Trump Tariffs Expected to Increase Cannabis Industry Prices

Ganjapreneur/August 13, 2018/Pat Beggan

The prices of cannabis retail items like vapes, batteries, filters, cartridges, and packaging may soon increase thanks to President Trump’s proposed tariffs, Forbes reports.

The tariffs will force vape manufacturers to locate new American suppliers or be quickly out-competed by the companies that do. American-made equipment in this category is far more expensive.

The increase in prices is expected to decrease sales and tax revenues, hurting not only the private companies’ bottom lines but also the budgets of states with legal sales. Colorado logged more than $247 million in tax revenue from cannabis sales in 2017; 25 percent of those sales were in the category of cannabis vaporizers.

Other components beyond vapes — such as construction and grow equipment and even cell phones — will also increase in price.

Companies in the cannabis space are especially vulnerable to product cost increases as they are unable to deduct the usual business expenses before paying taxes due to the federal status of cannabis; those business deductions are fundamental to how the vast majority of business works in the United States.

Growers are expected to suffer the most with the tariffs because, of all operators in the cannabis space, their margins are typically the slimmest and many already struggle to make ends meet.