The vaping crisis has troubled once white-hot cannabis companies—which may finally offer legal vaping products—with a $10 billion drop in market value.
Four of the biggest cannabis companies, Tilray, Canopy Growth, Aurora Cannabis and Cronos Group—have lost around $10 billion in market value since the CDC launched its multi-state probe into vaping illnesses on August 1st.
The ongoing health crisis in the U.S. have lit more uncertainty for cannabis investors and could negatively impact companies’ sales as Canada legalizes vaping products later this year.
In states that have legalized recreational use, vape demand makes up between 10% to 25% of the market.
Also hurting cannabis stocks: Profitability hasn’t materialized as quickly as expected, says Matt Markiewicz, managing director of The Cannabis ETF, which tracks CBD and THC companies.
While cannabis will likely be a massive industry, these newly public companies are still learning how to deal with Wall Street expectations—and that has been a “painful learning process,” Markiewicz says.
“In the long run, the vaping crisis is just a bump in the road,” says Morningstar analyst Kristoffer Inton, who thinks that the real growth opportunity for cannabis companies is in the underdeveloped derivatives market, such as edibles and beverages.