Industry Reports

Vapor Pens: The Next Big Thing in Cannabis?

August 11, 2016

Executive Summary

The vapor pen market is one of the fastest-growing and most exciting ones in the Washington cannabis industry. This report examines trends in the vapor pen market, providing information on the various types of vapor pen products, a look at the performance of various product subcategories, and a portrait of the typical vapor pen customer, as well as what they purchase. The information in this report will be indispensable for anyone currently offering vapor pen products, or anyone looking to enter the market.

Intro to Vapor Pens

What exactly are vapor pens and why do they appeal to customers? Though there are various products within the vapor pen category, vapor pen products can be loosely defined as any portable device that allows for the vaporization of cannabis concentrates. They appeal to customers because, though there is some concern about additives, extraction methods, and pesticides, vapor pens are largely perceived as a healthy alternative to smoking flower. Beyond that,

The product category is also increasingly popular with producers, as concentrates free cannabis farmers from the constraints of producing visually appealing bud, or worrying about powdery mildew, which is filtered out in the extraction process. Concentrates are also far more shelf stable than flower.

Concentrate for vapor pens can be obtained from a variety of methods. Extraction mediums include butane, CO2, distillation, ethanol, hexane, methanol, propane, non-solvent, cold, with each carrying its own advantages and disadvantages. The resulting concentrates are often cut with a benign additive to achieve the desired dosage, though some manufacturers offer pure cannabis oil products. These additives include vegetable glycerin (VG), propylene glycol (PG), polyethylene glycol (PEG), coconut oil, and various flavorings.

Within the vapor pen market, there are several subcategories:

•  Cartridges - A disposable or non-disposable vessel that attaches to a rechargeable vapor pen. Sold separately from the rechargeable pen.

•  Refills - Anything that refills a vapor pen or cartridge with fresh concentrate. These come in the form of tankers, syringes, and applicators.

•  All-in-one Disposables - Self-contained vapor pen units, designed to be discarded when the built-in cartridge is depleted.

•  All-in-one Rechargeables - Vapor pen units equipped with rechargeable batteries and designed to receive new cartridges as they're depleted.

Methodology

Data for this report comes from real-time sales reporting by participating retailers via their POS systems, which are linked up with Headset. This report is based

Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates,

Total Sales Growth 2016

The vapor market is an extremely promising one, with a growth rate more than double that of the overall market. Based on data taken from stores that were open and reporting sales as of January 1, 2016, vapor pens* experienced 32% growth, as compared to total sales growth for all categories from January 2016 to July 2016, which was 14% ($1.4 million dollars). This translated to a full percentage point increase in market share for the category, going from 9.5% in January to 10.6% in July.

*Vapor pens references an entire category that encompasses Cartridges, Tankers/Applicators/Syringes, All-in-one Rechargeable, All-in-one Disposable and Refills.

The growth in Vapor Pens has been felt in all subcategories except

Vapor pen sales remain dominated by Cartridges which made up over 80% of the sales and units in the last 6 months.  Growth in the Cartridges segment over time has been driven by an increase in the total number of products sold in the marketplace, from about 500 in January to over 800 in July. This was the largest total and % growth in products of all subcategories.

Price Pressure

All categories have experienced price pressure throughout the last six months, and Vapor Pens are no exception.  The average item price in July was 1.4% lower than in January. Vapor Pens experienced the fastest decline in average item price of all categories at about 14%.

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Team Headset

With extensive experience within the cannabis industry, Headset is comprised of a team of industry experts, data scientists and market analysts combining our abilities in technology, design and data to help push the cannabis industry forward.