My Favorite Cannabis “Vape” Company Just Made a Savvy Move

You don’t have to be a cannabis investor or enthusiast to have heard of the so-called “vaping crisis.” The severe symptoms that strike and rapidly overwhelm otherwise healthy THC and nicotine vape users are unnerving – and that’s putting it mildly.

The U.S. Centers for Disease Control and Prevention (CDC) is tracking around 530 cases of severe vaping-related respiratory illness across 33 states. As of Sept. 24, nine people have died in seven states.

The formidable powers of the various state and federal health and regulatory agencies are being brought to bear to pin down a definitive cause. There have been some promising leads, but so far, researchers have found neither smoking gun nor silver bullet.

No reputable, licensed cartridge or “e-device” manufacturers’ products have been linked to the epidemic. Instead, attention is focused on illicit “bootleg” oil cartridges that either trade on the black market or, in places with weaker regulation, “sneak” into otherwise legitimate dispensaries.

That’s why I’m so excited about what was just announced.

One marijuana company I know just moved miles out in front of the crisis. In one fell swoop, it’s moved to protect its reputation and market share, its consumers, and, no doubt, its shareholders.

When Regulation Is a Good Thing

You only need to look as far as California to see that sometimes, regulation and legislation – however well-intentioned – can go, well, awry.

At the same time, it’s fairly obvious that comprehensive, effective regulation and legislation of vaping and vaping devices would’ve gone a long way toward averting a crisis that’s been made orders of magnitude worse by patchy, ineffective regulation.

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If a cannabis company is doing the right thing, it wants regulations done right; it helps protect and grow its business and drives the black market out of town. Folks who are playing by the rules can then thrive. It’s a win-win-win for businesses, consumers, and governments.

KushCo Holdings Inc. (OTCMKTS: KSHB) isn’t waiting around for better regulations. Sensing the benefit in first-mover advantage, it’s partnered with UK-based De La Rue Plc. (LSE: DLAR, OTC: DLARF) in an exclusive product-security agreement.

De La Rue, which sports a £228 million ($284 million) market cap, is about as mainstream as you can get.

The firm is a 198-year-old British institution that, among other things, has a claim on inventing the world’s first practical consumer fountain pen, the “Onoto.” It’s made postage stamps, playing cards, and board games, too, during its long, colorful history.

These days, however, it is a world-beating expert in the field of “security printing.” It is a trusted partner of governments, central banks, and corporations. De La Rue prints pound sterling banknotes for the Bank of England, of course, but also nearly 60 varieties of banknotes for currencies used on six continents. It also does bank and traveler’s checks, tax stamps, passports, and driving licenses, too.

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And now, for KushCo, De La Rue will offer custom-branded, anti-counterfeit security labels for cannabis products. This arrangement will enable KushCo to offer its customers enhanced secure packaging, unique serialized packaging, e-verification, label tracking, and data capturing capabilities.

In plain English, it will enable KushCo to offer peace of mind where others simply can’t or won’t.

“Counterfeit products undermine the legitimate cannabis industry by hurting sales, cheating governments out of tax revenue, and eroding consumer confidence while putting their health at risk. KushCo wants to provide the tools for our clients to have greater transparency and accountability,” KushCo CEO Nick Kovacevich said in a statement.

This won’t be a huge business in its own right, but it will increase the “stickiness” of Kush customers as it goes after larger multi-state operators and the big producers in Canada.

The deal gives a nod to regulators… and it beats ’em to the draw, too.

You can expect to see these anti-counterfeiting solutions (primarily hologram stickers like what you see on NBA and MLB authorized merchandise) to become required over time, so when someone goes to buy a vaporizer or cartridge from a dispensary down the road, they’ll know they’re getting an authentic product.

By getting out in front of this, KushCo gives itself a huge advantage – one that investors should jump on, as well.

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