It’s more than soybean farmers and car makers who could feel the effects of Donald Trump’s tariffs on Chinese products. The legal cannabis industry will take a hit as well.

By increasing prices on Chinese-made products, Trump has essentially forced American manufacturers to take time out of running their businesses to find alternate suppliers, “or price themselves out of competition with other manufacturers,” said Juan Carlos Negrin, President of the New Jersey Marijuana Retailers Association.

The tariffs have consequences beyond just higher consumer costs. Higher prices lead to decreasing sales and a reduction in tax income for the states. The​ State of Colorado collected ​over $247M in Cannabis tax revenue in 2017 and “25% of sales come from cannabis vaping products,” said Mr. Dumas de Rauly.

Cannabis companies are especially vulnerable to changes in their input costs said Negrin because they are not allowed to deduct business expenses from their taxes. That lowers their profit margins. “A tariff on goods the companies use in daily operations will have a substantially negative impact on their earnings,” he said.

See the original article at Forbes