Marijuana vaporizer companies are on the rebound since last summer’s vaping health crisis, reporting that sales numbers are largely back to normal despite concerns around the COVID-19 pandemic and its impact on consumer behavior as well as the supply chain.
Seattle-based data analytics firm Headset found that all four of the U.S. markets it tracks – California, Colorado, Nevada and Washington state – experienced a decline in vape market share last fall after the vaping health scare broke out.
That decline leveled off toward the end of September into early October. Though the market share has been more or less restored, it is generally below pre-vape crisis levels.
Since the COVID-19 outbreak, Colorado and Nevada report an additional decline in market share for vape products, though correlation is not necessarily causation.
And vape companies are still experiencing slower-than-normal shipping times for hardware from China, where the bulk of the materials are manufactured.
Yet, some cannabis vape company business owners say that even though COVID-19 is a respiratory-related illness, consumers haven’t shied away from buying their products, though it could be a concern.
“The upshot is we have seen no real downturn,” said Jessica Billingsley, CEO of Denver-based Akerna, a cannabis technology compliance company that tracks data in the vape sector.
No noticeable impact
According to Billingsley, the company found that vape sales have increased in market share from 31% to 34% based on total sales since August 2019.
Overall, vape sales have continued to slowly gain market share by a couple of percentage points each month since October 2019, she said.
As it pertains to COVID-19: Vape sales were up, even during the first days of the pandemic, by more than 9%.
Last summer’s vape health scare didn’t drop revenue much for George Sadler, co-founder of Platinum, a vape and infused products company based in San Diego with operations in Michigan and Oklahoma.
“We didn’t really see much in that,” he said.
Platinum spent about $30,000 of its own money during the health scare to replace customers’ illicit-market vape pens for its own products.
The company then had the illicit products tested, and, according to Sadler, many of the products had levels of vitamin E acetate that were unfit for human consumption.
As for coronavirus concerns, Sadler said sales have been up in recent weeks, in particular for disposable vape pens.
“Everything is up,” he added, including the infused products the company sells.
According to Sadler, the company secured a large volume of cartridges from China very early on in the outbreak, and now that manufacturers in the Asian country are back up and running, he’s confident the supply will remain steady.
Jim Makoso, vice president at Lucid Oils, a Seattle-based vape and extraction company, said he felt a “short-term pullback” after the vaping health crisis, and business has recovered about 85%-90%.
Vapes remain a popular product in the Seattle area.
Such a downturn could lead consumers to either purchase less frequently or buy cheaper products.
But he doesn’t believe the respiratory nature of the illness will deter consumers from buying vape pens.
People who like to consume pre-rolls, concentrates and vapes – inhalables, in other words – are likely to continue that buying pattern, Makoso said.
It’s the less-regular consumers who might stay at home and not buy at all, he added.
As for the supply chain coming from China, Makoso said he’s been able to get shipments, but it takes up to twice as long.
“Good luck getting anything out of China in a meaningful period of time right now,” he said.
Bobby Burleson, an analyst for Toronto-headquartered Canaccord Genuity, pointed out that the increased near-term demand in many U.S. regions for cannabis at the retail level will benefit vape companies.
“They’re obviously impacted by the broader environment,” he said.
“Folks are treating cannabis like it’s something they can’t live without. That obviously benefits the vape suppliers as well.”
He pointed out that vape products require less intensive inventory management than cannabis products such as flower and have a longer shelf life. Also, flower can be converted to oil if there’s a disruption in the supply chain.
That all means consumers might end up buying more vape pens, according to Burleson.
“You might get a positive shift toward vape consumption,” he said.
Peter Calfee, CEO of Denver-based Gofire, a high-tech marijuana inhaler maker, said his company felt a sales decline last fall but that the sector has rebounded.
“There was a considerable drop for a few months,” he added. “But it seems to have recovered across the board.”
The COVID-19 outbreak hasn’t caused any problems with the company’s supply chain. Calfee attributed that to the company using a Chinese supplier and manufacturer on the medical technology side and not the vape technology side.
He also said China’s factories are “spinning back up” and doesn’t expect the supply chain to be further disrupted.
As for impact on consumption, Calfee said the coronavirus pandemic has had an effect on buying behavior and expects vape companies to see a slight decline in sales.
Looking for a positive aspect of both situations, Calfee pointed out that the COVID-19 outbreak will push the industry to reevaluate its manufacturing processes and strengthen the supply chain, as the vaping health scare had a similar result.
“The vape crisis needed to happen to wake up the consumer and wake up the industry that consumers demand safe products,” he said.
Bart Schaneman can be reached at [email protected]
Additional Marijuana Business Daily coverage of the vaping crisis is available here.
For more of MJBizDaily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.
Written by Bart Schaneman.
View the original article at here.
Marijuana Business Daily