Industry Roundtable: The Impact of Tariffs on Cannabis Businesses

As the cannabis industry continues to evolve, external factors such as tariffs can significantly affect the cost structure and profitability of businesses. Tariffs, particularly on products such as packaging materials, vaping hardware, and other essential components, create added financial pressure on operators, manufacturers, and service providers. With global supply chains already strained and margins in the cannabis sector often thin, these tariffs present unique challenges that impact everything from pricing strategies to long-term business planning.

In this roundtable discussion, we asked several CHNANY members to share their perspectives on the ongoing impact of tariffs, what it means for the future of cannabis businesses, and how they are navigating these hurdles.

Mitch Kulick, Founder, FeuersteinKulick: “Tariffs and just the threat of tariffs are creating uncertainty in the general marketplace and undermining consumer confidence as evidenced by recent economic reports and the stock market performance. Consumer confidence has dropped to its lowest level in 12 years with fears of tariffs and inflation driving that pessimism. My concern is that consumers feeling or fearing the pinch in their pocket will resort to the lower price alternatives offered by the illicit market. Because illicit operators sell marijuana that has not been tested for safety and that is not subject to the same taxing regime as legal cannabis and that is likely coming from lower cost out-of-state producers, they can sell at much cheaper prices. Add tariffs to the growing list headwinds facing legal operators selling safe and state-legal marijuana.”

Jordan Isenstadt, Senior Vice President at Marino PR: "Tariffs are having a direct effect on the cost of doing business in cannabis, especially for companies involved in packaging and vape hardware. More than just the financial burden, we’ve seen that the uncertainty around these tariffs is making businesses hesitant to commit to new investments. Many of my clients are finding it harder to sign contracts and move forward with growth plans because of the added costs. The overall mood is one of caution, as companies are taking a more conservative approach to spending, prioritizing short-term survival over long-term expansion."

Frank Manganella, Managing Partner, CH3 Ventures: “Tariffs create an additional challenge for U.S. cannabis companies already facing challenges due to federal illegality. The industry still relies on foreign goods for essential equipment and supplies and increased costs and supply chain disruptions would be passed down to consumers and/or squeeze operator margins. Many cannabis businesses rely on imported equipment such as extraction machines, lighting, and greenhouse materials from countries like China, Canada, and Europe. Cannabis packaging often requires specialized materials, many of which are imported. Tariffs on plastic, aluminum, or paper products can increase production costs for brands. Tariffs can slow down the supply chain, leading to longer lead times for essential products like vape cartridges, pre-roll tubes, and lab testing equipment.

While tariffs present challenges, there are opportunities on how businesses can mitigate tariff impacts by diversifying suppliers to multiple countries not affected by tariffs, negotiate with suppliers on bulk purchasing or long-term contracts to secure better pricing or shift procurement and purchasing to domestic manufacturing. Vape hardware, including pens, batteries and cartridges will also be impacted. However, some of the larger exporters have set up operations in other countries not affected by the new tariffs. Other options include improving operating efficiencies. For example, cultivators could invest in energy efficiency.”

Michael Gillespie, Founder, Gillie Consulting Services, LLC: “Tariffs on construction materials may impact cannabis facility costs in 2025, but labor and competition from the data center industry are driving prices even higher. The biggest cost factors—lighting and HVAC—are tied to copper, steel, and Chinese-made lighting diodes, but major U.S. manufacturers will buffer some tariff effects. While raw material costs fluctuate, labor shortages and rising wages continue to exert the most pressure on construction pricing. The pandemic caused a major spike in material costs, and while some prices have settled, overall costs remain above pre-pandemic levels due to sustained demand. Ultimately, tariffs may increase material prices by 3-7%, but broader economic forces will likely push construction costs even higher.”

Jordan Isenstadt

Senior Vice President