Concerning the "security standpoint", probably this news [0] is meant. Hashing the password with SHA-1 using 1 iteration may be referred to as "inadequate".
[0] https://www.bleepingcomputer.com/news/security/firefox-maste...
The article approaches this from an angle of an attacker with access to this hash bruteforcing it to obtain the original plaintext password. But as the hash is the encryption key, if an attacker were able to recover it from the encrypted password store blob, it would already be game over.
Applying a more costly hash algorithm would increase the cost of generating guessed encryption keys in a bruteforcing scenario, strengthening weak passwords somewhat. But using a single SHA-1 iteration here doesn't weaken the password security model. A strong password will remain strong.