Consumers Prefer Cannabis Vape Pens while Companies Enjoy Huge Markups – LPC
One area that isn’t talked about much in the media with the coming cannabis edibles legalization is cannabis vape pens. Some industry experts say cannabis vaping will be the next growth market for cannabis. Recent business deals seem to back those predictions up.
Canadian cannabis company Auxly Cannabis Group teamed up with British tobacco giant Imperial Brands in a deal worth more than $120 million. Altria, parent company of Philip Morris USA (Marlboro cigarettes) announced it was buying a $2.4-billion chunk of Cronos. Cronos itself announced it will focus on cannabis vaping over edibles. Altria, on the other hand, has also heavily invested in Juul, currently the most popular vape pen on the market.
The proof seems to be in the consumer market as well. Chris Damas, editor of the BCMI Cannabis Report, said cannabis vape pens will account for half of derivative sales. That prediction is based on existing data.
“We’ve seen from the market data south of the border and anecdotally across Canada in unlicensed dispensaries,” Damas said. “People seem to disproportionately choose vape devices.”
It’s natural that licensed producers are entering into partnerships with vape comapnies, considering the amount of technology they require. “Aphria, Aurora, Organigram, and Supreme cut deals with PAX Labs to be in a position to sell vape cartridges rather than try to develop their own,” he said.
Vaping Comes at a Premium – LPC
What companies like most about cannabis vape pens is that they come at a huge premium. It’s a premium that consumers don’t mind paying. Dumas said that a gram of cannabis can cost as low as $3 wholesale. It takes seven grams of cannabis to producer four vape cartridges, which might sell for $50. “So, $21 becomes $200 retail,” he said.
At this point, it’s all speculation. However, given the popularity of e-cigarettes, especially among younger smokers, cannabis vape pens seem almost a slam dunk. We’ll start seeing for sure in early 2020.
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