Oregon health officials announced this week that a middle-aged man who had been vaping THC oil purchased at a dispensary has died of a mysterious lung ailment that has so far struck more than 200 mostly young victims nationwide. His death is the second linked by public health officials to vaping cannabis oil, but the first implicating a product obtained from a licensed vendor as opposed to the black market.

If true, the cannabis industry may be staring down the barrel of an epic crisis.

Either way, the fast-breaking epidemic is pulling the curtain back on some inconvenient truths about the legalization movement, and causing a major headache for the e-cigarette business. Neither The Centers for Disease Control nor the US Food and Drug Administration have yet to pin the blame for the vaping disease outbreak on one or the other, noting that some victims reported using e-cigarettes, while others said they used cannabis oil in e-cigarette devices. State health officials suggest some of the former lied.

In Illinois, where two dozen victims have been identified and one has died, “Not everyone reported using THC oil,” said Ngozi Ezike, MD, director of the Illinois Department of Public Health. “We can’t say if that was because they were scared to acknowledge it or because they never used it.”

As reported last month by The Marijuana Times, a teenager from Long Island, New York – whose lungs were severely damaged – denied vaping cannabis right up until he almost died and his family searched his bedroom, finding a black market cartridge containing THC. His doctor said the boy’s lungs are permanently impaired.

One of the worst-kept secrets among American teenagers and young adults is the ready availability of black market THC oils and cartridges, many of which are packaged to look like legitimate licensed products and sold at a deep discount from dispensary prices. Some enterprising outlaws are buying “shake”, the leftover leaves from trimmed buds, and cooking their own cannabis oil in their basements and garages, then selling it like modern-day bootleggers.

Vaping THC instead of smoking it has become popular because the vape devices look similar to e-cigarettes, or the oil can be put into an e-cigarette, and the vapor produced is nearly odorless. A teenager can vape cannabis in the back of a classroom, or an employee in the office bathroom, completely undetected or, at worst, presumed to be just getting a hit of nicotine.

“It’s absolutely ridiculous,” said Gregory Conley, president of the e-cigarette trade group American Vaping Association, “that federal agencies don’t know enough at this time to make a very serious warning against using black market THC vapes.” Conley noted that e-cigarettes and nicotine oils have been in widespread use for years, while the outbreak of lung illnesses tied to vaping only began this summer.

Officially, the cause is urgently under investigation. But as first reported in The Marijuana Times in June, the Sheriff’s Department in Mendocino County, California intercepted a large shipment of illegal THC cartridges last spring that were found to contain an astronomical concentration of a fungicide – myclobutanil – which, when heated, converts into a deadly form of cyanide. Because of that characteristic, myclobutanil (sold under the brands Eagle 20 and Nova 40) is banned in Canada, Colorado, Washington, and Oregon for the production of medical and recreational marijuana. It is illegal to use it on tobacco plants anywhere in the US.

But it is widely used on crops such as grapes and almonds, which means myclobutanil is everywhere in California and easy for outlaw growers to buy and use. Fungus is a major headache in cannabis cultivation. An outbreak can destroy a year’s worth of work.

The danger of myclobutanil has been floating around the cannabis agenda for several years. In 2017, as the California Department of Pesticide Regulation prepared draft regulations regarding the use of pesticides and fertilizers on cannabis, scientists warned that myclobutanil “is incredibly dangerous in smokable cannabis.” The black market cannabis oil tested in Mendocino County had a concentration of myclobutanil that is 7,300 times the limit set by the department.

The lab that did the test is part of a larger operation in Mendocino County that specializes in cleaning cannabis oil of contaminants. David Kurzfeld, a partner and head of sales at Modular Processing Systems in Willits, California, told The Marijuana Times that the state has yet to come to grips with the amount of contaminated cannabis that is finding its way into the market.

“People have brought us cannabis oil to be purified that was so toxic I wouldn’t even rub it on my skin. By the time we get done, it’s completely decontaminated and safe. But we’re only seeing a small slice of the amount of product that’s ending up being used by consumers.”

Kurzfeld said it is common practice even among legal cannabis growers to unload contaminated weed that doesn’t meet state standards by selling it cheap on the black market. He also noted that the way contaminated oil is heated may be a factor in the lung illnesses. “The kids sometimes get the oil straight, not in cartridges, scoop it into a bowl, heat it with a torch until it’s smoking, and inhale it. (Myclobutanil begins to release hydrogen cyanide at about 400 degrees.) Imagine them, coating their entire lungs with huge concentrations of all sorts of contaminants!”

Kurzfeld echoed comments by others we interviewed that the problem stems from the fact that California legalized cannabis before it was prepared to effectively regulate it. To grow, process, and market marijuana products in California is an arduous, costly process at best. Furthermore, Kurzfeld says, state inspectors on the ground are few and far between. Those he’s worked with, “don’t last very long. They either quit or get fired.”

The epidemic of vaping-related illness is likely to get worse before it gets better. Cases are popping up all over the country, so it’s not an outbreak that can easily be contained. There may be many factors at work. Some have suggested that outlaw processors may be using unknown additives that may be toxic or become toxic when mixed or heated or consumed. The cartridges themselves may be a contributing factor. In California, laboratories have identified the presence of lead that may be leaching from the Chinese made cartridges into the oil.

The crisis is unfolding at a pivotal moment in the development of the legitimate cannabis industry and could prove to be a big stick in its spokes. In the past few months, industry executives say they have seen a rapid shift in the market, from traditional recreational smokers to a more mainstream audience interested in health and wellness.

Ed Schmults, CEO of Las Vegas-based Calyx Peak Companies, told Forbes.com, “I’ve been astonished at how many older friends and family – people who before would have been too shy to ask – are coming to me with pens and notepads, asking me for advice about products for insomnia, pain, anxiety, etc. Everything is happening much faster than we anticipated.”

In a twist on the way that Prohibition led to adulterated alcohol that injured and killed unsuspecting users, legalization of marijuana may suffer from the unintended consequence of too much legalization too soon, and too little regulation too late.