Here’s some good news for investors in vaping stocks. The U.S. Centers for Disease Control and Prevention (CDC) recently admitted that the rash of lung injuries that started in the summer of 2019 were linked almost exclusively to illegal marijuana vapes, not legal nicotine e-cigarettes.
According to the CDC, just one in six of those with vaping-related lung injuries admitted purchasing tetrahydrocannabinol (THC) vapes from commercial sources. (Source: “Update: Product, Substance-Use, and Demographic Characteristics of Hospitalized Patients in a Nationwide Outbreak of E-cigarette, or Vaping, Product Use–Associated Lung Injury — United States, August 2019–January 2020,” Centers for Disease Control and Prevention, January 17, 2020.)
The report was based on 809 patients in Illinois, Utah, and Wisconsin who provided information on where their THC vaping products came from.
Of the 809 patients, 131, or 16%, said they purchased their vaping products from commercial sources. Still, an illness rate of 16% related to commercial vaping isn’t exactly good for the cannabis industry is it? It’s all in the wording though.
The CDC definition of “commercial” includes licensed dispensaries and pop-up shops, which are illegal in states where recreational marijuana is legal. Commercial stores could also include corner shops and bodegas.
So, that 16% figure could be inflated, since most people probably do not want to admit that they purchased their vaping products from non-commercial, illegal sources.
That could still mean some of the vaping illnesses were caused by purchasing products from licensed outlets. But the true number, which is small, may never be known.
Black-Market Vaping Hysteria Brutal For Legal Vaping Stocks
It wasn’t quite the hysteria of the Salem witch trials, but the panic around vaping that started in the summer of 2019 sent the industry into free fall.
Vaping-related injuries led to blanket bans on nicotine e-cigarettes and a federal prohibition on flavored e-cigarettes (this didn’t include tobacco or menthol).
What were the biggest names behind the vaping scandal?
“Dank Vapes” was the brand cited by 56% of the people hospitalized with vaping illnesses in the United States. (Source: “Multiple brands likely responsible for vaping injuries, CDC says,” The Verge, December 12, 2019.)
Other brands named were “Smart Cart,” “TKO,” “Rove,” “Kingpen,” and “Cookie.” While these vape brands were purchased in states that can legally sell recreational marijuana, counterfeits of some of these legitimate brands are everywhere, making it difficult to determine whether a particular product is real or fake.
Street Vapes Not the Same as Legal e-Cigarettes
It can hardly be a big surprise to learn that counterfeit, black-market weed vaporizers can be dangerous.
First, they are not regulated. Second, they are mainly purchased by those who are too young to legally buy cannabis, or people who live in areas where recreational cannabis isn’t yet legal.
The black market doesn’t have the best history in terms of providing consumers with high-quality products. Tainted bootleg liquor results in deaths every year, and black-market opioids have also led to many deaths.
Back-market vapes may look the same as the legal ones, but illegal vapes typically contain harmful substances. Black-market cannabis products have even been found to contain rat poison. (Source: “The Spice of Death: The Science behind Tainted ‘Synthetic Marijuana’,” Scientific American, April 17, 2018.)
CDC Report Great News for Vaping Stocks
The CDC finally admitting that black-market suppliers, not vaping itself, was responsible for lung injuries is great news for vape stocks.
That’s especially since vaping, and other alternative forms of consuming cannabis that are preferred by younger pot users, have better margins than dried flower.
The highest-profile vaping-related stocks include Cronos Group Inc (NASDAQ:CRON), Supreme Cannabis Company Inc (OTCMKTS:SPRWF, TSE:FIRE) and Aurora Cannabis Inc (NYSE:ACB).
Greenland Holdings Inc (NASDAQ:GNLN), meanwhile, is one of the largest providers of vape products in North America.
Another company associated with vaping is KushCo Holdings Inc (OTCMKTS:KSHB), which also provides packaging and branding solutions.