The vaping health crisis is happening at a very bad time for the Canadian cannabis industry.

With pot stocks already down over 40% since the end of the first quarter, news that an Ontario youth has been diagnosed with Canada’s first reported vaping-linked illness while hundreds have fallen ill in the U.S., is further battering the sector.

It’s not clear what’s causing the illnesses or whether they’re tied to nicotine, cannabis or both. As long as that uncertainty persists, so will questions about whether the big bets many Canadian pot companies have made on vaping will pay off.

Canada has taken a staggered approach to legalization, and the first legal cannabis vapes will appear on stores shelves along with edibles and beverages on Dec. 16. Pot companies are optimistic vapes will be the most popular format with consumers, and that they’ll help to boost flagging margins in an industry that’s struggling to become profitable.

Vaping accounts for 24% of the legal U.S. market, according to Cowen & Co. analyst Vivien Azer, and many companies are expecting it to take an even larger share of the Canadian market. Tim Pellerin, general manager of Canada for Pax Labs Inc., predicts Canadian vape sales could reach C$600 million ($452 million) by 2021. [Read More @ Bloomberg]