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Marijuana Industry: Viridian's President Explains Why He's Concerned About The Vape Sector

December 18, 2016 8:53 pm
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Benzinga recently had the chance to talk to Scott Greiper, founder and president of Viridian Capital Advisors, one of the world’s largest financial and strategic advisory firms for the cannabis industry.

Talking about sectors attracting the most capital within the industry, Benzinga asked about sectors to avoid.

“This industry is pretty much of a rising tide; it lifts all boats. So, I don’t know about avoiding [a particular sector],” the firm’s founder responded. “One of the sectors that we have some concern about, competitively, is the vape [or vaporizers] sector.”

“When you look at the typical vape, it is a product that is produced in China, without a lot of quality control or intellectual property behind the manufacturing. They are a commodity in large part,” he explicated.

The Space: Competition And Differentiation

In fact, he continued, there isn’t much product differentiation among manufacturers around the world. In addition, the space is becoming “extremely price competitive, so we’re seeing pressure on margins,” he voiced. “I think the existential threat or challenge to the vape market is what’s happening to the e-cig vape market, where the FDA earlier this year came in and said ‘we are going to regulate the manufacturing of vapes, insert quality controls in manufacturing and ISO standards.’ This crushed and put a chill throughout the e-cig market, because they were operating with no standards and no regulation.”

Regulations And Concerns

Regulation of this kind will eventually reach the cannabis vape market, Greiper supplemented. “The concern is generally around quality control and manufacturing practices, and specifically around leachability and extractability. This means that, as a vape heats up the oils in the cartridge in the vape (whether it’s flavored nicotine for an e-cig vape, or its cannabis oil, CBD oil, in a cannabis vape), there’s some concern that the heating elements are also heating up the plastic cartridge and the metal container in the vape. So, you might be inhaling heated plastic or metals.”

“There’s obvious concern about what is that doing to you body and to your lungs,” he went on to explain. “It’s not known yet; the FDA is just beginning to fund those studies in the e-cig market. But, this type of oversight is going to come into the cannabis vape market.”

“So, the combination of competitive factors, pressure in pricing and margins, and the ultimate oversight by the FDA has us concerned about that sector of the market,” he concluded.

A Few Stocks

Companies that make vaporizers include:

  • Vapor Corp (OTC: VPCO)
  • mCig Inc (OTC: MCIG)
  • Hemp Inc (OTC: HEMP)
  • Medigreen Holdings Corp (OTC: RFMK)
  • Newgen Concepts Inc (OTC: VPOR)
  • Neutra Corp (OTC: NTRR)

Liked this interview? Now check out our conversation with Blues Traveler's Brendan, who shared the story of one of his best joints ever, which he smoked with Metallica, Neil Young and Marilyn Manson.