Cannabis Vape Companies Saw Bootlegs Coming — So Why Didn’t Regulators?
If imitation is the highest form of flattery, you’d think Kingpen, a popular California-based cannabis brand, would be positively tickled by the fact that they make one of the most widely counterfeited vape cartridges on the market. But with a mysterious lung disease putting both manufacturers and consumers on high alert, Kingpen’s parent company Loudpack is especially worried. “I think it’s very scary what’s happening right now,” says Danny Corral, Loudpack’s vice president of sales. “There’s a lot of bootleg product that’s going out there and flooding the market and getting people sick. I think that the perception of the product is getting tainted in that way.”
For two months, there’s been a flood of stories about the mysterious illness apparently connected to vaping that’s sent hundreds to the hospital and is linked with several deaths. As speculation about what might be causing the illness spreads, the Center for Disease Control is warning against vaporizer usage, and both federal and state-level bans on flavored vape pods are going into effect, ostensibly to keep kids away from potentially dangerous cartridges. With over 1,000 cases and at least 19 deaths potentially caused by vaping, people are asking questions about how the problem started, why it grew so out of control, and what can be done to prevent any more harm. But for cannabis companies who have been operating legally for years, there’s another burning question: How did regulators not see this coming?
It’s still unclear exactly what kind of vaping is leading to these illnesses, and in fact, the cases are still missing a concrete link to each other. While some victims cited the use of nicotine vapes as a trigger for their symptoms, many patients have said they were vaping THC products before they became ill. And that’s led to some understandable panic in the cannabis industry. Since states began legalizing recreational marijuana usage in 2012, vape use has risen steadily — but the popularity of vaping nicotine, CBD, and THC has surged in the last few years. Last year in California, for example, cannabis concentrates outsold traditional flower cannabis for the first time ever. According to BDS Analytics, which analyzes cannabis market trends, vaporizers have been the second-most popular consumption method for legal marijuana in 2019, with $473 million in sales through May in California, Oregon, and Colorado alone. Which means that a lung disease epidemic could have a major ripple effect throughout an industry that, despite its lucrativeness, is still trying to be taken seriously by both mass consumers and the federal government.
Of the culprits for the illnesses, much blame has been put on vape cartridge fillers like Vitamin E acetate and propylene glycol — two substances that can be harmful when heated and inhaled. With the extremely rigorous testing standards in legal markets, it’s unlikely that a filler would get into a cannabis product without the company being aware of it. According to Lydia Abernethy, direct of cultivation science at Steep Hill, one of California’s major cannabis testing and research facilities, vape cartridges are tested for things like “residual solvents, residual pesticides, heavy metals, mycotoxins, microbiological contamination, and foreign materials, in addition to cannabinoid content.” Most of the existing testing standards would have flagged the presence of a filler in a cartridge, but in light of the recent crisis, cannabis labs have also announced they’ll begin testing specifically for Vitamin E acetate as well. Cartridges are tested in their final, packaged form, so it’s unlikely a manufacturer would put a cheap filler in their cartridges after the fact.
As a result, it seems pretty clear that much of the contamination is happening without regulatory oversight, i.e. in the black market. And there are several reasons an illegal manufacturer might use a filler in a vape product: For one, it can dilute certain compounds in THC and CBD cartridges, preventing them from crystallizing, turning color, or losing their shelf stability. But that’s a generous interpretation, suggests Degelis Tufts, CEO of CBD company TribeTokes. “If you look at Vitamin E, it’s very cheap to buy wholesale,” she says. Her company uses terpenes — compounds found in the cannabis plant and other natural products already — to prevent crystallization in their vape oil, but this can get expensive. “It could cost just as much per gram as the [cannabinoid] oil itself, and as the market’s getting more competitive, a lot of people are trying to compete on price. Part of it is cost and part of it is laziness.”
And if illegal cannabis vapes are hard to regulate, the legal CBD industry might be even harder. Since CBD became available for purchase nationally under the 2018 Farm Bill, the cannabis-derived compound turned into the wellness aid of the moment — it’s even on track to outpace legal weed’s gargantuan earnings. But even if vaporizing CBD won’t come with a THC-like “high,” its cartridges could still be filled with chemicals you wouldn’t want to ingest. And, unlike THC’s strict regulations, CBD is the wild west.
“We do see out in the CBD world all kinds of crazy things going on,” says Tony Daniel, Steep Hill’s chief revenue officer. “We’ll test these products that come from other states, and we’ll see, for one thing, no CBD whatsoever. We’ll see other things, like a CBD tincture that possesses no CBD but has Robitussin in it because, I imagine, [the manufacturer] is trying to make it so that the consumer feels something.” That also means that other fillers, like the ones suspected of causing the current crisis, could be lurking at your local CBD provider.
TribeTokes noticed the potential for illegal cartridge manufacturers to add fillers without alerting customers first. That’s one reason why, even before the current crisis, the company put a QR code on all of its packaging, which leads customers to the product’s lab results. “We want to be forward-thinking, educate people, and show that this is what brands should be doing,” says Tufts. “I think that regulation will catch up to that, but I think that if brands want to lead the way in consumer education and providing safer options that they should be doing these things even if they’re not legally required to do them.”
