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The shock announcement this week that a federal trade court had ruled that key elements of President Trump’s flagship tariff policy were unconstitutional has come as a major relief for any internationally-facing US business, not least the cannabis sector.
Should the courts manage to survive the incoming tirade of legal and political challenges from the Trump administration, it could see the end of the universal 10% tariffs, and the upcoming ‘reciprocal’ tariffs on countries like China, Mexico and Canada.
However, if there’s one thing that is certain about Trump’s America, it’s that nothing is certain. An appeal is already underway to challenge the ruling, and speculation is rife over whether Congress will step in to save the policy.
While this is undoubtedly good news for many businesses, Jason A. Little, who heads the cannabis practice team at NY-based law firm Farrell Fritz, tells Business of Cannabis that the ongoing uncertainty is what is really threatening the US cannabis sector.
Uncertainty kills
“The broader issue is the uncertainty itself,” he explained.
“Whether you’re in the stock market or running a small business, uncertainty causes stress. It tightens budgets, impacts confidence, and even if the disruption doesn’t fully materialise, the fear alone can create very real challenges.”
The prominent target of Trump’s tariffs has always been China, where many of Little’s clients, who he says are ‘early-stage entrepreneurs, startups, small farmers, processors, retailers and CUARD licensees who are new to business, source products vital to the production of cannabis.
Adding to the complexity and potential impact of the issue, is the complex supply chains in which these products are sourced.
Little explained that his clients ‘aren’t typically importing these products directly’, but rather from US vendors who themselves rely on international supply chains.
“So whether it’s fertilizers, sector pellets, sprays, or specific processing chemicals used in product formulation, the actual sourcing is a step removed. Their vendors might be sourcing from wholesalers or overseas manufacturers, and that adds complexity.”
Once these import costs start rising, he continued, it creates a ‘trickle-down’ effect that means even those not directly impacted still feel the financial pressure.
“While the individual cost difference for each item may not be massive, collectively it adds up. We’re seeing 5–10% price hikes on a number of these goods… This is especially true for smaller agricultural producers and processors in states like New York and Massachusetts. Most of them aren’t in the medical space, and they’re already dealing with tight price points. These cost increases absolutely get passed down to them.”
Jason A. Little, Partner at Farrell Fritz, P.C.
Impact is already being felt
While many of the promised tariffs have not yet come into force, have been rolled back or might now not even happen, the impact on businesses remains and is already being felt.
“They’ve seen prices go up, though whether those increases reflect actual market conditions or are more perception-based is debatable. That’s part of the complexity here.”
Little suggests that there are direct financial pressures driving up costs, such as tariffs, but there are also secondary pressures caused by supply constraints, increasing stress on the system.
“Then there’s what I’d call ‘phantom stress’, the opportunistic pricing that happens when local producers see an opening. If cheaper, imported alternatives are no longer available, local suppliers can justify charging more.
“Uncertainty creates space for opportunism and discourages entrepreneurs who are still evaluating whether cannabis is a worthwhile investment. They may start asking, ‘Should I be growing soybeans instead of cannabis?
That’s the kind of situation we’re seeing. When economic and regulatory uncertainty combine, it makes it easier for people to say, ‘Maybe not now.’ And over time, those decisions can lead to real impacts in the cannabis market.”
Stand firm
Asked what advice he gives to his clients in such turbulent times, Little suggests that the best course of action is to take no action at all.
“The advice right now is: stay the course. Don’t make any major changes at this point.”
He explained that on a granular level, these price increases are likely far less than businesses would experience due to inflation over the past four years.
Furthermore, given the uncertainty and ever-changing landscape of US politics and regulation, ‘there is risk either side’, and changing your entire business could ultimately work against you when the dial shifts again.
“If you wanted to stock up pre-tariff… that might not be a terrible idea. But that’s risk… you’re going outside of budget, you’re increasing costs, you’re storing things you wouldn’t necessarily store. On the flip side… if you do nothing, it’s risky if prices continue to increase… in a manner and with enough of a regularity that it affects you.
“So the best place you’re at is probably right now. You have a business plan, you have a budget… and unless there are material issues… there isn’t a reason right now to change a whole lot of what you’re doing.”
“}]] The shock announcement this week that a federal trade court had ruled that key elements of President Trump’s flagship tariff policy were unconstitutional has come as a major relief for Read More
