The marijuana industry continues to see massive returns, and the global market is expected to skyrocket to $146.4 billion by 2025. Medicinal marijuana that is effective for treating chronic pain, epilepsy, and other debilitating conditions could play a major role in driving increased revenue in the sector.
Private and public investments that conduct research and development on more user-friendly consumptions of marijuana such as tinctures, oils, vapes, and edibles could also promote increased growth in the industry. Not to mention, the full implementation of legal recreational marijuana in Canada, and potentially in other countries like the U.S., has also seen robust competition as more businesses set their sights on the sector.
However, the growth doesn’t come without any challenge. When President Donald Trump announced a tariff on Chinese imports last May 29, this affected several products related to the marijuana industry. The decision, as seen in the Office of the United States Trade Representative (USTR)’s decision that “China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce” imposed a 25% duty on $50 billion worth of Chinese imports containing industrially significant technology.
The tariff continues to affect several business areas such as cultivators seeking to expand greenhouse infrastructure, growers looking to purchase lighting, brands who purchase Chinese packaging, as well as businesses who purchase materials using Chinese-made steel and aluminum.
Cannabis businesses who produce vapes are likely to be the most affected, as a specific tariff schedule code targets vapor devices and related batteries. Vapes weren’t initially affected in the first batch of products to be hit with the tariff and were only included when tariffs were applied to an increased amount of Chinese imports in the growing trade war.
“If I was in the vape industry or the lighting industry or greenhouse industry, I would be pretty concerned that costs were going to go up as the result of a trade war,” said Oregrown president and co-founder Kevin Hogan. He stated that vapes are becoming one of the largest cannabis related products, adding that Oregrown only sells vapes that are manufactured in China.
Datamyne revealed that the US imported $42 million worth of vaporizers and vaporizer parts from China in 2017 and another $800,000 from Hong Kong. Other countries where America imports vaporizers like Mexico, Germany, and Canada amounted only for less than $500,000.
With very few domestic vaporizer manufacturers in the US, this measure aimed at stimulating local jobs will only result in the possible increase in prices for vape consumers as local companies typically lack the ability to produce vapes on their own.
Jan Verleur, CEO of VMR Products, which owns cannabis vaporizer product line Prohibited, said: “But the profit margins in the cannabis space as an overall rule are still healthy. I don’t think this is a hit that’s going to collapse anyone’s business.”
There are differing opinions on whether products will become more expensive to purchase, with Organa Brands International president Jeremy Heidl stating, “It’s pretty difficult to raise cannabis prices in the market right now. “It will likely be absorbed” by the cannabis companies.
Vapor and cannabis technologies incubator The Blinc Group’s co-founder and co-CEO Arnaud Dumas de Rauly believes that the tariffs will make it difficult to avoid price hikes on consumer products.
Despite the potential implications of the tariff on Chinese imports, cannabis companies continue to see success and ever-increasing profitability as legalization continues to gain momentum, particularly from Canada’s significant decision to allow for its unconditional use.
PotNetwork Holdings, Inc.(OTCMKTS:POTN) is a recognized company operating in the CBD industry. CBD is a cannabinoid that is derived from cannabis, just like THC found in marijuana. It differs from marijuana in that POTN’s CBD products contain 0.3 percent THC or less, lacking the psychoactive effects common in marijuana.
Their year-to-date revenue jumped up from $3,900,000 in 2017 to $10,300,000 in 2018, and POTN continues to excel through a vast CBD product lineup that continues to see expansions into other segments such as Medipets and Meds Biotech, which is comprised of pharmaceutically developed products that promote another level of wellbeing.
Aside from these, POTN, via its subsidiary Diamond CBD, is assured of continuous growth because of their wider range of products that don’t just focus on vaping, which could be affected by the U.S. - China tariff war. The popular brand features edibles like Chill Gummies as well as various oils, tinctures, creams, and other products.
Through this subsidiary, POTN also recently released a new program that aims to raise awareness about CBD and its myriad of health benefits. Presented as a colorful infographic, the new program provides a very detailed and honest look at the process behind making the company’s CBD products, as well as give much-needed information about the nature of the compound and the good it can do.
Canopy Growth, on the other hand, is one of the premier cannabis businesses in the world, and has become the very first publicly traded company in North America. Subsidiary Tweed is a premier cannabis brand and provides quality medicinal marijuana at affordable prices through Tweed Main Street’s unique Compassionate Pricing feature, allowing patients to access a wide variety of strains online and in shops.
They also feature medical brand Spectrum Cannabis as well as expert growers DNA Genetics, which has claimed awards in every single category at the renowned Cannabis Cup. Canopy Growth also has a partnership with Snoop Dog, allowing Tweed Main Street’s online marketplace to distribute his Leafs by Snoop brand.
Tikun Olam is a renowned Israel based medical cannabis supplier and is generally acknowledged as the pioneers of promoting the medicinal capabilities of marijuana through research and testing. Their famous strains contain varying amounts of THC and CBD and also feature the very first high CBD strain. These extensively tested and certified medicinal marijuana products have helped them score multiple awards.
It conducts clinical testing on products to monitor their efficacy and have large amounts of patient clinical data through continuous research. Tikun Olam also boasts the very first cannabis nursing clinic, administering proper dosage of strains to treat over 20,000 patients of all ages suffering from various ailments and collecting valuable data as a result.
Despite the tariff imposed by President Trump, the cannabis industry continues to see profits and treat the suffering of patients who rely on cannabis for its recuperative properties. Although there are some considerable implications on various segments such as vaping and greenhouses, the sector operates on a strong foundation that should be able to minimize any potential hits that may occur as a result.