In fact, several of the cannabis companies Rolling Stone spoke to acknowledged that there was always the threat for a crisis of this magnitude in the unregulated parts of the market, and said they took active steps to protect their consumers early on. So why, then, didn’t regulators do something sooner?
When reached for comment, Alex Traverso, assistant chief of communications for California’s Bureau of Cannabis Control, pointed to the agency’s education and awareness campaign Weed Wise, which has been up and running “for about the past four months.” When pressed if there was anything else the agency had done to enforce black market manufacturing prior to this summer, Traverso said, “The bureau has been doing enforcement against the illegal market since late 2018. So we have been out there following up on complaints and working on closing down the illegal retailers.” However, no more specific examples were provided.
The problem, therefore, is truly an issue of the black market. Kingpin has experienced this firsthand: They’ve got popular and widely recognizable vape products (which, they say, have never included fillers), but what may look like one of the brand’s vapes, bearing their logo and filled with a brown liquid that looks like THC oil, could actually have come from an unregulated manufacturer overseas. And it’s happening much faster than regulators can keep up. “There’s a significant problem with illegal shops that are operating,” says Corral, the V.P. “On our website, we’re constantly trying to get [customers] to focus on purchasing their products — whether it’s ours or anybody else’s — through licensed dispensaries. We try to be active in our social media community to respond to people within our comments that are saying, ‘Hey, I got a Kingpen here in Philadelphia and it’s great!’ And we say, ‘We only sell in California.’”
Still, Kingpen and others are up against some pretty big hurdles. For one, there are the massive third-party sites like Alibaba, the Chinese mega e-retailer, which are ripping off brands and selling product at a discount, keeping one step ahead of regulation in the process. “When we rolled out our product or our new packaging, it’s basically available [on Alibaba] within 48 hours, it’s very affordable, and you can buy in bulk? I think that that’s kind of an enabler” to the counterfeiting problem, Corral says. He also points to dispensary listing sites as another enabler, since there seems to be a lack of due diligence when it comes to whether a listed location is operating legally.
Though Corral says the state needs to put “a lot more money and a lot more research” into educating consumers and shutting down illegal operations, Kingpen is now working to mitigate the counterfeiting issue itself. The company announced in September that they would be launching the Counterfeit Prevention Program, a reportedly multimillion dollar program to include 3-D verification stickers on all Kingpen products and a QR code that allows customers to validate that their product is actually made by Kingpen, and therefore subject to that company’s strict, California-mandated regulations.
For proof that someone foresaw the potential for problems in the vaping industry long before there was a crisis, look at Airgraft, a company whose entire business model is based on the idea that people should be aware of what they’re ingesting. Founded in 2018, Airgraft fancies itself a tech company as much as a cannabis company. According to Mladin Barabric, the founder and CEO, he and his partners had been looking to solve issues in the cannabis space and saw the lack of transparency in vaping as cause for alarm. “Ingesting brown liquid that you don’t know where it came from is just bonkers,” he says. Aircraft currently sells a proprietary vaporizer and corresponding pods (their equivalent of cartridges) that pair with a companion mobile app which, in addition to measuring things like how much a person draws per hit, might also offer a blueprint to how vape companies can protect consumers from contaminated or bootleg product going forward.
“When you put a pod into the device, the device authenticates that pod,” explains Barbaric. “We have an encrypted signature on the pod that can only be activated through our servers and sold through our filling machine to approved, licensed partners.” He also says that they simply don’t allow distillates and fillers in any of their product, “only 100 percent pure plant oil.” The pod must be activated through the app to work, and when it is the user is also given a complete lab report for the exact batch they’re consuming. “It’s about creating more transparency, more control, cleaner vapor, something that people are happy to ingest and something people can trust so that this kind of stuff doesn’t happen.”
And, should any unclean batches get through the Airgraft platform, each pod comes with a kill-switch that can be engaged by the company to make it un-vapeable. And those kinds of safety features are scalable, says Barbaric. “We have filling machines that can be mass-produced that can connect to servers, we have pods that have chip sets in them that track each pod,” he says. “It’s not rocket science, it’s using technology to solve a problem that is rampant but solvable.” The only conceivable downside is that some users might understandably bristle at the idea of registering their cannabis usage until it’s legal federally.
But that Aircraft exists at all, and that it came about before the crisis, suggests that the potential for contamination not only existed for a long time, but that it was foreseeable. Now, the question is, who’s responsible for cleaning up the industry? Are companies who lacked the foresight of TribeTokes or Aircraft in charge of making the industry safer, or should consumers defend themselves by buying only from licensed dispensaries? It’s clear that regulators need to be more active in shutting down illegal sales — even if, in such a rapidly-expanding market, that’s not going to be easy or cheap. For now, it seems like the best way to ensure the safety of vaping will be some combination of consumer education, technological advancement, and regulation. Or, of course, people can just stick to buying flower.
Source : Elisabeth Garber-Paul Link