New Trump tariffs create more chaos for cannabis operators

The cannabis industry is no stranger to tackling complex regulatory challenges, but the latest wave of President Donald Trump’s tariffs has introduced a new level of uncertainty that’s rippling across the supply chain.

From vape hardware and cultivation equipment to packaging, operators are grappling with the financial and logistical challenges posed by a layered tariff system that continues to evolve. While some have moved operations out of high-tariff locales, others are taking a wait-and-see approach.

“The theme of this whole thing is uncertainty and volatility,” said Doug Fischer, general counsel for Seattle-based cannabis vape hardware company Active and president of advocacy group Vape Safer.

“Be wary of anyone who tries to portray the situation as certain, because it’s not,” Fischer said.

The high cost of President Trump’s tariffs on cannabis

The president has repeatedly used the 1977 International Emergency Economic Powers Act (IEEPA) to increase duties on imports. While the U.S. Supreme Court last week struck down IEEPA tariffs Trump implemented April 2, 2025 – a day he referred to as “Liberation Day” – the president countered with a new global 10% duty that went into effect on Tuesday.

And Trump has vowed to increase that tariff to 15%.

For now, that new 10% tariff is stacked on top of the existing 25% Section 301 tariff on cannabis-related products coming from China that Trump implemented during his first term. Common items manufactured in China include vaporizer hardware and mylar bags used to package flower.

This ever-shifting layering of duties creates a challenging environment for business planning, industry operators and observers told MJBizDaily.

The upshot: Higher prices for goods entering the U.S. are expected, potentially raising production costs across major product categories, said Hirsh Jain, co-founder of Los Angeles-based consultancy Ananda Strategy.

“That pressure lands directly on operators who are already dealing with compressed margins and limited ability to raise retail prices because they are competing with illicit markets,” he said.

For cannabis, tariff ‘uncertainty is a tax on business’

For many operators, the uncertainty undermines any potential benefits from the court’s tariff reversal, such as the prospect of refunds. 

“Any tariff relief is welcome, but uncertainty is a tax on business, and right now the industry is paying it,” said Laura Fogelman, vice president and chief of staff at California-based vaporizer company Pax Labs.

Pax previously moved some manufacturing from China to Malaysia to mitigate the initial 25% Section 301 tariffs, while absorbing the costs to avoid passing it onto consumers.

Under previous duty measures, the tariff per container for Custom Cones USA has increased from between $2,000 and $4,000 to $15,000 to $20,000, said Harrison Bard, co-founder of the Renton, Washington-based pre-roll packaging and manufacturing company Custom Cones USA.

This time around, Bard has received emails from DHS, UPS and FedEx saying the new policy is unclear, he told MJBizDaily.

“At least there was certainty before, and now we’re back into that uncertainty,” Bard said.

Trump tariffs are making cannabis companies less profitable

In response to the initial tariffs, Custom Cones opened a third-party logistics center in Canada to serve that country’s licensed producers. It’s also launched a Cones Canada website.

“This is a necessity because of tariffs,” Bard said. “As soon as Trump did Liberation Day, we saw sales from Canada decline. This is a way we’re adapting to better service the Canadian market.”

Other measures Custom Cones took in response to Trump’s past tariffs were to stop ordering Chinese pop-top tubes and find a U.S. based plastic injection modeler, which Bard said is purchasing more machines and hiring more people – among Trump’s goals when he implemented the duties.

“We’re not passing the costs along to the customers, but we’re less profitable over the last 12 months than we were the previous 12 months,” he said.

“We’re not going to stop importing products because we can’t.”

Balancing offshore and domestic manufacturing costs

Not every cannabis operator is singing the tariff blues.

So far, Chinese factories have been “absorbing a significant share of any added costs, which helped stabilize pricing on this end,” said Jason Ambrosino, owner of New York-based processor and manufacturer Veterans Choice.

“In my view, the recent tariff shifts have had virtually no impact on the cannabis industry,” he said. “To the extent tariffs may have contributed to price increases, those adjustments tend to stick.”

“Once consumers are accustomed to paying a certain price, it rarely declines even if underlying cost pressures ease,” he added. “That’s largely where we are now; the market has absorbed the changes without any meaningful ripple effects for operators like us.”

But Alex Gonzalez, co-founder and president of Salt Lake City-based packaging company Calyx Containers, described the constant policy “whiplash” as exhausting for the industry.

He said he’s frustrated over the Supreme Court’s ruling and subsequent legislative maneuvers that created “a ton of chaos” for supply chain teams.

Cannabis chaos under Trump

“Is it 10, is it 15, what’s the effective date?” he asked, adding that cannabis companies can’t afford the luxury of waiting it out like mature industries.

Instead, operators are forced to make quick decisions, sometimes hedging by ordering domestically to avoid tariff ambiguity – even when international options might be cheaper.

Although it’s an “unsexy level that no one wants to pull,” SKU rationalization – paring down product varieties to focus on higher-volume, more predictable sellers – is critical now, Gonzalez said.

He also noted that tariff premiums sometimes put domestic manufacturing on par with offshore pricing. Operators should build relationships with U.S. suppliers for greater cash flow certainty, he added.

While the Supreme Court ruling offered a brief moment of hope, the cannabis industry is bracing for continued instability.

“Tariffs are going to remain a centerpiece of this administration’s policy for the foreseeable future,” Active’s Fischer said.

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.