As previously reported, CDC, the U.S. Food and Drug Administration (FDA), state and local health departments, and other clinical and public health partners are investigating a multistate outbreak of e-cigarette, or vaping, product use associated lung injury, or “EVALI.” In an update issued earlier, the CDC stated that recent CDC laboratory testing of bronchoalveolar lavage fluid samples, or samples of fluid collected from the lungs, from 29 patients with EVALI submitted to CDC from 10 states found vitamin E acetate in all of the BAL fluid samples. Vitamin E acetate is used as an additive in the production of e-cigarette, or vaping, products. “This is the first time that we have detected a potential chemical of concern in biologic samples from patients with these lung injuries,” the CDC noted. CDC continues to recommend that people should not use e-cigarette, or vaping, products that contain THC, particularly from informal sources like friends, or family, or in-person or online dealers. We will continue to provide updates as more data become available. In an email, GLJ Research analyst Gordon Johnson said he believes the intraday rally in cannabis stocks is related to the CDC report. In general, legal vapes do not contain vitamin E acetate, Johnson explained in his email. However, he would use today’s rally as an opportunity to “aggressively” build or initiate short positions in Tilray (TLRY), which he has a Sell rating on. Johnson added that he sees 40%-100% downside across the Canadian cannabis equity space from a valuation perspective. Other publicly traded companies in the space include Aphria (APHA), Aurora Cannabis (ACB), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Canopy Growth (CGC), Cronos Group (CRON), General Cannabis (CANN), India Globalization Capital (IGC), and Trulieve Cannabis (TCNNF).
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