Stocks fall on vape crisis

By Jonathan Jackson. Published at Oct 8, 2019, in The 420 Report

The share prices of publicly listed vaping companies have been dragged down recently, following the outbreak of respiratory illnesses in the United States.

Read: Will the Vape Crisis Kill Canada's Legalisation 2.0?

There is no direct link between the illnesses and companies selling vaping products, however 800 people falling ill and 16 people dying has the industry under fire.

The Centers for Disease Control and Prevention’s (CDC) recent report on the issue, suggests that marijuana products from the illicit market are likely to be the main culprit of the vaping illness epidemic.

Regardless of blame, stocks in this market have been hard hit.

California-based vaporiser distributor KushCo Holdings (OTCMKTS: KSHB) has experienced a share price decline from US$3.75 at the end of August to US$1.48 as of September 30. The price had edged back to US$1.69 as at 8 October.

Seaport Global lowered revenue expectations for KushCo in 2020 by 14% as a result of the current crisis and by a further 4.5% in 2021.

Vancouver-based Vapen MJ Ventures (CNSX: VAPN) saw its stock price tumble in September from a high of 1.80 Canadian dollars on 3 September to CA$0.82 as of 30 September. It is currently CA$0.94.

Another Vancouver-based company, 1933 Industries (CSE: TGIF) endured a 20% decline in its stock price.

1933 Industries produces THC and CBD products, none of which contain either vitamin E acetate or other additives such as vegetable glycerin and propylene glycol, which have been the cause of several illnesses. Its products are also third-party lab tested.

Looking at KushCo specifically, its vape products account for approximately 70% of the company’s overall revenue.

“We believe the vast majority of these cases are linked to untested vape devices purchased from illegal markets or street dealers,” said the company in a recent investor presentation.

When buying vaping products, it is worth seeking out reputable distributors.

Privately owned MedPharm is a Denver-based marijuana company. Its director of chemistry, Tyrell Towell and extraction told Marijuana Business Daily, “Sadly, people have been hurt or even killed and our approach is to express even more our motto, our beliefs, our mission statement, that we will always provide safe, clean and pure products for adults to consume.”

Proper identification of the causes of the deaths and illnesses needs to be attained before any judgement is passed.

Perhaps if this happens in favour of vaping manufacturers, we will see a full turnaround in stock performances.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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