Canadian Pot Producers Going Full Bore on Vaping Despite health risks, Competition

Hundreds of new vaping devices are set to hit the Canadian market as early as next month, a sign that emerging health concerns, taxes, and even a provincial ban isn’t enough to deter what some Canadian cannabis producers are hoping will be a big money maker.
Health Canada told BNN Bloomberg that it has received close to 50 applications from licensed cannabis processors who have requested regulatory authority to sell the new classes of pot products. According to the regulator, those applications cover a total of 747 different cartridge-based vaping systems that industry players are hoping to sell when next-generation cannabis product sales begin on Dec. 16.
“There’s going to be a lot of choice for consumers, because all the licensed producers are getting into the vape space,” said David Kideckel, an analyst with AltaCorp Capital Research in a phone interview. “There’s going to be the potential for oversupply in that market, although we won’t know the answer for that for some time.”

That potential comes amid a health crisis in the U.S. where 47 people have died and over 2,000 others have suffered lung illnesses from using cannabis-infused capes sourced from the illegal market. The U.S. Center of Disease Contol determined that the black market vapes contained a vitamin E acetate additive that could coat the inside of lungs like grease and now considers the substance to be a “chemical of concern.”
Health Canada said it is actively monitoring the vaping illnesses in the U.S., and stated it has restricted the type of ingredients that are used in cannabis vaping products.

“These cannabis extracts are not permitted to contain anything other than carrier substances, flavoring agents, and substances that are necessary to maintain the quality or stability of the product,” a Health Canada spokesperson wrote in an email to BNN Bloomberg.
The serge of vaping-related illnesses has led Quebec to opt out of selling vape products when they become available next month, eliminating a major market for Canadian cannabis producers. Meanwhile British Columbia slapped a 20% tax on all vape products, sparking fears the move would exacerbate al already-thriving illicit market.

Still, the Canadian cannabis industry appears unfazed. Vape products and so called cannabis 2.0 offerings such as beverages, topicals and edibles are expected to generate double the amount of gross margin potential for cannabis producers, according to a recent report by Raymond James. Canopy Growth Corp., the largest cannabis company in the world, unveiled its suite of vaping products during glitzy event in Toronto’s Design Exchange on Thursday. Other cannabis producers such as Hexo Corp., Aurora Cannabis Inc., Aphria Inc. and OrganiGram Holdings Inc. have also indicated they plan to have vape products available for sale next year.

Canopy president Rade Kovacevic told BNN Bloomberg in an interview that the company’s lineup of vape devices are produced to abide by top safety and manufacturing standards and adhere to all Health Canada regulations. He added that the devices are the end result of establishing a separate “high-tech” division within the cannabis producer where its R&D staff took dozens of off-the-shelf devices, tore them apart and figured out how to build a complete new product from scratch.

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