There are two issues plaguing the vaping industry, but it’s important regulators understand that each issue is unique…
There are two huge challenges facing the vaping industry right now.
Many people – including regulators – are conflating the two, but they are separate and unique issues.
First, there is a mysterious vaping illness sweeping the country.
Seven people have died, and over 400 have been stricken ill by vape products. Almost all of those illnesses can be traced to the use of illegal vaping products, most of which contain cannabis or synthetic cannabis.
Second, after a long investigation, the FDA has concluded that the e-cigarette industry, which makes nicotine-based vaping products, has not met its commitments to limit the product to former smokers looking for a healthy alternative.
Instead, they have been marketing the products to non-smokers and even children.
There is not a lot the cannabis industry can do about the second problem.
Its products – the ones made by the kinds of legal producers that we might invest in – are already heavily restricted in terms of marketing. Those products are only available in cannabis dispensaries that already ban children from even entering the store.
Regulations and Vaping
KushCo Holdings Inc. (OTC: KSHB) is among the largest vape sellers in the United States, and it has done the most to respond to current issues.
Its biggest move was probably something it had in the works for a while. It announced a partnership with De La Rue, a huge anti-counterfeiting company, to distribute anti-counterfeiting measures to cannabis product producers nationwide.
These products are things like holographic stickers that you may have seen before on licensed merchandise, but also can include other authentication steps.
De La Rue makes 7 billion banknotes every year, and all of them have a variety of anti-counterfeiting measures designed right into the currency.
Micro printing, magnetic ink, coded serial numbers, and other measures can be brought to increase the confidence that a consumer is getting a tested and safe product.
KushCo CEO Nick Kovacevich has also talked about the issue publicly. He’s been appearing in just about any venue that will have him, talking about the importance of avoiding illicit vape pen makers and calling for federal regulation of cannabis vape products.
The company even put out a presentation for media and others to use as they tend to understand these twin challenges. I think it’s among the best explanations of the challenges out there and I’d encourage you to check out KushCo’s investor presentation to learn more.
Tackling the Vaping Issue
Other vape pen companies have focused mostly on the safety of their own products.
Companies like Cresco Labs Inc. (CSE: CL, OTC: CRBLF), Ionic Brands Corp. (CSE: IONC, OTC: IONKF), and 1933 Industries Inc. (CSE: TGIF, OTC: TGIFF) have released statements assuring the public that their products do not have any of the ingredients thought to be behind the vaping illness.
They are also reminding existing and potential customers that this illness is a new one, and people have been vaping legal cannabis products for years with no ill effects.
Private vaping companies like dosist and Heavy Hitters have made similar public outreaches.
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Testing Vape Products
The testing industry is getting in on the issue, too.
Previously, testing companies didn’t bother testing for vitamin E acetate, one of the suspects thought to be behind the current vaping illness.
They didn’t do it because there was no need – legal vape companies didn’t use the product.
It would be like testing beef for traces of peanut butter.
But since vitamin E acetate is now an issue, the testing companies are adding detection of it to their lineups. Some are adding a charge for the test, while others are including it in their standardized pesticide tests.
But either way you, can expect to see packaging boasting of lab-certified, non-vitamin E acetate products on the shelves shortly.
And the industry’s trade association is responding.
The National Cannabis Industry Association put out a statement reinforcing the lack of a link between legal cannabis vaping products and the illness associated with the illicit vendors.
The response may be the most important one in the long run, because it is this organization that meets with policymakers.
The National Cannabis Industry Association is calling for more regulation, and when an industry association approaches lawmakers and says, “please regulate us,” people pay attention.
The Developing Story
Will all of this be enough?
In the end, I think it will be.
Vaping is not entirely without risk or health effects, but the science right now supports a view that the risk is low enough to allow people to make their own decisions.
We’ve seen scares before over a variety of products. As long as the regulators don’t overreach, this crisis will pass.
I’ll be in touch again as more details unfold.
Executive Director, National Institute for Cannabis Investors
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9 responses to “The Two Huge Issues Facing the Vaping Industry”
September 23 2019