FDA Vaping Ban could ban tobacco and cannabis stocks

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Topline: With the public surfacing, the increased regulation of vaping in the United States will have a significant impact on two market sectors: large stocks of tobacco and marijuana.

Key background: Last Wednesday, the Trump administration announced that it would ban the sale of most flavored electronic cigarettes. This announcement comes as a result of mysterious vaping-related illnesses occurring across the country, which have caused hundreds of cases in dozens of states and could be linked to six deaths. The White House and the FDA have had to deal with growing public pressure to stem the epidemic, particularly because of the recent CDC data showing that vaping youth reached a record level.

• Plans to bring Big Tobacco together in a $ 200 billion merger between Altria and Philip Morris International have now been plunged into uncertainty as the industry faces its greatest regulatory threat since the 1990s.
• "While the US litigation risk was enough to separate these companies in 2008, the US regulatory risk is on the same level, in our opinion," said Chris Growe, a Stifel analyst, in a recent note.
• In trying to offset decades of declining sales of traditional cigarettes, both companies have invested heavily in e-cigarettes and cannabis (Altria paid $ 12.8 billion for a 35% stake in Juul last year, as well as $ 1.8 billion for a 45% stake in Cronos, a marijuana business, while Philip Morris has invested more than $ 6 billion in a smoking tobacco device called Iqos.) Since the announcement of the FDA, Altria shares and Philip Morris fell 7.5% and 3.5%, respectively.
• Assuming that the flavors of electronic cigarettes are banned in the United States, Altria will need the merger with Philip Morris to "be able to distribute Juul in developed markets, with different rules and regulations," Garret Nelson, CFRA Research Analyst . say it New York Times.
• There is also a "preliminary concern" among marijuana companies, many fearing that the restrictions proposed by the FDA may "have a negative impact on cannabis-related regulations" in the United States, according to a spokesperson for the National Cannabis Industry Association.
• The president of Aurora Cannabis, one of the largest cannabis producers in the world, has admitted on CNBC last Thursday that he is "very worried" about the vaping situation in the United States. Aurora shares have fallen nearly 15% since the FDA announcement last week.

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Topline: With the public surfacing, the increased regulation of vaping in the United States will have a significant impact on two market sectors: large stocks of tobacco and marijuana.

Key background: Last Wednesday, the Trump administration announced that it would ban the sale of most flavored electronic cigarettes. This announcement comes as a result of mysterious vaping-related illnesses occurring across the country, which have caused hundreds of cases in dozens of states and could be linked to six deaths. The White House and the FDA have been faced with growing public pressure to fight the epidemic, particularly given recent CDC data showing that youth vaping has reached unprecedented levels.

• Plans for the Big Tobacco meeting of a $ 200 billion merger between Altria and Philip Morris International have been placed in uncertainty, with the sector facing its biggest regulatory threat since the 1990s.
• "While the US litigation risk was enough to separate these companies in 2008, the US regulatory risk is on the same level, in our opinion," said Chris Growe, a Stifel analyst, in a recent note.
• In trying to offset decades of declining sales of traditional cigarettes, both companies have invested heavily in e-cigarettes and cannabis (Altria paid $ 12.8 billion for a 35% stake in Juul last year, as well as $ 1.8 billion for a 45% stake in Cronos, a marijuana business, while Philip Morris has invested more than $ 6 billion in a smoking tobacco device called Iqos.) Since the announcement of the FDA, Altria shares and Philip Morris fell 7.5% and 3.5%, respectively.
• Assuming that the flavors of electronic cigarettes are banned in the United States, Altria will need the merger with Philip Morris to "be able to distribute Juul in developed markets with different rules and regulations," said Garret Nelson, an analyst at CFRA Research. New York Times.
• There is also a "preliminary concern" among marijuana companies, many fearing that restrictions proposed by the FDA could "have a negative impact on cannabis regulations" in the United States, according to a spokeswoman for the National Cannabis Industry Association.
• The president of Aurora Cannabis, one of the largest cannabis producers in the world, told CNBC on Thursday that he was very worried about the US vaping situation. Aurora shares have fallen nearly 15% since the FDA announcement last week.