Is the Trump-China Trade War Making It Tough for Cannabis Businesses to Survive?

Ever since President Donald Trump announced entering a trade war with China, many businesses and consumers have been very watchful of how it might all play out. So far, news outlet Forbes, who referenced CNBC, noted that there’s, “25 percent tariffs levied on $200 billions of Chinese goods,” with more goods expected to be taxed some more.

Ever since the announcement was made, nearly 50 American businesses have opted out of conducting production operations in China. This being said, it has been argued that the cannabis industry might be stuck in a sticky situation.

According to the news outlet, CEO of cannabis firm, Aster Farms, Julia Jacobson, shared that the 25 percent tariffs made it relatively tough to conduct her business operations on a timely basis. Given that her company relies on the Chinese for the company’s packaging, most orders eventually got backed up until she was able to pay the tariffs. In particular, she said:

“Our custom tins for our pre-roll pack were finished, but not shipped when the tariffs first kicked in. It resulted in our shipment being delayed for two months and was only released after we paid an additional 25 percent.”

As for the reason why she retorts to China, the current regulations on cannabis packaging forced her to seek said needs elsewhere. This is interesting to hear, as China is neither for the use of cannabis, nor does it believe it testing. Nonetheless, she further made the case that,

“While many people think the cannabis industry is striking it rich, with the current regulations […] we are all operating on extremely thin and often negative margins.”

Does this mean that all cannabis firms are suffering? Perry N. Salzhauer, a lawyer at Green Light Law Group was referenced saying that his clients aren’t entirely affected. He reasons that,

“It’s possible that the ordering of the equipment is bypassing some of the tariff system,” he speculated. “It must be under the radar. They’re not going through customs or [U.S. cannabis firms] are directly ordering these things from a company in China. That’s a totally different can of worms because that can be subject to the postal office.”

A news report by Forbes further indicates that”For companies like Aster Farms that are feeling the effects of the tariffs, little can be done. [T]he proverbial banking problem faced by many marijuana businesses [is] an obstacle rooted in the federal illegality of the substance.” Because cannabis is illegal under federal law, cannabis companies operating in states that have legalized the substance still face significant risks and challenges.

All information is for general informational and educational purposes only. Nothing should be interpreted as legal or wellness advice.