Unless you’ve lost all access to the internet, you’ve no doubt heard about the vaping crisis. And if you’re involved in the vaping industry or have investments levered toward it, the news seemingly worsens daily. While it’s not a direction association, cannabis investments like Aphria (NYSE:APHA) and Aphria stock suddenly have a dark cloud hanging over them.
Primarily, this is because Aphria, along with Cronos Group (NASDAQ:CRON) and Canopy Growth (NYSE:CGC) specialize in cannabis vaping products. Moreover, federal investigators have found THC as a recurring compound among many of the vaping-illness cases. Therefore, APHA stock suffers a double whammy: optically, the underlying company is involved in both vaping and the broader cannabis narratives.
However, it’s important to note that neither the Centers for Disease Control and Prevention, nor the Food and Drug Administration have identified a single, common culprit. As CDC director Robert R. Redfield, M.D., stated, “All available information is being carefully analyzed, and these initial findings are helping us narrow the focus of our investigation and get us closer to the answers needed to save lives.”
Unfortunately, that hasn’t stopped individual states from taking draconian action. Among the growing number of states that have banned vaping to various degrees, Massachusetts took the biggest step: Governor Charlie Baker declared a public health emergency, banning all vape products for four months. Logically, you can appreciate the risk toward Aphria stock.
Currently, Aphria’s native Canadian market hasn’t suffered from the vaping illnesses to the extent here in the U.S. But if that changes due to increased cannabis-based vaping, APHA stock faces serious trouble. Forget the nuances about THC and CBD: an angry public would scream for big corporate blood.
Aphria Stock Is a Compelling Gamble
No matter how you look at this situation, APHA stock is a high-stakes gamble. If health investigators find that the vaping platform is dangerously flawed, Aphria would lose a major revenue stream. Given the painful state of affairs surrounding marijuana stocks, it’s a revenue stream no one can afford to lose.
But at the same time, Aphria stock is an incredibly compelling gamble for the risk-tolerant investor. While the vaping crisis is piling up a worrying body count, available evidence suggests that the platform isn’t the catalyst.
Again, it’s a curious detail that only the U.S. is dealing with this vaping epidemic: surely, we are not the only ones puffing from e-cigarettes. Yet you don’t hear about a rash of Canadian, British, and Japanese teenagers succumbing to acute lung injuries. Why?
To answer this question, the vaping crisis does indeed have a single, recurring element: regulation (or lack thereof). And this is what may eventually cool the heat against vaping-centric cannabis investments like Aphria stock.
Specifically, the U.S. does not have regulations regarding nicotine content in vape liquids. That means underage users can get quickly addicted to American-made vape products like Juul’s liquid pods.
This policy is quite different in other parts of the world. Recently, Canadian InvestorPlace contributor Will Ashworth referenced his country’s strict policies toward vaping. It’s the same thing in the U.K. and Japan. When you think about it, it’s crazy that we don’t follow suit.
Yet this distinction is important when assessing APHA stock. As I mentioned about Canopy Growth, Aphria also has an opportunity to exonerate vaping. If they successfully distribute cannabis-based vape products with no ill effect to Canadian users, we have our true culprit: lack of federal standards and regulations.
Beware the Public Outcry
Before I close this story, I’d like to remind readers that the vaping issue wasn’t always so one-sided. For example, professor Karl Fagerstrom stated that nicotine may not be so addictive after all. Fagerstrom blunted stated, “There is very little to no evidence for the abuse of nicotine when not delivered in a tobacco vehicle.”
Or consider the words of Dr. Paul Newhouse, director of Vanderbilt University’s Center for Cognitive Medicine. Newhouse’s research indicates the potential use of nicotine to combat degenerative diseases. He stated:
Nicotine doesn’t appear to enhance normal people, but in people who show some degree of cognitive impairment, nicotine appears to produce a modest but measurable effect on cognitive function, particularly in areas of attention and, to some extent, memory.
I mention these quotes to reinforce the point that we don’t know chemically what’s driving the vaping crisis. However, scientific and medical research suggests that the vaping platform could get a reprieve.
That said, Aphria stock must endure the present public outcry. And unfortunately, it doesn’t matter what I say or how much evidence I forward: people are people and panic sometimes gets the best of all of us.
Therefore, APHA stock is a risky play, no doubt about it. But there’s a chance that broader emotions will settle down and governments will react rationally. This is the reason why Aphria stock is simultaneously dangerous and alluring.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.