Trump's trade war drives up pre-roll prices in the U.S.

Pre-rolled joints are one segment of the cannabis industry which is growing the fastest, generating $2.3 billion in sales last year alone, according to the analyst Headset. But most consumers don't realize that nearly half of the pre-rolled cones from around the world—an essential ingredient in every pre-rolled joint—comes from’India, with Indonesia accounting for most of the rest.

This concentration makes the supply chain highly vulnerable to trade policies. And when the United States, which already predict an increase in cannabis use during Trump's second term, imposed a a 50% customs duty on imports from India, the raw materials needed to manufacture millions of pre-rolled consumed each month in the United States have suddenly become much more expensive.

From Customs Duty to Retail Price

It costs only 3 to 8 centimes to produce a single cone. But a 50% tariff quickly drives up costs. For a pack of five pre-rolled joints, the additional cost ranges from 8 to 20 centimes. Multiply that by retailers’ profit margins, and consumers could see prices rise by 20 to 60 centimes per multipack, a significant increase for products that often sell for about a dollar each.

«It's becoming prohibitively expensive to source supplies from India,» explains Harrison Bard, co-founder of Custom Cones USA, to MJBizDaily. Companies are now faced with a difficult choice: absorb the additional costs, pass them on to buyers, or look for other suppliers.

Limited alternatives

Indonesia remains an option, but production there is limited and quality can vary. China is another source of supply, but its products are also subject to high customs duties and their quality is inconsistent. For U.S. cannabis growers, there are simply no other countries capable of producing large-scale pre-rolled cones.

Some companies are turning to national solutions, with the installation of cone-rolling machines. But such changes require significant investment. Furthermore, many companies rely on custom-printed cones to differentiate their products, which are becoming increasingly popular. Switch to standard cones from brands such as Zig-Zag or Raw could lead to cost savings, but at the expense of the brand's identity.

High customs duties have also led to attempts at fraud. Some Indian exporters falsify the origin of their products—sometimes labeling them «Made in France»—in order to reduce customs duties, while others undervalue the prices they charge.

«The problem with high tariffs or taxes is that they encourage people in this kind of situation to circumvent or break the rules,» notes Josh Kesselman, founder of the rolling paper brand Raw.

The trade war Will it end in pre-roll war ?