Considering using smoking to alleviate the impact of tariffs? You might want to reconsider. The recent tariffs implemented by U.S. President Donald Trump are poised to raise prices of cannabis products in the United States. Many companies in the industry rely heavily on manufacturing in Asia, leading to a compounding effect on tariffs previously imposed on nations like China, Canada, Mexico, and the EU.

Certain items essential to cannabis products, such as tins, vape devices, and specialized glass, are challenging to procure domestically, with a continued dependence on Asian suppliers, particularly China. Analysts and executives suggest that businesses relying on imports from tariff-affected countries will need to strategize on how to handle increased costs or pivot their partnerships accordingly.

The repercussions of these tariffs have been reflected in the stock market, with cannabis companies like Tilray Brands, Canopy Growth, Organigram, and Terrascend experiencing trading decreases between 5% and 10% on Thursday. The additional costs are anticipated to be shifted to consumers, potentially driving them towards the illicit market and further squeezing profit margins for legal cannabis enterprises.

Many cannabis businesses lack the flexibility to absorb a significant price hike of 10%-15%, according to industry experts. This surge in costs has already dampened consumer demand and is leading to a slowdown in order rates within the industry.

Moreover, the importation of essential materials for cultivating cannabis from countries like Canada might also face cost escalations due to the trade disputes. Collaborations across borders for manufacturing and distribution, such as importing glass from China, wood from Canada, and assembly in Mexico before reaching the U.S., present additional challenges amid the tariff climate.

The escalating trade tensions in North America are expected to intensify these challenges, ultimately impacting consumers at the ground level.