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Trump’s trade war with China likely to affect legal marijuana industry

Now that Trump’s trade wars have reached the CBD industry, how will it react? And will it be able to stay afloat?

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Just a couple of months ago, President Donald Trump surprised the entire world by stating that he’s more likely to support a new bipartisan marijuana bill, hinting at the possibility of an end on the federal ban covering the plant and giving hope to the legal cannabis industry.

A congressional effort to help end the near-century prohibition of marijuana, the proposed bill is sponsored by Senators Cory Garden and Elizabeth Warren and is created to ensure that each state has its own rights to determine what will be the best approach for the plant within its borders.

However, fast forward a couple of months after this positive comment, Trump may have given the marijuana industry some negative news.

As per Forbes, Trump’s currently ensuing trade war with China will not only hit soybean farmers and car manufacturers but also the young cannabis industry. According to The Blinc Group Co-CEO Arnaud Dumas de Rauly, vaping devices and any other accessories related to it are subject to the new tariffs that will be imposed.

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Among the first to be affected by Trump’s tariffs are vape devices made in China. (Source)

In fact, it’s not just vaping devices that are affected, many other products made in China that are used with marijuana are also included.

The bottom line? Increased costs for both marijuana companies and their consumers. What’s even more worrying is that these tariffs can just as well subdue the growth of the market. Marijuana tax revenues also have the possibility of getting hit.

What does this mean for cannabis companies?

Cannabis-focused companies are also at risk. Of course, some are big enough to actually take the hit, like PotNetwork Holdings, Inc. (OTCMKTS:POTN), which stays as one of the most prominent names in the cannabis industry today. As a matter of fact, its subsidiary and distribution arm, Diamond CBD, remains as one of the top cannabidiol (CBD) manufacturers all throughout the 50 states of the U.S.

For a company that’s shown continued growth and success in a relatively young industry, POTN can easily thrive, thanks to its steadily growing market base and more than 15 recognizable brands.

Still, there is a reason to worry. CNBC recently reported that unlike other sectors that will be subjected to tariffs, such as aluminum and imported steel, the cannabis industry will surely react differently, what with its tariffs showing up immediately. This will then push the people in the industry to adjust their prices accordingly or else risk hitting the bottom line.

In the same Forbes article previously mentioned, marijuana venture and Sun Grower magazines publisher Greg James commented that the tariffs will hit the rural states of Washington first, adding that there may very well be a snowball effect that will “result in the outdoor growing community having an even harder time selling their crop.”

Thankfully, numerous cannabis companies have already planted deep roots in the industry, managing to keep their high-growth businesses. Of course, there’s no denying that Trump’s tariffs will definitely warrant some setbacks. But the combined popularity of POTN’s Diamond CBD products along with the growing acceptance for CBD and marijuana, in general, is definitely enough to keep companies like it afloat and in good shape until the whole situation figures itself out. And seeing as the trend towards marijuana legalization seems inevitable, then it’s safe to say that the incoming tariffs will be nothing more than a small roadblock.

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This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

Desmond O’Flynn is Irish but he’s not into boxing. He writes about finance and investing, as well as world politics and global economy. He used to believe that he didn’t have the luck of the Irish since he failed his art class thrice, but this immediately changed after meeting his wife Katarina, a startup interior design consultant based in Dublin. He is also a financial adviser.

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