Will the Vape Crisis Continue in 2020?

The Centre of Disease Control and Prevention has updated its stance on E-Cigarette and Vaping Associated Lung Injuries (EVALI), stating that it is no longer advising people to refrain from all vaping products.

When we last checked in on the Vape Crisis in October, it had spread to 46 US states, leading to more than 850 reported cases and 12 deaths. The disease primarily targeted men in their late teens to early 20s, with all victims reporting heavy usage of nicotine or THC vaping products.

The symptoms reported by sufferers included shortness of breath, chest pains, nausea, and fatigue and fever. Patients typically sought medical attention after experiencing difficulty breathing, before subsequently having to endure a lengthy stay in hospital, with more severe cases requiring the use of ventilators and other intensive care equipment to treat.

Although investigations and data collection are ongoing, it appears that most, if not all, of the reported cannabis-related cases so far stem from products sourced from the unregulated criminal market. Cannabis Trade Federation CEO, Neal Levine

Part of the issue is the medical community's inability to conclusively identify the root cause of the disease, although one potential candidate that has been identified is Vitamin E Acetate—which is often used as a volumizing agent by black market vendors—and was singled out by the Centre for Disease Control and Prevention (CDC) as a "very strong culprit" for vaping-related lung injuries.

This view was also echoed by the chairman of the ISO Committee on Vaping Standards, Dumas de Rauly, who argues that "all of the patients are saying they bought it off the street."

"They didn't buy it in legal, regulated environments. This is just basic math. … We have substantial data that shows that these products and these vaping illnesses come from the black market."

"The culprit here is the black-market product. It's not the cartridge, it's not the hardware, it's not the regulators. It's the black market," de Rauly said.

From Crisis to Cataclysm

Unfortunately, the situation has only become more dire since then, as legal vape revenues have continued to plummet across the US.

 In fact, the latest data compiled by BDS Analytics and Arcview Market Research suggest that the US cannabis industry experienced a staggering $41 million decline in vape sales by the end of 2019.

This is a significant contrast to 2018, when legal vape sales across the markets totalled more $1.6 billion. At that point, the vape market was expected to reach $2.5 billion by the end of 2019, before eventually growing to $10.6 billion by 2024.

The outbreak of illnesses related to certain additives in THC vaporizer cartridges makes it clear that it is imperative that we move towards regulation and legalization in every state in this country. The overwhelming majority of cases related to these additives were from products purchased on the unregulated market, where sellers are incentivized to make the most money they can, as quickly as possible, regardless of what that means for the health of their customers or the quality of their products. National Organization for the Reform of Marijuana Laws Executive Director, Erik Altieri

The sharp decline in sales—which reached an all-time high of $160 million only months before in August 2019—was attributed to the ongoing fallout from EVALI, as the number of hospitalisations rose from just 850 in October to more than 2,561 cases by the start of 2020.

The confirmed death toll has also increased from 12 to 55, although the CDC believes the actual number could be much higher, as there are a number of deaths currently under investigation that may also be attributable to the EVALI outbreak.

According to the CEO of Arcview Market Research, Troy Dayton, the latest data released by the company, "is incontrovertible; consumers want to vape, but want to do so safely."

"The fear of vaping illicit, dangerous products has put a damper on this segment of the cannabis industry."

"It is incumbent upon both the federal and state governments to put into place a regulatory regime that protects consumers and advocates for highly-regulated, third party-tested concentrates," Dayton said.

This was also echoed by the Managing Director of BDS Analytics, Tom Adams, who argued that the Vape Crisis underscores the urgent need to make recreational cannabis legal in the US on a federal level, as it would allow for the introduction of a robust regulatory framework that could protect consumers and further erode the influence of the black market.

Get the Latest Marijuana News &
Content in your Inbox!

All your support helps The Green Fund keep writing content for all you
marijuana enthusiasts and potential pot stock investors

"Vapes have not just been the legal cannabis industry's fastest-growing major product category, but also the focus of some of its most creative product-development and marketing initiatives," Adams said.

"The popularity of vaping is central pillar of our forecasts of the future growth of cannabis sales, so it's crucial for cannabis industry professionals to understand the impact the vape crisis will have on the market, and how to best adjust business strategies in its wake."

