LOS ANGELE.–Cannabis stocks like Tilray Brands, Canopy Growth, Organigram and Terrascend all traded down like most stocks 10%-15%. “Most cannabis businesses don’t have the margin flexibility to absorb 10%-15% increase,” said Mike Forenza, managing partner at AE global which makes packaging products for cannabis firms. How the stock market and tariffs shake out over the next few days will tell the story on how much pain companies will endure. U.S. consumers before today’s nearly 1,700 point drop in the Dow Jones Industrials were already belt tightening, curtailing plans on travel and dining out. Businesses have seen a drop in retail sales a possible sign of a real economic downturn in the foreseeable future. Like the beverage industry, consumers usually cut back on discretionary purchases like alcohol and tobacco and possibly the use of cannabis. Cannabis uses tend to be fairly consistent in their habits, so sales shouldn’t drop that significantly with higher prices.
Compared to beer with sales of 56.8 billion in 2024, cannabis sales were $32 billion, adding significantly to states tax revenues. Total wine sales in the U.S. for 2024 were $22.8 billion, down 2.5%, but still a substantial number. Most people wouldn’t guess that cannabis sales would total $32 billion, something the beverage industry feared, why they opposed legalization or medical cannabis around the country. But for cannabis, any increase in packaging materials could increase costs if tariffs begin to take a bite on fertilizer, compost and peat, all necessary to harvesting cannabis. “Manufacturers are passing these tariff cost down the line and it will ultimately impact our customers . . .” said Brad Wasserstrom, president of Wasserstrom Co., a supply chain firm working with cannabis companies.
Wasserstrom said he’s already seeing a slowdown in cannabis sales. “We are starting to see a softening of the market and inbound order rates starting to slow,” Wasserstrom said, seeing it in the same trend as other retail sales beginning to show signs of an economy slowdown. With consumers spending accounting for 70% of the U.S. Gross Domestic Product, the growth rate could flatten if the Federal Reserve Board doesn’t return to a more aggressive monetary policy, starting to slash rates again. President Donald Trump has pressured the Fed to be more aggressive cutting interest rates, something that it may be forced to do with all the fallout on Wall Street. When Wall Street stumbles, it adds to growing federal budget deficits now in the $2 trillion range and climbing. Stock market capital gains revenues were a big driver in former President Bill Clinton balancing the budget in 1998.
Trump should order his Health and Human Services Secretary Robert F. Kennedy Jr. reclassify cannabis in the federal register so that suppliers can use the federal banking system. Once cannabis is decriminalized by the federal government, it would be easier for the industry to deal with tariffs or any other financial curveball. Former President Joe Biden never got around to removing cannabis from the federal register, in effect decriminalizing it all over the country. Using the federal banking system would be a boost to the cannabis industry, making it easier to deal with economic storms now faced by most businesses dealing with Trump’s tariffs among other things. Trump’s tariffs irk Canada but they’ve been levying tariffs on the U.S. for years in some of the strictest tariff policies on U.S. goods. Canada wants to continue the status quo or retaliate against U.S. farmers and manufacturers.
Cannabis industry is a growing part of the U.S. economy now at $32 billion annually. Whether it continues to grow is anyone’s guess. But, like other U.S. industries, it’s entitled to use the federal banking system, requiring Trump to have RFK Jr. order the FDA to remove cannabis from the federal drug register. Whatever happens with tariffs, the cannabis industry deserves the same advantages as any other product in the beverage industry. When economic downturns take place, consumers tighten belts on just about everything, including cutting back on vices like alcohol, weed and gambling. “That’s a challenge for everyone and ultimately it will come dow to the consumer level,” said Wasserstrom, concerned that his supply chains could increase prices. Every business has concerns about tariffs whether they’re fair or not, prompting concerns about price increases.
About the Author
John M. Curtis writes politically neutral commentary analyzing spin national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.
