TechCrunch
TechCrunch
Some company CEOs see the pandemic driving consumer acceptance and pushing legalization at the national level. With legalization, new consumers enter the market, and companies such as Canopy Growth, PAX and Grenco Science look to benefit as makers of some of the best vaporizers on the market — that is if consumers can find them in stock.
Supply chain issues are partly to blame, and cannabis products are not alone in facing short supply. For the U.S.-market, many products, from bicycles to kayaks, are hard to find right now. And like those products, increased demand is straining the already stressed supply.
Grenco Science was founded in 2012 and was an early mover in the dry herb vaporizer market. In 2019, the company raised a Series A for an undisclosed amount to develop and release innovative products. And in early 2020, the company was ready to launch the inexpensive Dash and the Roam, a portable water-filtered concentrate vaporizer.
Then COVID-19 hit.
CEO and co-founder Chris Folkerts says product launches were pushed back, yet the company was still able to launch the Roam and Dash.
“We’ve still been able to see growth and expand the product pipeline significantly,” Folkerts said. “There are still releases slated for later this year and we’ll be able to launch the redesigned Stundenglass after the company’s acquisition.”
Indeed, Grenco had a busy pandemic, launching two new products and acquiring the maker of another. And they’re not done. Folkerts says interest in dry herb vaporizers is spiking and could be due to the Dash vape launch. Grenco has three more new dry herb vaporizers in its release pipeline.
Folkerts admits that there were troubles along the way, primarily around customer support and shipping products. The company saw an influx of orders through online sales and distributors that the company was not prepared to handle. He says the company had to repurpose “a decent portion” of its staff to speak directly to online consumers to address product and shipping concerns.
Canopy Growth’s marquee vaporizer company Storz & Bickel is also experiencing increased customer support issues. Browse any user forum and it’s clear the company cannot keep up with customer relations. Buyers are reporting delayed shipping and inconsistent customer support. Most items on storz-bickel.com carry a “low inventory” warning, though most are available through official distributors.
Andy Lytwynec, VP, Global Vape Business at Canopy Growth, says Storz & Bickel’s sudden growth is outpacing forecasts, and the company accelerated production expansion. Thirty new employees were added to its German factory through a heightened sense of urgency, he said.
In 2000, Storz & Bickel released the Volcano, arguable the first worthwhile desktop dry herb vaporizer. The company now sells two versions of the Volcano and a handful of handheld devices that use the same underlying technology, all of which are certified for medical use. In 2018, Canopy Growth acquired Storz & Bickel, where it joined the conglomerate’s other vaporizer brands.
Lytwynec points to Storz & Bickle as a barometer of sorts in judging the impact of COVID-19. The German-based vaporizer company saw an uptick in sales, as reported in Canopy Growth’s latest quarterly report. The company reported a 71% increase during the first quarter ending on June 30. The financial report pointed to Storz & Bickel’s increased sales and distribution expansion as a primary reason for the increase.
During the pandemic, consumers are not just turning to dry herbs. Makers of concentrate vaporizers also see an increase in sales.
Puffco, maker of the fantastic Puffco Peak e-rig, tells TechCrunch it has also seen an explosion in sales. Puffco founder Roger Volodarsky says, “Since the pandemic hit, it seems like many new users have joined the cannabis space. Puffco has seen historic sales during this time. We’re thankful to see our growth continue despite the challenges that we’ve been faced with.”
Instead of using ground flower, Puffco’s products are designed to be used with concentrates, which many see as the next big cannabis inhalation market. It sits between dried flower and portable so-called vape pens.
Jupiter Research is the largest distributor of CCELL vaporization hardware and sells into all regulated cannabis markets globally, including across the United States. For this market, namely the pre-packaged, self-contained THC cartridges, Jupiter Research has seen little effect from COVID-19.
“There hasn’t been a material increase or decrease in the vape market as a whole due to COVID-19,” Tim Conder, COO and president said, adding, “at least from what our data tells us. In fact, Jupiter has continued to gain market share in the vape category as a whole. Vape remains the second largest category in cannabis henna flour. The third is edibles.”
Conder sees COVID-19 potentially changing the government’s stance on cannabis. As he told TechCrunch, it feels like cannabis legalization is gaining more traction at a federal level. He hopes state and federal governments are looking at the fiscal benefits of a nationwide legal cannabis market.
Other cannabis hardware manufacturers agree COVID-19 is pushing the United States government to look at cannabis through a different light.
DynaVap, a Wisconsin-based manufacturer, says the public perception of cannabis has remained consistent with continual movement into positive public acceptance. Eric Olson, founder, and CFO of DynaVap, notes that he feels the cannabis plant has even had positive effects and eases the impact from COVID-19.
“The post-pandemic outlook for the cannabis plant will be an impactful positive public movement assuming the industry can continue the legalization momentum on the federal and state levels in the U.S.,” Olson told TechCrunch.
DyanVap, which employs 50 people in Wisconsin, says it started increasing staffing in May and recently launched several new products, including a portable induction heater called “the Orion.”
Now, six months out from the start of the global crisis, the cannabis market seems to have gained significant traction as such manufacturers have ramped up production and increased staffing to keep up with demand.
Canopy Growth’s Lytwynec sees the past few months as a turning point around cannabis. And not just for the economic impact for legalization (and taxing) cannabis. He says he sees consumers waking up to the level of sophistication around cannabis.
“People are spending their dollars, not on baggies of illicit weed, but they’re spending their money on higher-end products, and it’s nice to see the category mature in the middle of a pandemic. We see people investing in [devices] and the quality of consumables. It speaks to the health of the category, and I’m hopeful the industry picks up tailwinds, and we exit this dystopian period sooner than later.”
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