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.

But the industry is responding to the first crisis, and I’m going to show you what that means for your cannabis investments…

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.

Greg Miller

Executive Director, National Institute for Cannabis Investors

P.S. Do you want to know more about Cresco Labs Inc., Ionic Brands Corp., KushCo Holdings Inc., and 1933 Industries Inc.? If so, you need access to our proprietary cannabis database. With information on these companies and over 180 more, the NICILytics database is a resource you can’t afford to miss when researching which companies to back. It not only covers companies with massive profit potential for investors but also companies smart investors should avoid. To learn how you can get immediate access to this investing tool, click here.


Comments

9 responses to “The Two Huge Issues Facing the Vaping Industry”

  1. Greg, I’m not sure the alternative viewpoint stated is going to have a great impact on the inevitably of stock prices continue the current spiral downward. In only six months, returns on initial investments have dropped almost 40%. This obviously is not the expected outcome in a short term scenario. Seeing how the investments have been in NICI-rated 4 & 5 stocks like CGC and Kushco and TGIFF companies I hope the long term will pay off. Until then, I remain very sceptical of the legwork NICI is pulling.

  2. How high does a risk level need to be in order for an individual to lose their decision making capacity about taking that risk?

  3. Mr. Scott, I support your view. I understand this is a young market with many variables. I do think a paid research service should be able to predict at least a few meaningful gains.

  4. Ok for starters, I have not seen anything put out by Ionic yet explaining to the public and investors that they do not use additives like Vitamin E acetate. Maybe I missed it. All the same, it would probably be a good idea if we could get the platforms like Etrade and the others to put a note on the investor page of each one of the companies that are vape heavy with such an explanation. Because the thing is that people who do not research this stuff for themselves are going to lump cannabis vapes in with everything else. Ionic is in the basement right now and not moving. The media is just as guilty when it comes to lumping things together and making general statements with no regard for investors and it is ridiculous that they can get away with basically printing whatever they want whether it is true or not. The truth is that many members have lost faith in this NICI organization and it’s not getting any better. For example Dionymed. You would think with all of the interviews their CEO has done

  5. One more thing. Since everyone in NICI invests in companies that may be outside their individual membership yet still part of other NICI portfolios, IT would be nice if NICI would make a list of the vape heavy companies that we should hold for now. So it would be helpful if NICI could put together a list and publish it for EVERYONE!!

  6. You did not draw any distinction in this article between THC and CBD and just used the word “Cannabis” whereas one other articles you mentioned it was THC vaped that had the vitamin E issue. Is CBD not vaped?

  7. All my investments are 5 rated they are all down. I see this as a chance to pick up a lot of shares at bargain prices. When this turns around it will be too late and it will happen quickly. I saw they are trying to push the Safe Banking Act ( Fox Business 9/22). I know It’s hard to watch the value go down every day But remember this is Cannabis I am focused on the long game.

  8. As a vape shop owner and manufacturer, I have been following this intently. I do get high level legit info thanks to friends with whom I went to college. Obviously, I can’t compromise their positions, their livelihood, so take this however you want. Big Tobacco is behind this. It starts with the Master Settlement Agreement, on to state issued bonds and the enormous amount of money that is being taken away from Big T companies. They are ruthless and many politicians have been ‘talked to’ by Big T. I’m sorry to be so vague right now but we need to be looking at and studying what their new products are, WHY they are introducing them and why they need to discredit vaping. Follow the money! I hope to be able to explain more soon, but to let out anything I know, what I suppose and why, can be found out with out too much trouble. Start with the MSA, figure out what companies now own what tobacco brands, cigarette brands; move on to what is happening with MSA court mandated payments, state bonds, etc.
    As soon as I can, I’ll be back with more. There’s more to this than meets the eye and don’t believe everything you see on all media. It’s possible to put these pieces together yourself.

  9. FYI: Just to let you know, I had important info to relate, but I have been censored! The manner they did this was by giving me an error when I tried to post, that said, “Dupicate. It has been determined you already posted this.”

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