Vaping health scare takes toll on cannabis vape firms’ stock prices, but many see longer term opportunity beyond crisis

cannabis vape, Vaping health scare takes toll on cannabis vape firms’ stock prices, but many see longer term opportunity beyond crisis

(For a closer look at the vape segment and a framework to assess the downside risk and upside potential of companies in the sector, check out the latest report from Marijuana Business Daily’s Investor Intelligence.)

State-legal cannabis vape products and the companies selling or distributing them may not be the principal cause of the recent outbreak of respiratory illnesses in the United States, but those firms are feeling the effects nonetheless.

A widespread consensus – which includes some evidence from a recent report put out by the Centers for Disease Control and Prevention (CDC) – is that marijuana products from the illicit market are likely the main culprit of the vaping illness epidemic that has sickened more than 800 people and caused 16 deaths.

However, the crisis continues to cast a large pall over the licensed marijuana industry, affecting vape sales and dragging down the share prices of publicly traded vaporizer companies.

Companies on the defensive as stock prices decline

KushCo Holdings, a California-based ancillary company that distributes vaporizers, has seen its share price decline from $3.75 at the end of August to $1.48 as of September 30. The price had edged back to about $1.75 October 2.

Also September 30, analysts at Seaport Global lowered revenue expectations for KushCo in 2020 by 14% because of the vaping crisis and by a further 4.5% in 2021.cannabis vape, Vaping health scare takes toll on cannabis vape firms’ stock prices, but many see longer term opportunity beyond crisis

Vape products account for approximately 70% of the company’s overall revenue.

To try to stem the fallout, KushCo Holdings, which trades on over the counter exchanges as KSHB, produced an investor presentation specifically to address the vaping crisis, arguing:

“We believe the vast majority of these cases are linked to untested vape devices purchased from illegal markets or street dealers,” the presentation stated.

Reassuring consumers

Other MJ vape companies have also taken proactive measures to bolster their customers’ confidence in licensed products. Yet their stock prices also have suffered.

Vancouver, British Columbia-based Vapen MJ Ventures, which trades on the Canadian Securities Exchange as VAPN, said none of its products contain vitamin E acetate, adding that the “diluting and thickening agents” used in black-market products are not present in any of its offerings.

The company’s stock price tumbled in September from a high of 1.80 Canadian dollars September 3 to CA$0.82 as of September 30. It had edged up slightly to CA$0.92 October 2.

Vancouver-based 1933 Industries (CSE: TGIF) said none of its branded THC and CBD products contain either vitamin E acetate or other additives such as vegetable glycerin and propylene glycol and that all of its products are third-party lab tested.

Its stock declined almost 20% in September.

Greenlane, a Florida-based vaping products distribution firm that trades on the Nasdaq as GNLN, said in a statement its products are safe because of a strong and stable supply chain ensuring it can only work with producers of licensed vape cartridges.

Its stock declined almost by half in September.

Private companies also act

Private companies that aren’t publicly traded also are taking steps to reassure consumers.

Pax Labs, a leading vape industry company that is privately held, said Sept. 11 none of its branded products contain vitamin E acetate and that they are tested according to state compliance.

The San Francisco-based company, which raised a record $420 million in private equity funding in April, also said last week it has formed a health advisory board composed of medical, cannabis research and patient safety experts.

Medicine Man, a private Denver-based cultivator and dispensary company, has halted the sale and destroyed any inventory of vaping products containing vitamin E acetate or propylene glycol, additives that have been associated with possibly causing the respiratory illnesses.

Silver lining?

Legal vape companies are ultimately hoping for a flight to premium products as a result of the vaping crisis.

As consumers are scared off from using unsafe illegal products, they will become better informed and use safer, legal products, some vape companies have said.

MedPharm, a Denver-based marijuana company, produces vaping products that are free of additives.

The natural product approach has remained the company’s guiding philosophy from the beginning, Tyrell Towle, director of chemistry and extraction, told Marijuana Business Daily.

The current crisis has only served to strengthen such an approach, he said.

“Sadly, people have been hurt or even killed and our approach is to express even more our motto, our beliefs, our mission statement, that we will always provide safe, clean and pure products for adults to consume,” Towle said.

MedPharm has not seen any effect on its own vape product sales with its dispensary customers, for example, ordering similar amounts of product as usual, Towle noted.

Even as states and cities move to ban vaping products, however, consumers are likely to return once things settle down, especially if the real culprit behind the illnesses and deaths so far is more accurately identified, Towle said.

“More consumers will become more aware of companies that are not using additives as the rate of cases decreases,” he said.

For more of Marijuana Business Daily’s ongoing coverage of the vaping crisis, click here.

For analysis and in-depth looks at the investment trends and deals driving the cannabis industry forward, sign up for our premium subscription service, Investor Intelligence.

Nick Thomas can be reached at [email protected]

5 comments on “Vaping health scare takes toll on cannabis vape firms’ stock prices, but many see longer term opportunity beyond crisis
  1. jim on

    all the more reason to legalize and then regulate if it is the additives than lose them so far all news about cannabis is it is healthier than tobacco in its pure unaltered state lets hope senate is on board with banking as well

  2. Gary Galleher on

    I’ve seen my “Model Portfolio” decrease by 50%, but I’m IN and HOLDING. Kushco, MedMen , and half dozen selected Cannabis stocks…..”Seed to Sale”…approach. Us old hippies have waited 50 years to get this close to legalization…stay strong, stick to the facts, support State Legalization ballot petitions and then VOTE! Get Cannabis OFF schedule 2. (PS: I suggest everyone watch the “Official” Government anti-marijuana film: Reefer Madness and see how absolutely silly all the Gov. efforts have been, Sadly many of those sentiments are dug in deep. Keep the TRUTH coming. Remember June of 2015 I think it was…The AMA came out and made an Official statement: “After significant study The AMA has determined that Marijuana IS a MED. and does NOT cause CANCER.” (from memory and may not be an exact quote, but the two points are accurate.) America in general have NOT been made aware of this. Repeat it and pound it into public knowledge….Double G.

  3. Seth Tyrssen on

    Get rid of the damn vapes. Since ALL have become suspect, throw ’em all away. Stay natural. Wanna smoke a joint? Roll one.

    • Jeff on

      You don’t have to ban vape. You just need the correct ingredients that doesn’t cause harm by vaping.
      I love weed. Been smoking it for 40 or more years. I’ve smoked vape for the last 3 and never had any issues.
      Vaping doesn’t produce the smell like the old fashioned way does.
      If you live in close quarters to other people(apartment) people don’t get pissed because of the smell.
      Not everyone smokes pot and more people don’t like the smell that permeates from smoking it.
      Have a little respect for people who don’t like it and vape.
      They don’t need to know anyway.
      Next they’ll find crap in flower that’s unhealthy. Just a big ploy because the government can’t make money when everyone quits smoking cigarettes the old fashioned way and can’t quit.

  4. Ron on

    I have been smoking weed for 50 years and never had a problem until I started vaping the flower this past July
    Now my glands swelled up and are very sore. I have quit smoking weed altogether and I am concentrating on healing for the month of October and once well I will return to smoking with my glass pipe. Until further research and protection measures are put in place, I’ll enjoy my Flowers the old fashion way.

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