The epidemic of E-cigarette or Vaping Product Use-Associated Lung Injury (EVALI) is having an adverse effect on legal sales of cannabis vape products, with a recent Freedonia Group study projecting demand for vapes to be the slowest growing of any cannabis delivery format through 2024. Meanwhile, cannabis vaping products are expected to cede share to other delivery formats – such as edibles and concentrates – as the availability of these products increases in legal states.
While EVALI has been linked to use of black-market cannabis vape products containing vitamin E acetate, a recent CDC report focusing on cases in Illinois found that a small share of patients showed no evidence of cannabis use, suggesting that nicotine vape products may also be a culprit. As federal and state regulators and media reports continue to warn of the health risks of vaping, public perception of the delivery method as a safer alternative to smoking is becoming diluted.
Despite these challenges, a new Freedonia Group study projects legal sales of cannabis vaping products to rise almost 11% per year to $5.2 billion in 2024. “While recent news stories about the potential link between EVALI and THC-infused e-cigs may cause some consumers to avoid vaping,” says Carolyn Zulandt, author of the study, “they are unlikely to deter most regular users of cannabis-based vaping products.”
“In other words,” says Zulandt, “concerns about EVALI will most likely limit some THC vaping product sales in the near term, but are unlikely to cause a major blow to the industry, especially due to a lack of conclusive evidence for a direct link.”
Who uses cannabis vaping products?
More Americans support cannabis legalization than ever before. For example, a consumer survey conducted by the Freedonia Group in 2019 found that 61% of US consumers have used cannabis for medical purposes in the last 12 months and 44% used it for recreational purposes.
Vape products are popular among cannabis users because vaping THC is immediately effective, discreet (e.g., minimal odor), and vaping in general is widely viewed as both safe and hip, particularly among Gen Zers and Millennials – who generally view cannabis more favorably than older consumers.
A survey commissioned by the American Society of Clinical Oncology found that 23% of US cannabis consumers primarily use vape pens for delivery; 18% reported using vape cartridges; and 18% reported using vape oil – with men and younger consumers (under 45 years old) using cannabis vape products more intensively than women and older generations.
Legal market growing pains and building consumer trust
A 2019 consumer survey by Simmons found that 42% of US consumers feel that not enough thought has gone into safety regulations for the cannabis industry. Meanwhile, black and gray markets thrive in even the most developed legal markets – such as California and Colorado, where some state-licensed cannabis producers reportedly divert products to underground channels. Because these products bypass regulation, they are not being tested for contaminants such as mold and heavy metals in accordance with the law, and are thus not acceptable for consumption by the standards of the state.
Moreover, legally made vape oil that ends up on the black market may be watered down with substances such as Vitamin E acetate – the alleged source of EVALI – to stretch product sales further.
The prevalence of black and gray markets poses a number of challenges for legal markets to flourish. Importantly, it causes confusion about what is legally allowed, but it also leaves to uncertainty the safety of products as they pass through both licit and illicit supply chains.
However, as these legal markets continue to develop and expand access to cannabis – and more states pass recreational marijuana laws, as expected – these growing pains will abate and consumer confidence will rise.
EVALI cases decline, but concerns remain
While the number of new cases of EVALI has decelerated sharply since peaking in September 2019, it continues to grow. The key to ending the crisis and restoring public confidence in cannabis vaping products largely falls on lawmakers to ensure that the regulatory frameworks of these markets are functional and sound, and on licensed businesses to maintain compliance with the law.
In addition, consumer education about the benefits of legal cannabis channels and the risks of the black market is needed to support legal markets. Nevertheless, even with education, price-sensitive consumers may still go to the black market for their cannabis needs. By some estimates, for example, three-quarters of all cannabis sales in California are made via the black market. That’s due to the higher cost of legal products compared to illegal ones in the state, which taxes marijuana sales at a higher rate than any other legal state. Hence, increasing consumer accessibility to affordable cannabis products that are tested by accredited facilities and certified safe will be central to growing legal markets and mitigating the negative publicity around cannabis vaping products.
Peter Kusnic writes industry studies for business intelligence firm The Freedonia Group. Focusing on consumer/commercial markets including cannabis in North America, he also covers e-commerce, packaging, security, smart homes, and a number of other topics. He holds a BA from University of Pittsburgh and an MFA from University of North Carolina Wilmington. Peter can be reached at [email protected]
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