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  1. New consumers may not differentiate between illicit U.S. vapes and regulated ones in Canada
  2. Euromonitor expects cannabis vape products will make up 10-15 per cent of legal pot sales by 2022
  3. Cannabis companies need to tackle vaping concerns head on, analysts say

Canadian cannabis companies need to band together and assure consumers that regulated vaporizer products will be safe when they reach store shelves later this year, analysts say.

Health officials in Canada are investigating confirmed and possible cases of a severe lung illness tied to vaping products amid a larger outbreak in the United States that has been linked to at least seven deaths and sickened more than 500 people.

Industry watchers say consumers typically do not understand product nuances and may not differentiate between illicit vaping products sold in the United States versus federally regulated ones in Canada, which could potentially deter purchases by new customers – a group that much of the industry is counting on for a revenue boost.

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It is a “strategic error” for Canada’s nascent cannabis industry to be quiet amid negative vaping news, said Shane MacGuill, head of Tobacco Research for Euromonitor International in London.

“This is probably the most critical time I’ve seen in the last five to six years for how vaping is to be perceived. I think this is a real issue for the industry that’s preparing to launch vapes,” Mr. MacGuill said.

“This is a serious moment for the category and needs to have a considered response from producers. The one message that’s absorbed by the public is, these products are dangerous. If it’s just a vacuum, then they’re only hearing one side of this.”

In just four weeks, licensed cannabis producers will send Health Canada newly manufactured items such as vaporizer products and edibles for approval, with expectations they will be available for sale on store shelves as early as December. The industry widely expects the launch of these new products, which will add to the dried flower and oil that is available now, will sharply lift legal cannabis sales and take market share away from illicit sellers.

On Thursday, the Vaping Industry Trade Association (VITA) was launched in Canada to represent vaping industry stakeholders.

Euromonitor, a major consumer market researcher, expects cannabis vape products will account for 10-15 per cent of legal pot sales within a few years.

But very few cannabis companies have made public efforts to allay concerns that potential customers may have about the soon-to-be-launched cannabis vapes, by outlining the safety controls inherent in government-approved products or by being transparent with ingredients.

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“There’s so much consumer confusion right now. Cannabis companies should absolutely be getting ahead of this and broadcasting the importance of quality testing and consumer safety to them,” said Bethany Gomez, managing director for Brightfield Group in Chicago.

Canada’s young cannabis industry has not seen the “hockey stick growth” it initially expected and there is hope these new products will open the floodgates from new consumers who have yet to buy legal pot, Ms. Gomez said.

“If the primary products that are coming to market are driving a lot of confusion and concern among consumers, that could throw a wrench in fourth-quarter growth with this whole mindset,” she said.

“Many licensed producers are not even focused on edibles because they’re putting all their hopes and dreams in vapes.”

While consumers tend to trust government regulated products, their trust in legal markets can be shaken.

“It’s certainly an area that is going to get a lot of attention and focus, and brands need to do a good job at advertising those testing requirements and be really proactive about that, and not sit on the sidelines and hope it all boils over,” Ms. Gomez said.

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Brian Sterling, president of SCS Consulting, said the cannabis industry is being “surprisingly quiet” about what it will do about the vaping-related illnesses.

“Nobody’s prepared to take that heat right now. I think in today’s world you need to be up front and open about it. Wherever you think it’s going to end up, go there,” Mr. Sterling said.

“When you’ve been around business long enough, you really need to be transparent and open about this.”

While more mature industries often respond to negative news in a unified way that focuses on consumer benefits, “I think the cannabis industry has a lesson to learn and maybe take that to heart,” Mr. Sterling said, about the industry’s need to collaborate on the vaping issue.

“I think they need to think about what it is they need to do and how to come together,” he said.

“Right now the industry is behaving very much in silos. The industry is still so fractured that it isn’t able to pull a consistent story together about what cannabis is all about.”

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Some of the early findings in the United States around vape-related illnesses clearly outline the challenges of buying cannabis illegally, said Nathan Mison, co-chair of the National Cannabis Working Group in Canada.

The group has not provided any guidance to cannabis companies about how to broach the topic with consumers as the vape products are not yet in licensed retail stores in Canada.

“The product will have ingredient lists, clear marking, and will have been reviewed by Health Canada in a regulated fashion that will hopefully allay concerns,” Mr. Mison said.

“It’s the responsibility for all individuals to continue to assure the product that will be coming to market in Canada have gone through rigorous testing for quality controls, product testing … and all of that.”

The Cannabis Council of Canada (C3) is “strongly considering” launching an awareness campaign around legal versus illicit cannabis, said Megan McCrae, chairwoman of C3’s board

“The health risks associated with purchasing cannabis products from illicit channels cannot be understated. It is why we strongly support the government regulation of Canada’s Licensed Producers of cannabis,” Ms. McCrae said.

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“It’s obvious that further investigations into the reports emerging from the United States associated with the vaporizer devices are required, and the Cannabis Council of Canada will work closely with Health Canada to better understand the cause of these pulmonary illnesses and what it may mean for Canadians.”

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