As President Donald Trump continues to level tariffs on America’s trading partners around the world, every American industry is starting to feel the pinch, including cannabis.
The most recent pain point comes with the addition of a 50 percent tariff on goods from India, up from 25 percent. This tariff alone could cause massive supply chain disruptions, particularly in the pre-roll sector.
RELATED: Lawsuit pits cannabis against hemp yet again
The simple truth about the American cannabis pre-roll industry is that nearly all of the pre-rolled cones used throughout all the state markets come from one of three places: India, Indonesia, and China.
And while a 25 percent tariff was somewhat stomachable for most suppliers, a 50 percent tariff is not, especially considering how price-sensitive pre-rolls are. The doubling of that tariff will likely cause many pre-roll companies to move their ordering to other countries, which will increase lead times and cause production delays. For pre-roll companies that can’t make the switch in time, we expect them to raise their prices to meet their increased costs or cut corners on input flower material.
This will also undoubtedly cause massive supply chain disruptions across the entire global industry. The increased tariffs will mean fewer ships coming from Indian ports, which could cause shortages among popular cone sizes and paper types that may require manufacturers to have to switch up their products.
RELATED: How to choose the right pre-roll machine for your business
Protecting Against Costs and Supply Chain Disruptions
At Custom Cones USA, for example, we have been preparing for the impact of these tariffs for much of the year, protecting our supply lines and building up stock at our US-based warehouse for just this possibility.
This is especially important as we make the turn toward the fourth quarter, an increasingly busy time for cannabis sales and pre-rolls in particular. Halloween parties are just weeks away, and Green Wednesday, the day before Thanksgiving, has become the second-busiest day of the year for the industry (behind 4/20, of course), with Black Friday close behind. The Christmas season is another high-volume time for cannabis shops, with pre-rolls, and their convenient, portable, and ready-to-go nature, driving sales for the entire industry.
RELATED: Texas DA smokes weed on TikTok to fight THC ban
But zooming out beyond the immediate need for companies to keep stocked, the fastest-growing category in the industry, the new tariffs highlight the importance of diversifying your supply chain.
Beyond that, it’s also important to make sure your suppliers are thinking ahead, watching the trends, and preparing for whatever the market – or the president – can throw your way, so that you can keep your pre-roll business up and running, no matter what happens.
*This article was submitted by a guest contributor. The author is solely responsible for the content.