Although Canadian cannabis is not directly impacted by the emerging trade war with the US, many aspects of the cannabis industry supply chain could be. 

This can mean increased costs for producers, and those costs being passed on to consumers. 

With cannabis still not legal in the US, cannabis imports or exports between Canada and the US are off the table. While there have been some rumblings of tariffs on Canadian cannabis being sent to Israel, for the most part, Canada’s actual cannabis products are not feeling the pinch of the emerging tariff wars.

The packaging used for those cannabis products, however, as well as some of the equipment used in the different steps of cultivation and processing, can be.  

Two of the most significant cost increases for SNDL, a publicly traded company that operates in the Canadian cannabis space in both production and retail, are the costs of mylar packaging and aluminum cans. SNDL sells an array of cannabis products, from dried flower, vapes, and edibles, to beverages. It operates a dedicated beverage production facility for both cans and bottles in Bolton, Ontario.

Although most of their business on the cannabis side is not impacted, says Tyler Robson, President of Cannabis at SNDL, Inc., those two aspects of cannabis packaging are already seeing cost increases and delays. 

“The biggest increase and biggest bottleneck for us is probably mylar packaging,” he says. “With the childproof bags we’re seeing about a 15-20% increase, not even from tariffs, but just from recent cross-border challenges. That’s the one that’s impacting our business in the most critical way now.”

In addition to cost increases on the finished cans they order from a manufacturer in the United States, he says there have been increased delays in shipping, and even issues securing enough supply due to increased cross-border challenges in recent months. 

“But beyond that, to be honest, we’re really not very impacted,” he adds. “The federal banking system doesn’t allow us to do a ton of cross-border purchasing, so we don’t buy too many things from the US today. It’s mostly from Europe and China. So we’re mitigating most of the noise coming from tariffs today.”

One of the challenges in terms of packaging, explains Robson, is that there are few more affordable options from manufacturers in Canada or abroad. Even with cost increases from the US, he says it’s still “exponentially” cheaper for SNDL to source their packaging from south of the border than domestically, or from Europe or Asia. 

Callum Hanton, CEO of Bubble Bud Inc. in Edmonton, which produces cannabis beverages in glass bottles, says he’s already seeing a noticeable increase in his costs for bottles, as well.  

Although he sources them through a broker in Quebec, the bottles are made in the United States. Even further highlighting the complexities of modern-day supply chains, he says the silica used to make the bottles can come from Canada, but that is then shipped to the US in Ohio or Illinois, before making its way back to his factory in Alberta to be filled with cannabis-infused drinks. 

If Canada puts a retaliatory tariff on silica, the price for the manufacturer will rise. Then he’ll be tariffed on that finished product coming back into Canada.

“We searched far and wide for a Canadian company that could meet the volume, the pricing, and the timescale required to run an industrial plant without having huge warehouses of buffer material.”

Instead, he says he’s now looking at getting supply from Europe, but expects this could be even more of a cost increase. 

This is also an issue he thinks some companies may not want to admit yet, especially if they have to take into account investor interests and concerns. 

“Most cannabis companies don’t want to admit that they’re seeing cost increases everywhere, because most aren’t operating on great margins.”

Not everyone is feeling the pinch, though. 

Raj Grover, founder and CEO of High Tide, which operates not only a large cannabis retail chain in Canada but also various e-commerce sites in the US, says the majority of its products are not impacted by trade issues with the US.

“Despite the trade war’s threats to the broader North American economy, our underlying fundamental business is insulated from supply chain impacts as 99% of the sales we generate in Canada and the US don’t cross the border.”

Keith Bao, Managing Director at Aveo, a company that sells vape hardware to cannabis companies, says that since their products primarily come from China, they have not seen any associated cost increases due to tariffs or other trade restrictions.

“The current trade wars do not impact vape hardware currently,” Bao tells StratCann. “The majority of the manufacturers are from China and there has not been further increase of tariffs in the USA for vape hardware (Trump mandated a 25% tariff impacting the vape industry in his first term, and nothing has changed). In Canada nothing has changed. We still pay importing customs which equal to 5% GST.”

Still, he says consumers will likely see an increase in vape prices as an indirect result of the US government’s trade war with Canada under the Trump Administration, as well as increased prices of Canadian cannabis inputs. 

“This will not be due to the ongoing trade war climate or tariffs,” Bao explains. “This is due to supply and demand and our weak Canadian dollar. Flower, trim, and input materials are going up in cost due to less cultivation and more demand than previous years. And, the only currency China accepts is USD, and there’s an expensive cost to convert Canadian dollars to USD. The cost of vape hardware will go up because of these factors.”