Cannabis legalization is a vital topic in the US. With the 2020 presidential election heating up, many investors are waiting for the US stance on legalization. Other countries are moving forward with their cannabis dreams. Read Cannabis: While the US Waits, the World Opens Up. Meanwhile, vaping related deaths continue to rise. Will vaping concerns kill the US cannabis dream?
More vaping deaths
Previously, we discussed how vaping is causing severe health issues. Vaping gained popularity as an alternative to smoking. Notably, vaping users increased from 7 million in 2011 to 35 million in 2016. Looking at the demand, it isn’t surprising that Euromonitor expects the number of users to reach 55 million by 2021. However, recent deaths and severe illnesses caused by vaping devices threaten the vaping business.
The first death caused by vaping devices was in Illinois in August. Since then, vaping devices could have caused four more deaths in Oregon, Indiana, Minnesota, and California. Vaping illnesses have risen to 450 possible cases in 33 states. The CDC and FDA have already issued warnings for people to stop using vaping devices until more information is available.
What’s vaping?
Vaping involves inhaling the vapor from an e-cigarette device. The device contains a liquid that needs to be heated. The liquid could contain nicotine, marijuana, or other drugs. Recently, I discussed how e-cigarette maker Juul is engulfed in an FTC and FDA investigation. According to health officials, vaping device makers might be using misleading marketing strategies to attract youth. Currently, we don’t know much about vaping’s long-term effects. However, some users have experienced severe lung-related illnesses. Recently, Health Canada issued a statement and warned people about vaping risks. To learn more, read Vaping Risks: Health Canada’s Warning, US Reports More Cases.
Concerns for cannabis investors
I think that vaping could be a concern for cannabis investors. None of the vaping devices are directly linked to any company. However, traces of THC (tetrahydrocannabinol), the psychoactive compound in vaping devices, could be a concern. Some patients reported that they had been vaping THC.
Also, a Fox News article stated that New York investigators identified an ingredient called “vitamin E acetate” in 13 patients’ cartridges. The vitamin might be used to thicken marijuana vape juice. However, vitamin E acetate is dangerous when it’s heated and inhaled.
How will vaping impact cannabis players?
Major cannabis companies are preparing for the next phase of legalization. Canada will hit the second wave of recreational marijuana legalization next month. The country will legalize cannabis edibles, cannabis-infused beverages, extracts, and various other products. Stay with us for the latest updates.
Many of the companies have also shown interest in the vaping business. Over time, vaping gained popularity. Health Canada also recommended vaping over tobacco smoking.
Cannabis players and the vape business
Aphria (APHA) wants to diversify its consumer base after Canada legalizes vapes and concentrates. The company aims to gain from the vapes and concentrates business, which it expects to capture 30% of the Canadian adult-use market by 2021. Aphria also partnered with PAX Labs in June to introduce a broad portfolio of vapes and concentrate products. The company plans to have PAX pods for medical patients and recreational adult-use. However, the plan depends on whether cannabis extract sales for vaporization will be allowed under the amended Cannabis Act. Aphria stock has gained 8.4% in September and 19.3% YTD.
OrganiGram (OGI) also plans to expand into a new facility, which will produce vape pen products. OrganiGram’s management told BNN Bloomberg, “We think the vaporizer market will be the second-biggest market next to dried flower in the short term and the biggest driver to get new consumers in the space.” As a result, the company is developing more vape products. The stock has gained 15.6% in September. However, OrganiGram stock has lost 37% YTD.
Canopy Growth (CGC) (WEED) also stepped into the vaping business. The company made a distribution agreement with Greenlane Holdings. Greenlane will help distribute Canopy Growth’s vaporizer in the US. Canopy Growth manufactures its vaporizers through its Storz & Bickel vaporizer business in the US. The company didn’t perform well in its recent quarter. Advancing into the vaping and hemp business could help improve Canopy Growth’s profitability. The stock has gained 16.3% in September and 2.0% YTD.
The Horizons Marijuana Life Sciences ETF (HMMJ) tracks the North American cannabis sector. HMMJ has gained 6% in September.
What next?
So, while a positive expansion is on the way, I think that vaping concerns could impact cannabis players. Previously, I discussed why the vaping business might not be a gold mine for cannabis players.
Also, more states are inclined to legalize cannabis. Minnesota is stepping up in favor of legalization. Some presidential candidates support federal cannabis legalization. More countries are opening their doors to marijuana legalization. Will health officials’ concerns challenge the cannabis legalization policy in the US? Stay with us for the latest cannabis updates.