The decline in consumer confidence has also caused several pot stocks to take a battering, including KushCo Holdings (OTCMKTS:KSHB), which recently reported a sequential decline in revenue for the first quarter of 2020. The company only managed to record sales of $35 million during this period, compared to the $47 million in revenue generated over the course of Q4 2019.

The CEO of KushCo, Nick Kovacevich, addressed the loss in a statement to shareholders, explaining that the decline in revenue was expected due to the widespread industry slowdown caused, "in large part by the black-market vaping crisis".

Apparently, a significant amount of the ancillary cannabis company's wholesale customers—who sell KushCo's range of cannabis vaporizers—began reducing their orders in response to the onset of the EVALI Crisis, which left many retailers concerned they would be stuck with unsellable inventory in the event of a total regulatory ban.

What Happens Next?

At this point, it's still not entirely clear how the Vape Crisis will shake out in 2020 and beyond. However, there are a number of important factors which will play a substantial role in determining how the market responds.  

The first, and most crucial, element to consider is the eventual findings of the CDC's research into EVALI, as the results may either exonerate or further implicate the legal vaporizer industry.

Although, researchers from Arcview and BDS Analytics have stated that this may end up having a positive knock-on effect either way, as consumers who previously purchased vaporizers from the black market could now be motivated to switch to legal products instead.

In theory, it should promote the legal market, but if you don't have very aggressive education behind these products, a good portion of the population doesn't see the difference. PI Financial Research Analyst, Jason Zandberg,

The Director of Marketing Relations for the National Cannabis Industry Association, Morgan Fox, believes that the market will see sales stabilize soon, as consumers increasingly realize that the outbreak of EVALI is largely the result of illegally purchased products.

"But, it will only be sustainable if state and federal lawmakers start treating the industry fairly so that it can offer competitive prices for these products," Fox said.

 "It's really unfortunate that conscientious, regulated providers are taking this financial hit in the market, especially considering it was onerous financial burdens making it difficult to displace the illicit market that contributed to this outbreak in the first place."

"That being said, it is incredibly fortunate that, for the most part, policymakers seem to have realized that this issue is coming almost entirely from the illicit market and do not appear to be pursuing misguided total bans of regulated vaping products any longer."

State lawmakers are also expected to play a significant role in deciding how the Vape Crisis plays out, as any legal reforms made to address the issue could set the tone for future legislative changes.

This can already be seen in Massachusetts, where Governor Charlie Baker launched a failed attempt to enact a state-wide vaporizer ban in late 2019.

Only a few months later this was followed by an announcement that the Governor of New Jersey, Phil Murphy, had signed a bill into law that will ban flavoured vaping products in the Garden State.

"As governor, I am first and foremost charged with protecting the health and safety of our people. Research shows that flavoured electronic smoking devices and products, such as mint, candy, fruit, and chocolate, are extremely appealing, especially to children," Murphy said.

While this may not seem like a big deal, it was actually a watershed moment for the vape industry, as it is the first permanent product ban put in place since the EVALI epidemic began last year, although several other states have also issued a temporary halt on vaporizer sales.

The ban is set to take effect in New Jersey on 20 April, leaving vape store owners with little time to clear out excess inventory, just as many retailers feared. As a result, the decision has attracted considerable criticism, particularly since vape store owners claim the law does nothing to address the black market, which is most likely the real cause of EVALI.

Earlier this month the US Food and Drug Administration (FDA) also announced that it has issued a ban on fruit and mint-flavoured vapes due to their extreme popularity with young people, although tobacco and menthol products will be exempt from the crackdown.

The FDA's decision comes amid concerns that the Trump Administration may soon decide to step in and issue a complete ban on vaporizers at the federal level, which was originally proposed in September 2019. However, the White House has repeatedly delayed issuing its final ruling on the matter following intense lobbying from the tobacco industry.

Get the Latest Marijuana News &
Content in your Inbox!

All your support helps The Green Fund keep writing content for all you
marijuana enthusiasts and potential pot stock investors

Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

There is 1 Commentin this post

Leave a Reply

Your email address will not be published. Required fields are marked *