The U.S. cannabis sector is grappling with significant cost increases due to new tariffs imposed by the Trump administration. On April 2, 2025, President Trump announced a 34% reciprocal tariff on Chinese imports, raising the total tariff rate on these goods to 54%. Additionally, a universal baseline tariff of 10% is set to apply to all countries, further impacting the industry’s supply chain.Â
Industry Reactions and Adaptations
Cannabis companies are facing challenges in absorbing these increased costs. Kevin Kuethe, Chief Cultivation and Production Officer at Lume Cannabis in Michigan, noted that the company is experiencing a 2 to 3 cent increase per vape unit sold, which accumulates significantly given their high sales volume. To mitigate the impact, Lume preemptively stocked up on supplies before the tariffs took effect.Â
Similarly, Jaunty, a New York-based cannabis company, reported a rise in vape hardware tariffs from 36% to 46%. CEO Nicolas Guarino expressed concerns about the lack of domestic alternatives for sourcing vape hardware, emphasizing the industry’s reliance on Chinese imports.Â
Broader Economic Implications
The tariffs are not only affecting product costs but also the broader cannabis market. Shares of major cannabis firms like Tilray Brands, Canopy Growth, Organigram, and Terrascend fell between 5% and 10% following the tariff announcements. Analysts warn that increased prices may drive consumers toward the illicit market, further straining legal businesses.Â
Supply chain companies are also reporting a slowdown in demand and inbound orders, highlighting the growing fragility of the market. Brad Wasserstrom, president of Wasserstrom Co., noted that manufacturers are passing tariff costs down the line, ultimately impacting consumers.Â
Looking Ahead
As the cannabis industry navigates these challenges, companies are exploring alternative sourcing options and reevaluating their supply chains. However, the lack of domestic manufacturing infrastructure for key components like vape hardware poses significant hurdles. Industry leaders emphasize the need for a unified approach to sourcing and supply chain management to mitigate the impact of ongoing trade tensions.Â
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