HomeLIVINGCANNABISTrade War a Threat...

Trade War a Threat to U.S. Cannabis Companies?

The cannabis industry is well on its way to becoming a multi-billion-dollar global industry. Unfortunately, cannabis companies in the United States are already being forced to play catch-up against their global competitors, and a trade war with China could further devastate U.S. interests.

While the cannabis industry explodes in Canada — a trend most recently exemplified by Constellation Brands’ CA$5 billion investment in Canopy Growth — and legalization opens up new opportunities in western Europe, U.S. companies are struggling to keep up, despite promising retail growth figures. That is because the United States’ traditional competitive advantages are being nullified: state-level regulation means companies are competing in smaller markets, rather than a large, unified one, and Fed overhang has stalled access to crucial institutional capital. As Canadian producers cut licensing deals and secure footholds around the world, U.S. companies are left struggling to build out even mid-sized multi-state infrastructure.

The degree to which U.S. companies will be able to “catch up” will of course depend largely on how far ahead their competitors are by the time the U.S. legal environment changes to become more favorable to the industry. International markets could be locked up by the time U.S. companies really “get in the game,” and even if U.S. companies succeed at fortifying their domestic markets, they will become highly vulnerable once the market is opened up and companies like Canopy spend billions of dollars rolling up assets.

The United States’ trade war with China could significantly exacerbate these disadvantages. Generally, the costs of tariffs – such as those imposed in June on $50 billion worth of Chinese imports “containing industrially significant technology” — are borne by the consumer. When costs go up, consumers tend to look for alternative options, which governments in most cases hope is a domestic product. However, with cannabis, the alternatives will likely consist of black- or grey-market products; either products manufactured illegally, or else products smuggled in without tariffs that work with other legal products. Cannabis, having only been recently legalized at the state level in many jurisdictions, has already been forced to compete with black-market alternatives in California.

Perhaps the best illustration of how a trade war could push consumers to a black/grey market — and risk U.S. companies’ future competitive advantages — lies in the proposed tariffs on vaporization hardware and products. The 25% tariffs proposed in May by the Office of the United States Trade Representative (USTR) include “personal electric or electronic vaporizing devices,” including vaporizer batteries and pre-filled cartridges.

Cannabis concentrates, including vape cartridges, is currently the fastest-growing consumer segment of the cannabis industry, estimated to comprise up to 30% of sales in some markets, and with the potential to overtake flower as the primary consumption method in the near future. In 2017, the U.S. imported more than $42 million worth of vaporizer products from China, a 92% increase in the importation of these products from 2016.

The tariffs on vapor product devices are unlikely to change consumer preferences; people will continue to consume cannabis in their own desired way, and if prices get too high as a result of duties, consumers will look to grey- and black-market products as alternatives. This is especially likely given the nascent nature of the industry: cannabis is only recently legal in many states, and the black-market infrastructure is already well established.

Of course, vaporizer hardware and products manufacturers, including Pax and e-cigarette market leader Juul Labs, will feel the pain of any large-scale shift among consumers to grey- or black-market alternative products. But the shift will also significantly damage the broader cannabis market, as U.S. companies lose share to non-licensed competitors, states lose tax dollars, and consumers are pushed into unregulated markets. Money that would ostensibly be going to U.S. cannabis companies — which could conduct crucial R&D to innovate on products and medicines, build infrastructure and distribution capabilities, and attract top talent – will instead disappear underground. Meanwhile, global cannabis companies will remain unencumbered by these issues, and will continue to consolidate their leadership positions.

Other factors also contribute to the strong headwinds facing U.S. cannabis companies. Issues including a lack of access to banking, a lack of access to institutional capital, and tax complexities are already causing U.S. companies to lag behind their global competitors. In fact, my company, Tidal Royalty Corporation, was founded to help provide banking, financing, and regulatory guidance to cannabis companies in challenging markets. U.S. companies will need to meet these challenges head-on to acquire dominant market position in the global cannabis industry.

The current legal environment in the United States already poses significant challenges to U.S.-based cannabis companies seeking prominent position in the industry. A trade war could be catastrophic not just to consumers, but to state coffers, and to the position of U.S. players on a global basis for the foreseeable future.

 

- A word from our sponsors -

spot_img

Most Popular

More from Author

John Janssen Net Worth: A Look at the Businessman Behind the Reality TV Fame

John Janssen is not a traditional celebrity, but he has become...

