How Trump’s Tariffs Will Hurt The Cannabis Industry
By Roger Malespin Photo/istock/BluIz60
While the trade war started with China by President Trump is still in its early stages, the cannabis industry is one of the first to be hit right from the get-go. An range of imported consumer goods could be hit with a 25% increase, including Chinese-made vaping devices. This affects not just recreational users, but medical users as well.
By increasing prices on Chinese-made products, Trump has essentially forced American manufacturers to take time out of running their businesses to find alternate suppliers, “or price themselves out of competition with other manufacturers," said Juan Carlos Negrin, President of the New Jersey Marijuana Retailers Association.
The majority of the marijuana sold and in the legal market is grown in the U.S., most of the devices used to consume it are made in China. The devices range from quite cheap to as much as $500. Companies that import these devices have 3 options: absorb the extra cost, source production in another country, or increase the prices for their consumers.
Unfortunately, many of the companies are small startups already operating at a loss, so they are not likely to absorb the extra cost. There are also very limited alternatives for manufacturing the devices - vapor product devices, batteries intended for use in vaping devices, and pre filled pods and cartridges. That means the extra cost will almost certainly be passed onto the customers.
People who use medical marijuana have no choice but to use it, and these tariffs will make it harder for already struggling individuals to get it. It’s akin to driving up the price of any other medical need. Additionally, the tariffs will cut into state revenue as much as 25% according to some market analysts.
The problems for the manufacturers are not limited to vaporizers; grow lighting, greenhouses, large-scale extraction equipment, and more are all imported from China and, like the medical marijuana patients, need those things to survive. Washington state is one of the biggest cultivators in the country, so a good amount of concern in centered there.
“The Trump tariffs will undoubtedly hurt the rural parts of Washington State,” Greg James, the publisher of the magazines Marijuana Venture and Sun Grower, told Forbes. “There could well be a snowball effect that results in the outdoor growing community having an even harder time selling their crop.”
Several business people testified at the Office of the U.S. Trade Representative public hearings against the tariffs, but they apparently did not have an effect.
The only positive outlook on the situation is that the cannabis business is already an uncertain one for several reasons. As a legal industry it is still new and operating in a state of almost constant flux anyway, so it is possible that it could absorb the possible increases. Regardless of whatever the tariffs bring, it will be bad for growers and consumers alike.
We should be especially concerned for the medical patients in the community. A lot of recreational smokers can either pay a little extra or cut down, but medical marijuana users need these products more. Hopefully, the situation will not be as bad as projected and they won’t be hurt too much.