Covid-19 could cause vape sales to hit the brakes on the product's road to recovery following last year's health crisis.
Doesn't it seem like a more innocent time, when the cannabis industry was worrying about e-cigarette vaping lung injury? Illicit makers of vape cartridges had been cutting vitamin E acetate into the cannabis oil with the tragic side effect that some consumers died.
By February, 2,807 people had been hospitalized for the lung injuries and 68 people died. A result was that an emerging powerhouse of a cannabis category, vaping, was plunged into the abyss of uncertainty. However, as more was learned and it seemed the illicit manufacturers were to blame, vape consumers began to return. Paying for an original, tested brand was a small price to pay to avoid a trip to the hospital.
Now, just as the vape market was beginning to make a comeback, a new study from the Stanford School of Medicine found that vaping was linked to substantially increased risk of Covid-19 in teens and young adults.
"Among young people who were tested for the virus that causes Covid-19, the research found that those who vaped were five to seven times more likely to be infected than those who did not use e-cigarettes," found the report.
So, what does this mean for cannabis companies who were ready to put the lung injury fiasco behind them and welcome back their vape customers?
A new survey by California-based online shopping company Ganja Goddess took a poll of more than 850 cannabis consumers and found a slight decline in the use of vape pens. The company said, "Prior to the start of the pandemic, 61% of consumers selected flower as the primary way they consumed cannabis; 50% selected edibles, 42% vapes pens and 12% tinctures. During the ongoing pandemic, when asked the same question, flower came in at 56% and vape pens at 36%, a 5% and 7% drop, respectively, which supports the notion that consumers are using edibles slightly more often than they did prior to the pandemic. Edibles saw a 1% increase at 51%, while tincture saw a 2% increase at 14% and pills/capsules saw a 3% increase coming in at 13%."
What's Hot in Pot?
According to new data from Curaleaf via Brightfield Group, the fastest-growing product types across categories from March 20-July 29 included:
Capsules & Tablets are up 304.8%
"Other Medicinals" are up 26%
Flower is up 16.4%
Tinctures are up 14.8%
Edibles are up 8.5%
Vapes were not mentioned as a growth category.
Sales Fade
This was further supported by Canaccord Genuity (CCORF) analyst Bobby Burleson who wrote about July cannabis sales in a new report on the industry. He reviewed sales data from Arizona, California, Colorado, Nevada and Oregon. Burleson said, "By product category, flower remained the largest percentage of retail sales in July at 45%, up from 38% in July 2019. Flower sales increased 57% Y/Y in July. After flower, non-vape concentrates (+56%) and pre rolls (+38%) experienced the highest sales growth over July 2019 levels. Vape was the only category to lose share. As a percentage of sales, vape declined from 25% in July 2019 to 19% this past July."
TILT Holdings (TLLTF) , which owns the vape company Jupiter, also reported that its accessory category, which includes the Jupiter sales, declined slightly for the second quarter ending in June. The accessory category for TILT in the 2019 quarter were $31 million, which dipped slightly to $28 million in 2020. While $28 million is a respectable number, to see it dip by $3 million means the consumers are choosing something else.
The bottom line: With some states, like California, and cities, like Chicago, banning flavored tobacco vaping products, the stigma around vaping is not letting up. Plus, new hardware devices similar to Philip Morris' (PM) IQOS, which heats dry material in a device that looks like a vape pen, could potentially disrupt the cannabis vape market in the future. IQOS is not in the cannabis industry, but copycat products are being created. Cannabis consumers could enjoy their flower without the worry of the vape oil. The question will be whether the recovery from the lung injury saga, can bounce back once again following the pandemic. Or, will consumers stick with new form factors now that they've tried them.