Henry Ruggs Net Worth: Career, Earnings, and Financial Fallout

Henry Ruggs III was once seen as one of the fastest...

Playboi Carti Net Worth: The Rise of a Genre-Bending Rap Star

Playboi Carti, known for his experimental sound, elusive personality, and cult-like...

Bert Kreischer Net Worth: How the Party Legend Built a Comedy Empire

Bert Kreischer, famously known as “The Machine,” is not just a...

- A word from our sponsors -

spot_img

Read Now

John Janssen Net Worth: A Look at the Businessman Behind the Reality TV Fame

John Janssen is not a traditional celebrity, but he has become a public figure thanks to his high-profile relationship with The Real Housewives of Orange County star Shannon Beador. With appearances on the Bravo show and his name circulating in media headlines, many are curious about John...

Henry Ruggs Net Worth: Career, Earnings, and Financial Fallout

Henry Ruggs III was once seen as one of the fastest rising stars in the NFL. Known for his elite speed and athleticism, he quickly became a household name after being drafted by the Las Vegas Raiders. However, his promising career was cut short due to a...

Playboi Carti Net Worth: The Rise of a Genre-Bending Rap Star

Playboi Carti, known for his experimental sound, elusive personality, and cult-like fanbase, has carved out a unique lane in hip-hop. With just a few studio albums and a relatively private lifestyle, many fans are curious about how much he’s actually earned. In 2025, Playboi Carti’s net worth...

Bert Kreischer Net Worth: How the Party Legend Built a Comedy Empire

Bert Kreischer, famously known as “The Machine,” is not just a stand-up comic—he’s a full-blown entertainment brand. From selling out arenas across the world to hosting massively popular podcasts and starring in his own feature film, Kreischer has parlayed his wild college reputation into a multimillion-dollar media...

Marjorie Taylor Greene Net Worth (2025): Business, Politics, and Financial Growth

Marjorie Taylor Greene, a prominent Republican Congresswoman from Georgia, has been a highly visible and controversial figure in American politics since her election in 2020. While her political views often make headlines, her financial status has also drawn attention due to her substantial business background and growing...

Gabrielle Union Net Worth: Breaking Down the Actress’s Wealth and Success

Gabrielle Union is a household name in Hollywood—an accomplished actress, author, entrepreneur, and advocate. Over the years, her talent, versatility, and business savvy have helped her build an impressive portfolio and financial empire. But how much is she actually worth? In this in-depth guide, we explore Gabrielle Union’s...

Vegas Matt Net Worth: How Much Has the YouTube Gambler Really Made?

In the ever-evolving world of gambling content on YouTube, few personalities have stood out quite like Vegas Matt. Known for his high-stakes slot machine play and detailed casino adventures, Vegas Matt has built a loyal fanbase. His videos rack up thousands of views, and many followers are...

Rob Lowe Net Worth: A Deep Dive into the Hollywood Heartthrob’s Wealth

Rob Lowe is a name that has stood the test of time in Hollywood. From his breakthrough roles in the 1980s to his steady resurgence in television and film, Lowe has cultivated both fame and fortune. This article explores how Rob Lowe amassed his net worth, where...

Everything You Need to Know About Payday Loans eLoanWarehouse

In today’s fast-paced world, unexpected expenses can arise at any moment. Whether it's a car repair, a medical bill, or a sudden utility payment, many people find themselves in need of immediate financial assistance. This is where payday loans eLoanWarehouse comes into play—a convenient and quick solution...

Bader Shammas Net Worth: Wealth, Career, and Personal Life

Bader Shammas may not be a household name in the entertainment industry, but his marriage to actress Lindsay Lohan has thrust him into the public eye. A successful financier and business executive, Shammas has carved a solid professional reputation outside of the spotlight. This article explores Bader...

Rick Rubin Net Worth: Inside the Fortune of a Music Industry Icon

Rick Rubin is widely regarded as one of the most influential music producers in the world. Over the past four decades, he has shaped the sound of modern music and collaborated with some of the most iconic names in the industry. His unique approach to producing, combined...

Mattress Mack Net Worth: The Business Mogul Behind Gallery Furniture

Jim “Mattress Mack” McIngvale is a renowned retail entrepreneur and philanthropist known for his clever furniture deals, charismatic marketing, and charitable outreach. His vast empire, Gallery Furniture, along with earnings from high-stakes sports bets and real estate investments, has led to a significant net worth. In this...