Vaping Warning by CDC Should Worry Cannabis Players – Market Realist

On August 23, Illinois’s Department of Public Health reported a case of death likely related to the use of e-cigarettes or vaping. Vaping implies the inhaling of vapor produced by an e-cigarette or another device, such as a vape pen. These devices contain cartridges or pods filled with nicotine, chemicals, and dried cannabis leaves. They can also contain derivatives made with THC (tetrahydrocannabinol) and CBD (cannabidiol). THC is the psychoactive compound found in cannabis. In contrast, CBD is the non-psychoactive compound.

First vaping-related death

The death reported in Illinois was the first to be allegedly caused by vaping. According to Illinois’s health department, 22 people aged 17–38 have experienced respiratory illness after using e-cigarettes or vaping.

The Illinois Department of Public Health requested the CDC’s (US Centers for Disease Control and Prevention) help in investigating the reported cases. The CDC is now investigating 193 potential cases of illness involving e-cigarettes or vaping reported by 22 states between June 28th and August 20th.

CDC director Robert R. Redfield said, “We are saddened to hear of the first death related to the outbreak of severe lung disease in those who use an e-cigarette or ‘vaping’ devices. CDC’s investigation is ongoing. We are working with state and local health departments and the FDA to learn the cause or causes of this ongoing outbreak.”

However, Gregory Conley, President of the American Vaping Association, blamed the THC black market for the recently reported cases. He said, “Each day of this crisis brings more evidence that street vapes containing THC or other illegal drugs are responsible for these illnesses, not nicotine vaping products.”

Is the cannabis industry concerned?

Vaping has gained popularity recently. Moreover, the common perception is that vaping is an effective method of quitting tobacco smoking. In particular, young people are increasingly using JUULs, e-cigarettes shaped like a USB flash drive. Tobacco giant Altria (MO) has a 35% stake in Juul Labs, which manufactures JUUL. Altria also has a 45% stake in cannabis company Cronos Group (CRON).

The CDC and many organizations have been very vocal about the potential harm caused by e-cigarettes and vaping. They’ve mainly criticized rising usage among teens and young individuals. According to the CDC, the number of young e-cigarette users surged by 1.5 million between 2017 and 2018.

Currently, there’s no proof establishing the harmful effects of vaping products. Some also believe that smoking cannabis is better than tobacco. However, the American Lung Association warns against smoking marijuana because of the risks it poses to the lungs.

Nonetheless, the rising allegations and warnings by reputed organizations and health departments could work against cannabis companies, which have been investing significantly in the vape market.

Companies exposed to the vape market

On its fourth-quarter conference call, Aphria (APHA) indicated that it expects vapes and concentrates to represent about 30% of the Canadian adult-use market by 2021. In June, Aphria collaborated with PAX Labs, a maker of cannabis vaporization devices. Under the deal, Aphria will offer premium cannabis extracts from Solei, RIFF, and its namesake Aphria brand in pods for the PAX Era device and platform. For more information on Aphria’s growth plans, read Aphria’s Strategic Growth Initiatives Drive APHA Stock.

In May, Cronos established Cronos Device Labs, a research and development center. This center will innovate vaporizer products for cannabinoid applications. In July, Cronos signed an agreement with Heritage Cannabis Holdings. Under the agreement, Heritage will provide cannabis extracts and services for vaporizer devices for the Canadian market. Altria’s investment in Cronos will also facilitate its growth in the vaping market.

Canopy Growth (WEED) (CGC) is expanding into the US vaporizer market with its recently announced distribution agreement with Greenlane Holdings. Under the partnership, Greenlane Holdings will distribute Canopy’s vaporizers. In 2018, Canopy acquired Storz & Bickel, a maker of medically approved vaporizers.

Tilray (TLRY) aims to grow in the hemp vape market via three subcategories. It said on its second-quarter earnings call that it would distribute its vape products as disposable vapes, interchangeable 510 thread, and cartridges that fit into the proprietary delivery systems made by others.

With Canada set to legalize cannabis vapes, beverages, and edibles this fall, any unfavorable news about vaping could affect cannabis companies’ growth prospects. The FDA is closely watching the vape market. So far, it has instructed four companies to remove 44 products. To learn more, read FDA Raids Vaping Products, Gets Them Off Shelf.

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