Here Are the Companies Poised to Grab Lost “Vaping” Profits

We’ve talked before about the “vaping crisis” – a kind of lung syndrome sickening and, in some cases, killing, users of vaporized cannabis and nicotine. Health officials haven’t made much headway in definitively isolating a cause since we last spoke in September.

So far, it seems that illicit, black market products are making people sick, but the crisis is beginning to weigh on the legal market.

For instance, in Colorado, vape products accounted for 19.4% of total cannabis sales on Aug. 23. But they plunged to just 12.4% in only four weeks, on Sept. 23.

But nature abhors a vacuum – and markets don’t much care for ’em, either. It’s only natural that support is coalescing around other lucrative cannabis market segments, opening up more diverse opportunities for investors…

The Perfect Replacement for Vaping

One of the reasons people chose vaporizing cannabis is to avoid the well-documented negative health effects of inhaling burning plant matter – “flower,” in the lingo of marijuana culture.

The same motivation leads people to cannabis edibles, where the active ingredients – be it THC, CBD, CBN or a combination thereof – are absorbed through the gastrointestinal tract. The psychoactive effects can be considerably more potent, too, in most cases requiring a far lower “dose” than one would need if vaping or smoking.

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Edibles – which in this case includes “drinkables” (beverages) – are a good introductory product for people who are new to cannabis, but they are even better products for those who want to stop using vaporizers.

Now, it’s difficult to say definitively if the vaping crisis will increase edible sales directly; correlation doesn’t imply causation, after all. Increased access, better products, and more consumer education about the products are all reasons edible sales could increase.

Canada will launch vape products in mid-December, which isn’t ideal, considering what’s happening in the United States. You can be assured that our neighbors to the north are watching this issue closely, and it is weighing on the minds of Canadian cannabis enthusiasts. Without being able to identify what exactly is causing the sickness and deaths, everyone needs to have their guard up.

Even if vaping sales slow for the time being, it’s not like cannabis enthusiasts will completely stop. And despite what you may have heard on the news, it’s highly unlikely vaping problems will derail the whole industry or even slow the march toward U.S. federal legalization.

What’s more, users will buy things like pre-rolled joints, flower to smoke out of bongs, and edibles. And early data shows edible sales have climbed in four states, while vaping sales are down in those same four states.

From the time the first vaping-related death was reported on Aug. 23 to Oct. 6, edible sales as a part of total cannabis sales increased in Colorado, Nevada, California, and Washington.

In Canada – which, as a huge legal cannabis market, is critical to investors – edibles are poised for a breakout, too…

The Great Canadian Cannabis Cola Rush

Companies in Canada are racing to get food and drinks infused with THC and CBD on the shelves in dispensaries by mid-December.

This will open up a whole new revenue source for firms that can execute on this golden opportunity. Two firms I know are collaborating to get in position do just that.

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I’m talking about the Truss Beverage Co. – the joint venture between Molson Coors Brewing Co. (NYSE: TAP) subsidiary Molson Coors Canada, and Hexo Corp. (NYSE: HEXO). Truss will have two CBD-infused beverages rolling out that are infused with 10 milligrams of CBD each. Beverage Daily reports that 80% of the beverages in Truss’ product line will be infused with CBD, THC, or both, all sporting “low- to mid-level doses.”

In its own words, Truss hopes to be “one of the first on the playing field” as Canada’s cannabis beverage market kicks off. Molson estimates the cannabis beverage market could be worth anywhere from 1.5 billion Canadian dollars to CA$3 billion ($1.14 billion to $2.27 billion) in the medium term, and the first mover will have an enviable edge.

Between now and 2020, Canopy Growth Corp. (NYSE: CGC) will roll out a CBD-infused cucumber sparkling water, as well as a psychoactive ginger ale – just two of the 16 new infused products Canopy unveiled at an Ontario tasting event last month.

Cowen’s noted cannabis analyst, Vivien Azer, told Yahoo Finance Canada that she expects the first licensed producers to mimic the look and feel of established sport drinks, sodas, and alcoholic beverages in the early stages of the market, and “until we see where consumer preferences settle out, I think there is room for all of the above.” The way I see it, that’s confirmation that the first to move in will have a hefty advantage in this space.

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