U.S. health officials on Thursday reported another 180 cases of vaping-related lung illnesses and announced plans to start testing aerosols produced by e-cigarettes and vaping products as they search for the source of the nationwide outbreak that has so far killed at least 33 people in 24 states.

The U.S. Centers for Disease Control and Prevention (CDC) also said it plans to start testing lung tissue and fluids collected from people who became sick in the outbreak. The CDC said the new testing may lend insight into chemical exposures contributing to the outbreak.

The CDC now reports 1,479 confirmed and probable U.S. cases of the mysterious respiratory illness tied to vaping, up from 1,299 a week ago, an indication that the public health crisis has shown no sign of slowing.

Last week, the CDC and the U.S. Food and Drug Administration said that while many patients became ill after vaping products containing THC, the psychoactive ingredient in marijuana, some had only used nicotine vape products. They said more than one root cause may be behind the outbreak.

Investigators primarily have been testing the liquids in vape products. Testing the aerosol produced after the liquids are heated might show whether that causes a chemical reaction that produces a toxic substance.

“They might be able to see components that we don’t see in the raw materials,” said an official in the New York Health Department’s Wadsworth laboratory, which has been testing product samples for the state.

A preliminary report seen by Reuters of vaping product samples collected from Wisconsin patients and tested by the FDA showed that more than half contained THC.Of the THC-containing products, two-thirds also tested positive for Vitamin E acetate, a cutting agent believed to be used to stretch the amount of THC oil, and an early suspect in efforts to determine the cause of the injuries.

The results from Wisconsin match up with earlier reports from state and federal officials. FDA officials last week said it found Vitamin E acetate in 47% of the first 225 THC products it had analyzed.

Among the results, 14 products contained THC, nine of which also tested positive for Vitamin E acetate, while another seven contained nicotine.

New York health officials have now tested nearly 200 products.

“We’ve got nicotine pens; we’ve got THC-containing pens; we’ve got Vitamin E acetate associated with a lot of the THC pens, but we are not in a position to say what’s the cause of this dreadful illness,” the official with New York’s testing lab said.

Many of the products have no labels. Health officials in New York and Utah said they suspect many THC products that do carry labels - such as those under the Dank Vapes brand - are counterfeit.

In Utah, state epidemiologist Dr. Angela Dunn said the outbreak hit a peak in July and has not let up.

More than 90% of patients reported having vaped THC, and only a handful of cases denied using THC, Dunn said.

The state has tested 20 nicotine vape products and found nothing unexpected. Of 19 THC-containing products, 89% showed evidence of Vitamin E acetate.

None of the state officials said conclusively that the cutting agent was the cause of the injuries, but it remains a suspect.

Dunn said THC is the common denominator in most of Utah’s cases, and until an exact cause is found, the state is focusing on getting people to stop vaping THC.

“It’s the only thing we have,” she said.

At this time last year, marijuana stocks were the greatest thing since sliced bread. Growth projections for legal marijuana were off the charts, with one analyst on Wall Street forecasting up to $200 billion in global annual sales by 2030.

But oh, how the tables have turned.

One Wall Street investment bank sees significant downside to come in pot stocks

The past six-plus months have been a veritable disaster for cannabis stocks. Over that span, many of the biggest pot stocks have seen 30%, 50%, or even more of their market cap go up in smoke due to a variety of issues. And according to one Wall Street investment bank, the pain may not be over just yet.

Last week, Bank of America/Merrill Lynch analyst Christopher Carey, a noted marijuana bull, published a research note doling out his current thoughts on the industry. In that note, Carey suggests that while valuations are certainly more reasonable now than they were a few months ago, consensus estimates for the entire space may be at least 30% too high. 

According to Carey, marijuana stocks are unlikely to be worth buying until revenue estimates throughout the industry are adjusted to reflect the numerous issues that pot stocks are contending with. As a reminder, Health Canada began the year with more than 800 cultivation, processing, and sales license applications on its desk awaiting review and/or approval. Even with the regulatory agency changing the cultivation license application process to help work through its backlog, it'll probably take many quarters before the agency is caught up and supply levels are adequate to meet domestic demand in Canada.

Furthermore, certain Canadian provinces have been slow to approve licenses for physical dispensaries. This leaves consumers to either buy their product online and wait for perhaps more than a week for it to arrive, or to purchase their cannabis from an illicit grower.

The end result has been considerably underwhelming operating results, thus far, for practically all Canadian pot stocks.

The one marijuana stock you should avoid

Interestingly enough, the only one of a small number of cannabis stocks to have coverage initiated by Carey that currently carries an underperform rating is HEXO (NYSE:HEXO). I say "interestingly," because back in April, HEXO was named as the top pick in the industry by BofA/Merrill Lynch.

