The Trump administration’s recently imposed 50% tariff on imports from India is threatening the cannabis industry’s fastest-growing sector.
India is the world’s largest supplier of pre-rolled cones, a key part of a product category that recorded $2.3 billion in sales last year, according to data analytics firm Headset.
India accounts for about half of the global pre-roll cone supply, with Indonesia making up the other half, said Harrison Bard, co-founder of Custom Cones USA, which found in a study published last year the pre-roll sales grew nearly 12% from 2023 to 2024.
For retailers selling pre-rolls for as little as $1, even a small increase in production costs could squeeze already tight margins.
Operators now face tough decisions: absorb the added costs, pass them on to consumers or switch suppliers.
Trump India tariffs squeezing tight cannabis industry margins
Some pre-rolls are made from cones sourced from India and Indonesia, while others are machine-rolled joints.
The pre-roll supply chain is highly concentrated with few viable alternatives outside of India, Indonesia and China.
“With a 50% tariff, it becomes prohibitively expensive to source from India,” Bard said. “Some companies are already saying they can’t do it.”
Custom Cones USA is evaluating options for using automatic cone rolling machines at U.S.-based production sites rather than having its cones hand-rolled in Indonesia.
The cost of goods sold (COGS) for cones varies by paper, filter, print and other factors.
But it can be range from 3 cents to 8 cents per cone, said Hirsh Jain, co-founder of Los Angeles-based consultancy Ananda Strategy.
For a five-pack, a 50% tariff on declared value from India would add 8 cents to 20 cents in COGs.
Because brand and retail markups are typically two to three times, retail prices could increase 20 cents to 60 cents per multipack.
“In many U.S. markets, this will likely create meaningful price increases for pre-rolls,” Jain said.
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