Beyond Smoking: Why CBD-Based Products Could be the Future

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NEW YORK, July 15, 2020 /PRNewswire/ -- There may be over 34 million adult smokers in the US, but nearly 70% of those people are trying to kick the habit. Unfortunately, only a handful are ever successful, regardless if they try to quit cold turkey or by using one of the many smoking cessation therapies on the market. Luckily, another potential smoking cessation therapy is available for the 23 million people who want to quit and could be more effective than other methods. Cannabidiol (CBD) has been shown to help with chronic pain, anxiety, and rare forms of epilepsy, and is now also being studied for its effectiveness as a quit smoking aid. Companies like Aphria (NASDAQ: APHA) (TSX: APHA), Aurora Cannabis (NYSE: ACB) (TSX: ACB), Cronos Group (NASDAQ: CRON) (TSX: CRON), and Canopy Growth (NYSE: CGC) (TSX: WEED) have all developed CBD vape cartridges, but newly-listed life sciences company Taat Lifestyle & Wellness Ltd. (CSE: TAAT) is breaking free from the vaping trend with its CBD cigarettes.

Taat Lifestyle & Wellness Ltd. (TAAT.CN) has developed nicotine- and tobacco-free alternatives to traditional cigarettes that use a unique proprietary blend of all-natural ingredients and meticulous engineering to create a user experience that mimics smoking without the negative effects.

CBD as a Potential Quit Smoking Aid

There are currently a number of nicotine replacement therapy (NRT) products on the market, including gum, skin patches, oral and nasal sprays, lozenges, and prescription medications, but the success rate remains relatively low. In a 2019 study that included 63 trials with 41,509 participants, just over 17% of people who combined a patch with another kind of NRT were able to quit, compared with about 14% of people who used a single NRT. At the same time, several studies have shown that CBD can help reduce dependence, cravings, and withdrawal and cut down the number of cigarettes smoked, which is why Taat Lifestyle & Wellness Ltd. developed its proprietary Beyond Tobacco™ cigarettes.

Taat Lifestyle & Wellness Ltd.'s (TAAT.CN) Beyond Tobacco™ cigarettes have been designed to emulate every aspect of smoking, but without the nicotine and added chemicals found in traditional cigarettes. What's more, to assist smokers in attaining a successful transition off of tobacco cigarettes, Taat products contain at least 50 milligrams of CBD per stick to help mitigate tobacco withdrawal symptoms and reduce dependency.

The company is getting ready to launch its new products to the market this fall and has already signed a large distribution deal with one of the largest Texas-based wholesalers of premium vaping products, Worldwide Vape (WWV). As per the agreement, WWV will make the company's tobacco-flavored and menthol-flavored Taat Beyond Tobacco™ cigarettes available to 10,000 retail stores across 38 states.

According to initial retail market testing that began in May, Taat Lifestyle & Wellness Ltd.'s Beyond Tobacco™ cigarettes are receiving especially positive responses from users. During phase one of testing, Taat Beyond Tobacco™ cigarettes were offered for sale at over 50 retail locations in Nevada and Southern California to solicit feedback from users. According to the feedback, users consistently gave testimonies that reflected their satisfaction with the product as an acceptable replacement for traditional cigarettes.

Apart from disrupting the $849 billion tobacco industry, Taat Lifestyle & Wellness Ltd. has also identified an opportunity to compete in the $80 billion menthol cigarette segment of the market with its menthol-flavored variety at a time when laws are tightening around menthol cigarettes.

Menthol-flavored cigarettes have a bad rep because of their appeal to youth and have been already banned in several countries, including Brazil, Canada, Chile, the European Union, the United Kingdom, and some US states. The entire US may eventually follow suit with a recent bill receiving approval from the House to ban the sale of flavored e-cigarettes and flavored tobacco products, including menthol cigarettes. Luckily for Taat Lifestyle & Wellness Ltd. (TAAT.CN), the same rules won't apply to its menthol-flavored Beyond Tobacco™ cigarettes because they are nicotine- and tobacco-free.

Vaping Products Losing Their Appeal

In recent years, the most popular quit smoking aid has been electronic cigarettes, but after a series of vape-related deaths consumers have been turning away from the devices. In January 2020, the Centers for Disease Control and Prevention (CDC) reported 2,602 vape-related hospitalizations and 59 deaths linked to vaping. The illnesses caused several US states to take matters into their own hands and impose bans in the fall of 2019. Then, in January 2020, the US Food and Drug Administration (FDA) issued a policy to stop vape companies from manufacturing, distributing, and selling flavored cartridge-based e-cigarettes other than tobacco or menthol flavors. The e-cigarette market took a hit, as did the pot industry, due to 77% of the lung injury patients reported vaping THC.

After pot vape sales hit a peak of $160 million in August 2019, September sales for the products fell more than 21% and another 5% in October down to $119 million, marking a 26% drop (or $41 million) in two months. Luckily, the decrease hasn't greatly affected major companies in the space.

The drop definitely didn't hinder Aurora Cannabis' (NYSE: ACB) (TSX: ACB) revenue during that period. The company reported net revenue of $94.6 million, up 61% compared to the same period last year, $3 million of which came from extracts. Among Aurora's roster of extracts is its vape-ready CBD oil product line, which were the first products released containing over 550mg of CBD and less than 30mg of THC. Aurora has also developed CBD softgel capsules.

Aphria (NASDAQ: APHA) (TSX: APHA) has also been faring well financially, although its CBD products aren't the vape variety. The company has been selling award-winning CBD oil on the medical side of its business since 2016, which can be obtained with a prescription from a healthcare practitioner. Unlike Aurora's oil, Aphria's CBD is best suited for ingestion directly under the tongue and used in recipes. In April, Aphria reported its fiscal Q3 financial results, which saw a 65% increase in net pot revenue and marked the company's fourth consecutive quarter with a positive adjusted EBITDA.

Meanwhile, Cronos Group (NASDAQ: CRON) (TSX: CRON) sells CBD oils for both medical and recreational use through its portfolio of brands, along with CBD oral sprays and dried flower at legal dispensaries across Canada. The company also gained a slice of the US CBD market in August 2019, when it acquired four operating subsidiaries of Redwood Holding Group, including CBD beauty brand Lord Jones.

Canopy Growth (NYSE: CGC) (TSX: WEED) has also had a stake in the US market since 2018 and is hoping to dominate the CBD sector with its new line of CBD products, which will be available in 31 US states where the substance is legal for sale. The First & Free line includes CBD oil drops, softgel capsules, cream, and CBD isolate.

When it comes to using CBD as a smoking cessation therapy, the quickest method of absorption is through smoking or vaping, as the substance goes directly into the bloodstream. However, due to the lung damage associated with vaping, products like Taat Lifestyle & Wellness Ltd.'s (TAAT.CN) Beyond Tobacco™ cigarettes could become a key contender in the multi-billion-dollar NRT market.

For more information on Taat Lifestyle & Wellness Ltd. (CSE: TAAT), click here.

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