Dennis Lider is the senior vice president for cannabis at Ispire (Nasdaq : ISPR). He says that the decision of Ispire to move vape hardware production out of China has become “more valuable every day” as U.S. tariffs against imports are increasing.
Lider, in an interview with The Malaysian Times, spoke about the importance of Lider’s Malaysian facility, following Trump Administration’s recent tariff announcement that will increase duties on Chinese products from 10% to 20 % by March 4.
Lider, who cited the Malaysian-U.S. Free Trade Agreement as an important competitive advantage, said that manufacturing in Malaysia now offers a tariff saving of 45%.
Cannabis in the United States, although it is mostly grown within American boundaries, has not been immune from international trade wars. Tax Foundation estimates that the tariffs on Chinese imports will cause a 0.1% drop in GDP and thousands of lost jobs. Companies that manufacture vape hardware are especially vulnerable, since most of the hardware they use is traditionally made in China.
Ispire Malaysia’s facility is used to support both its nicotine hardware and cannabis hardware divisions. Lider noted that several partnerships with customers, mostly MSOs in the U.S. market, were made specifically so Ispire could “help them defer those Chinese tariffs.”
The company simultaneously advances product technology and addresses supply chain issues. The I-80 Filling Machine, with more than 100 machines in operation on the U.S. Cannabis Market, is designed to eliminate what Lider referred to as the “majority of failure rates that happen with vaporization equipment” during capping.
Lider stated, “I think that it proves there is definitely a demand for this.” This company provides lease agreements for smaller brands to overcome the capital investment barriers.
Insiders in the cannabis industry warn that companies may have to make difficult decisions about whether or not they will absorb tariff-related increases. Some are concerned that increased prices might push customers towards illicit markets.
Lider views the cannabis industry in general as being “stable and probably unclear, but optimistic”. He cites state legalization initiatives in New Hampshire Pennsylvania South Carolina Wisconsin.
Lider stated that “it’s clear there is a new federal administration who supports state-led efforts to legalize marijuana, but the position of the federal government remains unclear.” Lider noted that recent tariff hikes and the “uncertainty surrounding DEA rescheduling” are counterbalancing these positive changes.
Ispire believes that its competitors will also follow in Ispire’s footsteps and move manufacturing out of China. This is because firms are looking for different solutions to mitigate the negative impact from trade tensions. Some are also looking at India, which continues to invest heavily in its infrastructure.
Lider stated that “innovation used to be a product.” Lider said, “Now I believe that when we think about innovation, supply chain innovation is critical.”