Is Trump Making You Pay More For Cannabis?

Pretty much everywhere you look in North America, it’s hard not to see that the cannabis industry is not just budding – it’s thriving.

And while many states in the US are pioneers for legalizing recreational and medical use of cannabis, the price is not cheap.

In just a few days, Canada will legalize cannabis recreationally, yet the pot on the other side of the border is 30% cheaper than many parts of the United States where it’s been legal for several years, reveals data from Priceonomics. The report says that in the United States, it costs $40 on average to purchase an eighth of an ounce, while the same would set you back just $27.90 in Canada. To obtain its data, Priceononomics scanned information from Wikileaf, which monitors the cost of cannabis from dispensaries in both countries.

The report also found that the most expensive place to buy pot is in San Francisco, where it costs $43.80 for an eighth of an ounce while the cheapest place to do so is in Vancouver, Canada where it costs just $27.10.

 

However, in the wake of legalization, Priceonomics anticipates that the cost of cannabis will rise in Canada. “With marijuana, as with most things, when the supply is high, the prices are not,” says the report.

And considering that Americans are already paying a steep price for their medicine, POTUS Trump’s trade war could raise prices even more. In August of this year, he ordered officials to increase tariffs on $200 billion worth of Chinese goods by September 24, and Beijing responded by saying it would slap $60 billion in US products

Trump’s Trade War

Trump’s trade war with China means that many consumer goods could face as much as 25% in taxes, including the wide array of made-in-China vaping devices many of us are using. This could have a serious impact on the cannabis industry.

Most of the concentrates and the flower we consume are actually cultivated in the US, but the very devices we use to consume them are made in China. Vape pens cost anywhere from $50 to $500, depending on how fancy or complex it is, but a looming trade war could make it worse. American cannabusinesses that import vaping devices will need to find a solution to absorb the cost of extra tariffs, or find another place that can make it for cheaper. Otherwise, consumers will have to pay even more for vaping devices.

According to Arnaud Dumas de Rauly, co-CEO of the Blinc Group and treasurer for the Vapor Technology Association, the profit margin for vaping devices will only be between 10 and 15%, and there aren’t that many choices for alternatives. In fact, many companies won’t even see any extra dollars in revenue from these tariffs because they have to give it all to the government, including companies that haven’t had the need to raise prices in a long time. This will have an effect on the “entire cannabis consumption market – including medical and recreational marijuana,” Dumas de Rauly said.

“There’s no question that tariffs will raise the price of those products, which producers and importers will try to pass on,” says Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, a Washington DC research firm. Ikenson added that tariffs for machines, solar panels, imported steel, and aluminum have already been impacted but consumers aren’t really feeling the pinch just yet.

It’s going to be different for cannabis vaping products. “It’s hard to predict how people will react,” says Ikenson.

“For those who need it, they don’t have a choice,” says Mary Lovely, economics professor at the Syracuse University, and a non-resident senior fellow at the Peterson Institute for International Economics in Washington, DC.

Americans are divided when it comes to opinions of the new tariffs, but the responses are more negative than positive, reveals data from a Pew Research Center poll conducted last July. It revealed 49% or almost half of American respondents believe that increased tariffs will be bad for the country, and just 40% think that the tariffs could be good for the economy. Meanwhile, 11% are still unsure of how this will impact the country.