The downgrade of HEXO from buy to underperform (the equivalent of a sell) came just prior to the company's fourth-quarter update last week, which I'll touch on in a moment. Carey's downgrade and price target cut to 4 Canadian dollars ($3.03) came after Chief Financial Officer Michael Monahan announced that he was resigning from his post after only four months on the job. Carey's thesis in the note behind the rating downgrade and price target reduction is that Monahan likely realized that HEXO's corporate finance organization was underdeveloped.

As you may also be aware, just days after BofA/Merrill Lynch issued its downgrade of HEXO, the company issued an abysmal preliminary update for the fiscal fourth quarter. Back in mid-June, HEXO had estimated that sales would essentially double from about CA$13 million in the third quarter into the fourth quarter, and that total sales would hit CA$400 million in fiscal 2020. HEXO walked back both forecasts, with a new Q4 revenue range of CA$14.5 million to CA$16.5 million, representing a modest 19% sequential growth at the midpoint, rather than 100%, and no 2020 sales guidance offered.

Here's the one pot stock you can buy, according to BofA/Merrill Lynch

On the other hand, Carey and his team at Bank of America/Merrill Lynch view Cronos Group (NASDAQ:CRON) "as an especially attractive buying opportunity." BofA/Merrill Lynch has maintained its buy rating on Cronos following the company's more-than-70% pullback since early February.

The reason Carey likely views Cronos as an intriguing value is due to the company's robust cash position. Remember, Cronos Group netted a $1.8 billion investment from tobacco giant Altria Group (NYSE:MO) that closed in March and gave Altria a 45% non-diluted stake in the company. Since this deal, Cronos used more than $200 million in cash to purchase Redwood Holdings, owner of the Lord Jones cannabidiol-infused beauty products line in the United States, but likely has more than $1.5 billion in cash still on hand. This cash is viewed as an excellent downside buffer.

There's also the obvious partnership opportunity with Altria. As a leader in the tobacco arena, as well as 35% owner of the Juul vaping brand, Altria could prove invaluable in helping Cronos reach consumers who vape.

While I don't disagree that Cronos Group has become considerably more attractive than it was at the beginning of the year, it's still a company I, personally, wouldn't suggest investors buy.

To begin with, the vape-related health scare in the U.S. may translate into weaker vape sales in our neighbor to the north. Also, the aforementioned supply issues that have ravaged the Canadian pot industry are liable to also impact the launch of derivatives, which will occur in mid-December. Additionally, Cronos Group has lagged its peers pretty significantly in the sales and production department, which means it's still losing quite a bit of money on an operating basis, once a number of one-time benefits are removed.

Long story short, there's a lot of built-up worry in the pot industry at the moment, and it's unclear when it'll abate.

For those who follow the pot stock market, they know that the past few months have been less than kind to the industry. This is due to a variety of factors. As pot stocks are still very much an infant market, it seems as though any news that comes out can adversely or positively affect the marijuana stock market. With so much news coming out on a daily basis, pot stocks can be notoriously volatile.

One of the ways to combat this high level of price swings is to do all the proper research before making an investment. This ensures that there are no surprises when it comes to price action. Research seems to be what separates the pro investors from those still at the amateur level. With pot stocks showing massive future projections, the market definitely still has a lot of room left to grow. The key is to know where to find the value and to ensure that one is accurately locating the best pot stocks to watch. With this in mind, it is difficult to go wrong with marijuana stocks.

An Alternative Pot Stock Play

Roadman Investments Corp. (RMANF Stock Report) (LITT Stock Report) is one of the leading Canadian venture capital and advisory firms currently working out of the pot stock market. The company has stated that its main goal is to invest in companies that are pushing the limits of innovation for the future.

Additionally, their investments also accelerate growth for their holdings which help them to achieve alpha returns. The company states that they invest in breakthrough products, devices, treatments and health supplements which all have their benefits in the market. Because they have such a broad scope in the pot stock market, the company remains a key marijuana stock to watch moving forward.

Recently, the company announced that they have entered into a corporate advisory agreement with AltMed Capital Corp. For those who don’t know, AltMed Capital Corp. is a Canadian alternative medicine business incubator that works with intellectual property to help advance several areas of the medicinal market. Under the agreement, the two would be working on the development of standard operating procedures, intellectual property formulation, regulatory advocacy and more. With this, the two should be able to come up with some new and exciting goals for the future of the pot stock market.

A Big Name Pot Stock

Village Farms International (VFF Stock Report) is one of the leading growers of marijuana in the industry. The company has been dubbed as one of the cheapest cannabis stocks due to its forward earnings for the next year or so. Only a few years ago, the company partnered up with Emerald Health Therapeutics to create a joint venture known as Pure Sunfarms.

This venture has the goal of producing large quantities of marijuana. With its 1.1 million square foot facility, the company should be able to produce as much as 75,000 kilograms of cannabis when operating at peak capacity. This includes a large amount of hemp that they hope to produce as well. For this reason, they remain a key pot stock to watch for the next few years.