The Whole Gamet

The vape crisis has taken its toll in many ways. First and foremost, tainted vape cartridges have sickened thousands and have reportedlycaused the death of dozens.

The crisis has also hit the legal and regulated cannabis industry hard. Companies involved with vaporizers and cartridges have lost significant revenues. Some companies have lost 75% of their market value, almost overnight.

And this all could have been avoided.

While hindsight is 20/20, many industry experts and executives have been privately and publicly discussing the current problems with the regulated industry that gave rise to a powerful illicit market.

In California, the world’s largest market, cannabis is legal for recreational and medical use, yet the black market thrives. In fact, the illicit market is estimated to be over 3-times larger than the regulated market.

Tainted vape products have been sourced to illegally operating dispensaries or delivery services that advertise freely on some popular platforms.

More heinous is that it has been reported that some companies are operating both in the legal and the illegal markets. In a recent article, some state-licensed companies were alleged to be sending some products to the regulated market, and some to the black market.

In one instance, authorities raided a company’s warehouse and seized a number of illicit products, including gummies and vaporizers in the well-known company’s packaging.

It is alleged that cannabis that tested clean went through the company’s licensed facility and into the licensed supply chain. Cannabis that failed the state’s stringent pesticide standards went to the illicit operation and then to consumers.

Pesticides are no laughing matter. While carefully monitored in the legal market, samples of various vape products obtained in illegal shops in Los Angeles had pesticide levels more than 5,000 times the legal limit.

Some samples tested at 5,475 times the legal limit for chlorfenapyr, a mosquito pesticide, and 362 times the limit for myclobutanil, a fungicide that can transform into hydrogen cyanide when heated.

Others contained nearly 35 percent tocopheryl-acetate, the vitamin E oil additive that when heated and inhaled prevents lungs from absorbing oxygen and has been identified by the CDC as one of the root causes of vape illnesses.

All of this beckons the question, why is the illegal vape market flourishing?

There are several answers to this question.

One is accessibility. In many cities across the nation, even in legal states such as California and Colorado, there are no legal dispensaries. Local city councils have opted to prevent these businesses in their jurisdictions, often regardless whether the voters in those areas approved legal cannabis propositions or not.

In other states, such as Alabama, cannabis is illegal, so the black market is 100% of the sales. Accordingly, all the vaping going on in these areas are with black market devices.

But even in places where legal cannabis is allowed and accessible, the taxes placed on regulated products cause many consumers to seek out much cheaper items on the black market.

And this problem will probably only get worse.

Reports state the California will raise taxes on legal cannabis effective January 1, 2020. In announcing the move, the California Department of Tax and Fee Administration (CDTFA) stated that the cannabis excise tax will increase from 60% to 80% on New Year’s Day.

The California Cannabis Industry Association (CCIA) put out a response blasting the move: 

“As California’s regulated market spirals towards collapse from taxes on cannabis consumers, local bans, onerous regulations, slow growth, and a thriving illicit market, we believe that the CDTFA’s decision to increase tax burdens on compliant cannabis operators is counter to developing a safe industry,” the organization wrote.

In order to solve this current vape crisis, four things need to happen:

1. Legal operators must maintain their compliance, stock only legal and tested products, and assure that counterfeit products stay out of the regulated market.
2. Legislators must provide a framework that allows the compliant market to succeed. This would include lowering taxes to a more reasonable level, and cracking down on illicit operators.
3. Consumers must be educated to understand the benefits of legally purchased products and the dangers of the black market. Your health is worth a few extra bucks.
4. Access to legal, regulated products needs to improve. In many areas, there are either no stores or far too few to serve the population.

The legal cannabis industry is still young and going through many growing pains. We need all participants: regulators, operators, and consumers to work toward the common goal of establishing a safe, affordable and accessible market for all.