Possible L.A. vaping ban could be ‘extinction event’ for some marijuana firms, California industry executives say

A yearlong ban on all cannabis vaping sales introduced this week by a Los Angeles City Council member has many in the industry fretting over the future and scrambling to head the motion off before it becomes law.

If the city does enact the proposed ban, that could lead to tens of millions – if not hundreds of millions – of dollars in lost sales and useless inventory that’s already in stock, several executives told Marijuana Business Daily on Friday.

It could also spur other municipalities to follow suit.

“It could quite possibly represent the death of the regulated industry,” Kenny Morrison, the president of the California Cannabis Manufacturers Association, said of the proposed Los Angeles vaping ban.

Morrison, a longtime edibles maker and CEO of Venice Cookie Co., said a ban by the city council would have enormous ripple effects for the entire legal cannabis supply chain in California, given the size of the market and how important it is to many companies’ bottom lines.

“Not only is it going to put a bunch of vape companies out of business and have a chilling effect on capital markets, but it’s also going to have a chilling effect on non-vape companies that want to enter the regulated space as well,” Morrison predicted.

“It will represent such poor judgment that it’ll have a chilling effect that goes far beyond vape companies. I think it will affect all regulated cannabis companies.”

Status and support unclear

The new motion is part of a nationwide reaction to the vaping illness epidemic that has claimed at least 13 lives and hospitalized more than 800 people in the United States.

There have been mixed signals from the industry on whether the motion – introduced by Los Angeles City Council Member Paul Krekorian – will receive enough support from other council members to become law.

The move follows a vote by the Los Angeles Board of County Supervisors to ban flavored e-cigarettes in unincorporated parts of the county, and a call by City Attorney Mike Feuer for the city of Los Angeles to do the same.

The industry already is organizing to shoot down Krekorian’s proposed ban.

A coalition of MJ companies hired a lobbyist to combat Krekorian’s motion, said Jerred Kiloh, president of the United Cannabis Business Association.

Virgil Grant, who owns several licensed MJ shops in Los Angeles, predicted Krekorian’s motion will “hit a wall” and not become law.

“Krekorian loves to jump out there with these frivolous bills,” Grant said, suggesting (like Kiloh) that the council member is standing alone on the issue.

But the idea has at least some support on the council, said Adam Spiker, the executive director of the Southern California Coalition, a cannabis trade group that Grant also co-founded.

“It’s got traction. Yes. Very concerning,” Spiker said Friday, after having spoken with several council members.

“The city council in L.A. sees a problem, and they see Massachusetts do a ban, they see (the California Department of Health) recommend not (vaping). … It’s a bit knee-jerk, but it’s also pretty logical” from the political standpoint of elected officials, Spiker said.

The timing on when such a ban may occur is unclear.

The motion itself is pending before a council committee, but Spiker said the council could easily convene an emergency hearing and push the ban through quickly if it wants.

“I don’t know what the mayor’s position is on it, so we’re all just speculating here. The clock was started with the Krekorian motion, but the next clock is how quickly the city attorney drafts something,” Spiker said.

“They could turn it around pretty quick, but I bet something like this is going to take a couple weeks.”

Possible industry fallout

If the city of Los Angeles enacts Krekorian’s proposal, that will lead to an immense financial hit for the overall legal industry, several MJ business executives said, and it would almost certainly bankrupt many vaping companies.

“It would completely destroy our vaping business,” said Patrick Ersig, CEO of Long Beach-based Ocean Cannabis Co. (The Long Beach City Council is already considering banning flavored e-cigarettes.)

“I think it’s probably the most counterproductive thing this council could do, because … banning legal, regulated vapes would give a huge boost to the black market.”

UCBA’s Kiloh, who also owns Los Angeles retailer The Higher Path, estimated disposable vape cartridges and pens make up about 35%-40% of all marijuana product sales in the city, and noted that vaping is immensely popular with tourists.

“When you take 35%-40% of our revenue away, I don’t know if it’s going to transfer to flower or other products,” Kiloh said.

“You ban that, and if that’s currently 30%-40% of the market … that’s hundreds of millions of dollars in losses.”

Kiloh also warned that if the city passes Krekorian’s ban, then other local governments in California may follow suit.

“This could be an extinction event, and it could really cripple the industry as a whole,” Kiloh said.

Grant said that across his three Los Angeles shops, vape sales make up nearly 60% of his total sales.

“As a brand, California Cannabis, that would be devastating to the investment I just made in my disposable vapes, which is a huge part of the cannabis industry,” Grant said.

If the ban is passed into law, Grant said he has no doubt that plenty of companies will be driven out of business, because there are quite a few that have been established to both target the Los Angeles market directly and only manufacture vape cartridges and pens.

“That would be the death of that business, because that’s the only thing they sell, period,” Grant said.

Zach Pitts, who runs a Los Angeles metro area delivery operation called Goddess Delivers, agreed with Grant.

“L.A. alone is like half the market in California,” Pitts said.

“There are people who set their sights on selling to the L.A. market. So people are going to go out of business.”

