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October 1, 2019

Vaping Bans Could Cripple Pot Industry

Disclaimer: The writer of this article may have positions in the securities mentioned in this article. The fact they hold positions in securities has had no impact on the production of this article

By Dylan Callaghan

October 1, 2019

The mysterious vaping illness that has killed 12 and had 805 others reporting lung damage. Terrible news, but not a shocker to those who were initially quick to point out that the long term health effects of vaping were completely unknown.

Regardless of what is named the cause, there is nothing to say more issues wont arise in the future.

But this time, public enemy number one appears to be vaping oils infused with THC.

Canadian health officials are saying this scare is wildly counterproductive and they are concerned with the number of people that a vaping ban could push back into smoking regular cigarettes, despite the THC infused products being zeroed in on.

What does this mean for the pot industry?

From a financial standpoint, bans in the industry would be detrimental. It already wasn’t looking good and then all of the sudden people began to get sick.

Vaping products could be roughly 20% of the pot market in Canada. So a sizable revenue stream would vanish for these companies that are already having issues with cash flow and supply.

The downside could be large for Cannabis companies like Canopy Growth (TSX:WEED) and Aurora Cannabis (TSX:ACB).

But the timing might not turn out to be that convenient.

Another wonder is what the ripple effect of this vaping debacle will be…

Will life insurance and health insurance use stricter policies when dealing with vape users?

Will tobacco companies benefit from people abandoning vape and returning to their previous vices such as cigarettes, cigars, and smokeless tobacco?

Regardless of what the outcome will be, lots of tension exists within pot company holders for the time being. A vape ban or increase in incidents would mean a large loss in a future revenue stream for these popular Canadian stocks, and for those not properly diversified, huge portfolio losses.

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Dylan Callaghan

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