Washington’s New Cannabis Bill Could Push Illegal Sales – Market Realist

In 2020, Washington state will be strict with its cannabis laws. Since the state legalized adult-use marijuana in 2012, the laws have been very straightforward. The recreational market had been eagerly waiting for the new edibles, vapes, and concentrates products. Canada and some US states have legalized marijuana. However, there are issues with recreational products in Washington.

Washington’s new bill could restrict legal cannabis sales

The excitement among consumers in Washington state came to a standstill. The state decided to put limitations on cannabis products. On January 18, the Leafly reported that Washington lawmakers passed a bill to ban all cannabis concentrates products in the state. The ban comes after reports about psychosis cases after individuals consume products with a higher level of THC potency. THC (tetrahydrocannabinol) is the cannabis plant component that causes the “high.” According to lawmakers in Washington state, a study revealed that cannabis concentrates with 10% or more THC cause psychotic disorders. As a result, lawmakers decided to limit the potency level of concentrates in the state.

Notably, cannabis concentrates are used in vape cartridges oils. We saw the negative effects that vaping had in the US last year. Although the issues weren’t directly linked to legal vape products, the CDC found that the deaths were due to vitamin E oil in illegal cartridges. The vaping dilemma engulfed US markets last year. Big names in the cannabis industry have focused on creating high-quality vape products to address the issue. Canopy Growth (TSE:WEED), Aurora Cannabis (NYSE:ACB), and Aphria (NYSE:APHA) have spent a considerable amount of capital on R&D and developing quality vape products

Current dilemma

The new proposal would ban vape cartridges, dabble extracts, and other concentrated products. Washington state saw 40% of its legal cannabis sales in 2019 from these products. I think that banning the most popular products will take a toll on legal cannabis sales, which also concerns lawmakers.

Leo Beletsky, a professor of law and public health at Northwestern University, said, “If 40% of the market is toward these products and then you ban them, you’d definitely be creating a push towards the black market.” Legal cannabis sales draw a lot of tax revenue. Banning most of the popular products will also push consumers towards the illegal market, which could impact cannabis companies’ sales.

Christine Bryant, the marketing director for cannabis retailer Hashtag, thinks that passing the new bill would impact the company’s inventory. Many CBD concentrates also contain 20% THC.

Leafly also discussed that many industry experts think that producing low potency concentrates will be challenging for producers. In general, concentrates have a high level of potency—up to 100% in some. In order to create low-potency products according to the new proposal, producers will have to dilute them.

The restrictions and the ban could force users to make home extracts, which could be dangerous if the procedure isn’t right.

Consumers should be careful

Before Canada legalized edibles, there were questions about whether edibles are safe cannabis products. As I discussed in Know the Pros and Cons of Cannabis Edibles, many industry experts were concerned that edibles could be lethal if consumed in high doses. It’s easier to control the dose while vaping. Notably, vaping and smoking cause the “high” sooner. Consumers tend to consume high quantities of edibles like chocolates, brownies, and gummies. The “high” with edibles takes longer to kick in, which increases the chance of an overdose. For this reason, Washington state has already restricted the level of THC concentration at 10% in marijuana-infused edibles.

With concentrates, the effect is almost immediate, which causes a potent high and could last 1–3 hours. However, the impact varies from person to person. Usually, concentrates have a 40%–80% THC level. As a result, concentrates are very potent. There are concerns about the side effects despite the health benefits. Cannabis can cause paranoia, anxiety, hallucinations, and panic attacks.

Therefore, Washington state’s concern is understandable. So far, the directions for using cannabis products haven’t been clear. With Cannabis 2.0 products, Health Canada asked producers to follow labeling and packaging guidelines. The regulations stated that companies should clearly specify the THC content. However, quality research is essential to know the exact potency levels. Right now, research isn’t possible in the US without federal legalization.

The new bill could push illegal cannabis sales higher

Illegal marijuana sales have been a concern in Canada and the US. Many cannabis retailers and producers have been losing out of revenue due to rising illicit sales. A Raymond James analyst thinks that many small marijuana companies might go bankrupt this year. The companies might not be able to recover their losses. Washington state could see this problem. If the state passes the new bill, many small retailers will struggle with stored inventory and no revenue. Consumers will move to the black market to obtain products with higher THC levels, which would impact legal sales. Edibles, vapes, and concentrates are among the most popular products. As a result, Canopy Growth, Aurora Cannabis, Cronos Group, and Aphria’s expansion plans include launching these products in the US states as well.

Marijuana companies plan to capitalize on Cannabis 2.0 products’ growth. The cannabis sector had a tough time in 2019. However, Aphria and OrganiGram (NASDAQ:OGI) reported positive profitability in their recent quarters. Although Aphria is a little hesitant about the future and cut its guidance, I think that the company is still in a stable position compared to its peers. OrganiGram stock has risen after its incredible first-quarter results.

In January, cannabis stocks have performed well. As of January 17, Canopy Growth stock has risen 18.0%, while Aurora Cannabis stock has fallen 1.3%. OrganiGram stock has risen 33%, while Aphria has risen 0.96%.

Stay with us to learn more about the marijuana industry.

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