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

John Schroyer can be reached at johns@mjbizdaily.com

11 comments on “Possible L.A. vaping ban could be ‘extinction event’ for some marijuana firms, California industry executives say
  1. Jeff on

    These so called regulators should get the facts 1st of all. Vaping is 95% safer then smoking .
    If your smoking what it is intended for with no additives like vitamin e acetate in your vape there’s no issues.
    Cannabis companies aren’t shooting themselves in the foot. Why would they?
    That’s like an alcohol manufacturer putting rat poison in their beverages. It MAKES NO SENSE.
    Plus if they ban vaping or vape products the underworld will gladly step in to sell it. Which is probably why this all started to begin with.

    Reply
  2. Billy DeLyon on

    Here are companies insisting that their business interests should be put above public safety concerns. THIS is the problem with Big Weed. They will push their agenda. Honestly I’m glad to see a vaping ban. This particular delivery method was completely untested before it was unleashed onto an unsuspecting public, especially young people. No testing? No concern for human safety? And then these companies heavily invested in it? They SHOULD be run into the ground and eliminated. Bad business move motivated fully by greed.

    Reply
    • Dave on

      In the regulated environment they ARE tested, therefore suppliers and manufacturers can track any foreign substances in their supply chains with enough time. That’s how the conclusion of illnesses coming from the black market was reached. CA is very rigorous when it comes to using licensed labs. Read something Billy

      Reply
  3. Dwight J on

    IT’S CALIFORNIA. The governor does not care. He is too distracted with impeaching Trump. Black market is going strong. Weedmaps is advertising more unlicensed shops with counterfeits. Don’t believe me? Call them undercover and watch them pitch you on. A listing.

    Reply
  4. Rennie Allen on

    Extinction level event for an industry that kills people is a good thing. Since THC is the active agents that is causing the lung damage and deaths, I predict that states that have legalized eill begin repealing.

    Reply
    • Ethan Rubendall on

      Whoa. This industry does not kill people. Its the bad players operating outside of the law the have brought this about. In fact, THC is not what is causing the problems, it is unsafe additives being used by the unregulated market to cut the THC, much like other drugs are cut to increase profits. There will not be repeals, if anything regulation will crack down, as it has proven more effective than prohibition ever was in the first place.

      Reply
      • Billy DeLyon on

        There is no proof that only black market producers are to blame. So why do you play it that way? Because you are invested in the myth that “Permitted companies=good players/ unpermitted =bad people”. But that is bullshit in every aspect of the industry including vape cartridges. There is no proof that only black market is to blame. That’s why everybody is pulling away from even the nicotine vapes…because we don’t know. What we do know is that people are dying and becoming permanently disabled. Also…we know that vaping is an unproven, untested way to deliver questionable substances directly into your lungs. I’m sorry if you lose money. You should have seen this coming from a couple years back- like many of us did when we first heard of ethylene glycol being added and lead contamination inherent in many cylinders. Yet those products were gleefully sold to an unsuspecting public in dispensaries that were supposedly medicine to sick people!! Karma?

        Reply
  5. Charles E. Elkins on

    I have never gotten sick from vaping. But, I stress this. I DO NOT BUY BLACK MARKET PRODUCTS. I’m not stupid.
    The reputable company making these vaping products do it under California’s strict manufacturing laws. It’s the bad players. Put them in prison. then why not try something new. Rewarding the companies that follow the rules and do this process correctly. I would love to see the reaction if this was going against real cigarettes or real alcohol. You have so many Americans up in arms would be crazy. Why doesn’t this councilman try to figure out law to stop the bootleggers. Instead of punishing the people that do things correctly. I also believe this councilman has some issues. What he doesn’t understand his law he’s an acting everyone that buys legitimate vaping products. Are going to go to the black market, duh. The Los Angeles city council needs to start using their brain.

    Reply
  6. BARTLEY on

    I applaud the year-long ban in Los Angeles and I hope it passes and sets a precedent for other cities to follow.

    Rule of Thumb: When you sell a product that kills or medically injures your customers, it’s time to pull it off the streets. Period.

    IMHO – These new vaping products are not something we should be selling at all. Because unsuspecting consumers will buy them simply because they think it’s cool to exhale buckets of smoke. Some will die. Some will end up in the hospital. As for the rest — studies of the long-term effects of these new vaping cartridges are medical unknowns.

    There’s nothing cool or sexy about dying or destroying your lung capacity for the rest of your life by inhaling man-made chemicals that smell like bubble gum or vanilla. We need flash mobs to print up and start pasting hundreds of flyers of the unfortunate faces of vaping users that are now living with oxygen tubes.

    Making money by selling these new vaping products to unsuspecting customers is just irresponsible and inexcusable.

    If the manufacturers and retailers don’t like the vaping bans, you’re going to like the negligent homicide lawsuits a whole lot less.

    To the families of those who have been killed by vaping products, I feel your pain and I sympathize with many of you. I lost my father to cancer 22 years ago.

    Reply

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