Trump’s India Tariffs Threaten Cannabis Industry’s Fastest-Growing Segment
A New Economic Shock for the Pre Roll Market
The Trump administration’s newly imposed 50% tariff on imports from India is sending shockwaves through the cannabis industry’s fastest-growing segment: pre-rolled joints.
India supplies roughly half of the world’s pre-roll cones, the thin paper tubes that form the backbone of a product category that generated $2.3 billion in U.S. sales last year, according to data analytics firm Headset. With pre-roll sales climbing nearly 12% between 2023 and 2024, industry insiders say the tariff threatens to derail momentum in one of cannabis’ most reliable growth areas.
For retailers selling single pre-rolls at price points as low as $1, even minor increases in production costs could sharply compress margins already under pressure from state taxes, regulatory expenses and retail competition.
Supply Chain Concentration and Limited Alternatives
Pre-rolls are produced using cones sourced mainly from India and Indonesia, with limited contributions from China. The industry’s dependence on just a few regions has created a fragile supply chain vulnerable to trade policy shifts.
“With a 50% tariff, it becomes prohibitively expensive to source from India,” said Harrison Bard, co-founder of Custom Cones USA. “Some companies are already saying they can’t do it.”
While some operators may attempt to shift to Indonesia, Bard cautioned that China’s quality is often inferior, and its cones also face tariffs. Beyond performance, branding poses another obstacle: cannabis brands often rely on custom-printed cones, and switching suppliers can disrupt established consumer identities.
“If your pre-rolls are always in white paper, you don’t want to switch – it’s part of your branding,” Bard explained.
Cost Impact: From Cones to Retail Shelves
The cost of cones varies based on factors like paper type, filter design and printing. Hirsh Jain, co-founder of Los Angeles-based consultancy Ananda Strategy, estimates cones typically cost between 3 and 8 cents apiece.
A 50% tariff would add roughly 8 to 20 cents to the cost of a five-pack of pre-rolls. With brand and retail markups multiplying those increases, multipack retail prices could rise by 20 to 60 cents.
“In many U.S. markets, this will likely create meaningful price increases for pre-rolls,” Jain said.
Operators now face difficult decisions: whether to absorb the higher costs, pass them along to consumers, or explore automation and alternative suppliers.
Disruptions Beyond Price: Delays and Seizures
Beyond higher costs, supply chain reliability is also deteriorating. Kyle Loucks, CEO of Vancouver, Washington-based RollPros, which supplies pre-roll machinery, said shipments from India have faced additional scrutiny at U.S. borders.
In one instance, a shipment containing cone tips stamped with THC was seized in its entirety, even though not all products carried the marking. “We have tight timelines for all of our customers, and this makes it more expensive and time-consuming,” Loucks said.
As a result, Loucks is exploring U.S.-based manufacturing options to produce cone tips domestically. “My engineering team is looking at what we can do to make these here – it’s just better for the economy,” he said.
Market Variability: Which States Can Absorb the Shock?
The impact of tariffs will not be uniform across the country. Jain noted that states with higher average retail prices, such as California and Massachusetts, may have more flexibility to absorb costs without disrupting consumer demand. Price-sensitive markets, however, could see sharp declines in pre-roll sales if retail prices rise significantly.
“Operators with India-heavy sourcing will have to decide whether they will pass through the price to the consumers, accept some amount of margin compression or re-source to other countries such as Indonesia, Malaysia or China,” Jain explained.
Still, he cautioned against hasty decisions, noting the volatility of U.S. trade policy. “The president could change his mind, and operators need to be cautious about making drastic changes,” he said.
Tariff Evasion and Quality Concerns
While tariffs are reshaping the industry, some operators are already looking for ways around them. Josh Kesselman, founder of Raw Rolling Papers, said he abandoned India as a sourcing partner long ago due to quality issues, instead relying on factories in Europe and Indonesia.
“Both of those places face increased tariffs, between 15% and 19%, but not as extreme as the 50% tariff on India,” Kesselman said.
Still, he expressed concern about deceptive practices from some Indian exporters. Reports have surfaced of cones stamped “Made in France” despite being rolled in India, misleading consumers and regulators. Other tactics allegedly include underreporting invoice values to reduce tariff payments.
“The trouble with high tariffs or taxes is that it encourages people in this kind of situation to bend or break rules,” Kesselman warned.
An Industry at a Crossroads
The tariff shock highlights a broader challenge for the cannabis sector: its dependence on fragile global supply chains for seemingly simple but essential components. With pre-rolls now representing one of the fastest-growing and most profitable categories, the pressure to stabilize sourcing has never been greater.
In the near term, consumers may face higher prices, and operators will wrestle with shrinking margins. Over the longer term, the industry may see accelerated investment in domestic automation and cone production, a shift that could reduce reliance on foreign suppliers.
Whether tariffs ultimately strengthen or weaken the pre-roll sector depends on how quickly operators adapt and whether trade policies remain stable. For now, cannabis companies are bracing for a turbulent road ahead.
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