Marijuana Business Magazine February 2020

Marijuana Business Magazine | February 2020 46 J ust a few months ago, the marijuana industry was barreling out of the 2010s flush with cash, confidence and immense growth potential, thanks in part to sales of cannabis vape products. But a sudden outbreak of illnesses tied to vape products containing THC upended the industry’s momentum in the second half of 2019. The crisis—involving more than 2,600 hospitalizations and dozens of deaths—forced industry executives to pivot from planning for the new decade to scrambling to contain and survive a health emergency. Today, the cannabis industry ap- pears to have weathered the worst of the vaping crisis, with the number of vape-related hospitalizations declining sharply in recent months. (See chart on page 49). Additionally, vape sales have been edging back up in major markets. (See chart below.) But the health scare—linked to the additive vitamin E acetate that’s used in some THC vaping products—has left its mark on the cannabis industry. It also has transformed the vaping sector in some positive ways, forcing company executives to: • Reassess their production processes. • Vet suppliers and test products more than ever before. • Step up consumer education and communication. • Seek out new technologies to improve manufacturing and help consumers distinguish between legal and illicit products. The crisis also bolstered the legitimacy of cannabis programs in states with legal markets and validated many of their production practices: eschewing chemical additives such as vitamin E acetate, for example. Moreover, the bulk of vape-related illnesses was tied to products from the illicit market, further bolstering the legal cannabis industry’s legitimacy. In short, having a legal market likely saved lives. Looking ahead, the vaping crisis has unleashed opportunities for new tech- nologies and partnerships. Companies are seeking to develop better cartridges, batteries and anti-counterfeiting technol- ogies. At the same time, companies from the product-security and technology realms are reaching out to serve cannabis businesses. The question is, how can the cannabis industry best utilize these developments? In the following pages, we explore the possibilities. After the Source: Headset Copyright 2020 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. June July August September October November December 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% Vape Share of Sales 18.8% 19.9% 19.0% 10.8% 15.6% 17.7% 30.8% 25.1% First vape-related death reported in Illinois 8/23/19 Source: Headset Copyright 2020 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. • •• •• •• •• •• • •• •• •• •• • ••• • •• • •• •• • •• • •• •• ••• • •• •• •• •• •• •• •• •• •• • ••• • •• •• •• •• •• •• •• • •• •• • • •• •• • • • • California Nevada Colorado Washington 14.3% 15.0% 16.9% 24.1% VAPE SHARE OF RECREATIONAL CANNABIS SALES IN 2019 BY MONTH & STATE The vaping crisis that rocked the cannabis industry also transformed companies, spurred more testing and transparency and unleashed new technologies Storm By Omar Sacirbey