Extraction Archives - Green Market Report

Debra BorchardtDebra BorchardtJuly 9, 2019
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7min10330

Cannabis and hemp extractor Radient Technologies Inc. (TSXV: RTI)(OTCQX: RDDTF) reported that the company lost C$18 million in its financial results for the fiscal year ending March 31, 2019.

The company only reported revenues of C$214,060 for the year and expenses of C$18,319,167. The cost for that revenue was C$131,249.

On a positive note, the company’s cash balance at the end of its fiscal year totaled C$31,752,852, representing an increase of $9,897,548 from March 31, 2018. This increase in cash is a result of equity placements the company closed on July 31, 2018, for aggregate proceeds of C$34,202,759.

The company said that the proceeds of these financings have been used to upgrade its main Edmonton extraction lines for dedicated cannabis and hemp extraction and purification and are being used for additional capacity in North America and Europe, as well as for general corporate and working capital purposes.

Lots Of Extraction Plans

The company noted that it has lots of extraction plans, but it seemed to be light on who is buying the finished product. Only Aurora Cannabis was mentioned as a customer and that agreement was signed in 2017.

“On February 4, 2019, Radient announced it had received its Standard Processing License from Health Canada under the new Cannabis Act. Radient’s preexisting Dealer’s License for its Research & Development Laboratory was also successfully transitioned under the new regulations.”

“Upon completion of the construction of the Canadian and German facilities, which is expected in the second half of calendar 2020, Radient will have an estimated combined total annual throughput capacity of more than 600,000 kg/year of cannabis, and more than 6 million kg/year of hemp.”

“In March 2019, the Company announced it had begun the commercial-scale extraction of cannabinoids from cannabis biomass using its patented, proprietary extraction and downstream processing platform at its Edmonton I facility. Post-fiscal 2019, in May 2019, Aurora Cannabis Inc. (TSX: ACB; NYSE: ACB) and Radient announced that Radient had successfully completed its first commercial delivery of cannabis derivatives to Aurora.”

Tobacco

While pushing ahead with the cannabis extraction, the company is also building up its low nicotine cigarette business.

“Radient filed a provisional patent application with the United States Patent and Trademark Office on June 5, 2018 for a proven method of significantly reducing nicotine levels in tobacco, while mostly maintaining the appearance, taste, and smell of the tobacco, via Radient’s proprietary continuous-flow extraction technology.”

“In March 2019, Radient announced the hire of two former British American Tobacco executives as senior executives of the Company. With their assistance, the company has developed and is executing a marketing strategy that targets tobacco companies, the FDA, advocacy groups and equipment manufacturers to ensure acceptance of the company’s technology in the industry as a viable industrial nicotine reduction technology.”


Debra BorchardtDebra BorchardtJune 26, 2019
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3min2760

Canopy Growth Corporation (TSX:WEED, NYSE:CGC)  has acquired Saskatoon-based bio-product extractor KeyLeaf Life Sciences. Canopy Growth said it has been working closely with KeyLeaf – formerly known as POS Bio-Sciences – as a trusted partner building out extraction processes and technology for the past year as it refines its scale extraction model for Canadian and global markets.

“The KeyLeaf operations and team deliver instant scale at a pivotal stage in our growth, with brand new products coming to market later this year requiring sophisticated extraction capabilities at scale,” said Bruce Linton, Chairman & co-CEO, Canopy Growth Corporation. “This acquisition is the result of a year’s worth of work with a trusted partner, and part of our commitment to always staying a step ahead as leaders in a nascent industry, focused on the long-game one piece at a time.”

KeyLeaf has been working closely with Canopy Growth over the past year to retrofit its Saskatchewan facility to advance technology development and commercialization, in order to process hemp and cannabis biomass, and to conduct pre- and post-extraction processes.  It is anticipated the facility, which is currently in the Health Canada licensing process, will be able to process up to 5,000 kg of input materials daily when operational.

Canopy Growth said that it intends to leverage this facility, along with other owned and partner extraction options, to process its over 5,000 acres of Canadian CBD hemp production, over 160 acres of outdoor cannabis production, as well as any extraction materials outputted from its over 4 million square feet of greenhouse growing operations.  Then it’s off to Smiths Falls to produce the best possible, IP-protected products out there!

Back in November 2018, Canopy Growth assumed control of KeyLeaf for accounting purposes. This meant that KeyLeaf’s financial results were consolidated in the Canopy’s fiscal 2019 financial statements. Through the transaction, Canopy is buying a large-scale Canadian extraction facility as well as an extraction-related facility in the United States to support its U.S. CBD expansion.


StaffStaffJune 14, 2019
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4min4730

CannaCraft had a dilemma as one of California’s largest cannabis producers and distributors.

California is the largest market for cannabis in the U.S. Unfortunately, the flip side is that, with strict child-safety packaging requirements, it also produces the most amount of cannabis waste.

As a company that works towards cannabis advocacy, sustainability, charity work, compliance and safety, CannaCraft felt compelled to take a step back and reimagine its regulatory compliance tactics through the lens of environmental protection.

The company’s strict compliance with state packaging regulations meant that it was contributing significantly to California’s waste problem. Worse, it was afraid that as other states looked to California for guidance, the amount of waste generated would multiply, creating a tidal wave of ongoing waste generated across the country — a major environmental crisis.

Cannacraft first focused on a new packaging strategy for its vape product. The two million vape cartridges produced by CannaCraft annually were being packaged in plastic, child-resistant tubes to comply with cannabis packaging regulations in California. CannaCraft created a new step to the manufacturing process which allows it to simply seal the vape cartridges themselves, making them inherently child-resistant without adding excessive, single-use plastic.

“Public safety is naturally a top concern for CannaCraft, but the excessive plastic waste was also troubling,” says Tiffany Devitt, CannaCraft’s Chief Compliance Officer. “With each plastic tube standing 5.5” tall, 1 years’ worth of CannaCraft’s child-resistant tubes would reach over 900,000 feet if stacked. Or 30 times taller than Mount Everest. That’s a lot of waste that we’ll be eliminating.”

Innovation has been a driving force behind CannaCraft’s success, and, with over one hundred unique products, the company has amassed one of the largest product portfolios in California.

Dennis Hunter, CannaCraft’s co-founder said the company is in the process of reviewing its entire product lineup and production standards to improve sustainability and decrease the carbon footprint of the industry.

As a major producer of plastic waste, the cannabis industry must continue to innovate and demand regulations that take the environment into account. Consumers can also do their part. First, when feasible, support marijuana producers and retailers who are using recyclable or compostable packaging. Second, make an effort to recycle the parts of cannabis packaging that are recyclable, like paper, glass or cardboard. Third, in states that mandate exit packaging, such as California, aim to reuse your exit bag for all your cannabis purchases (just like bringing your own reusable bag to the supermarket!). Finally, advocate at the government level so that regulations are enacted that protect both people and our precious environment.

 


StaffStaffMay 3, 2019
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4min6680

Indose, a groundbreaking precise dosage vaporizer that measures and displays exact dosage in real-time, down to the milligram, for a customized and controlled cannabis experience, announced today that it has closed a $3.5 million Series A round led by Casa Verde Capital.

Vaporizers are currently the fastest growing segment in cannabis, according to market research company ArcView. By next year, the vape segment of the legal marijuana industry in the United States is expected to more than triple to $3.9 billion. By 2021, vape sales are predicted to surge to a total of $5.2 billion — accounting for 25% of the entire industry.

Indose brings to market a proprietary metered vape pen technology that measures the precise dose — down to the milligram — of THC delivered with every draw. As a person inhales, their dosage is shown in real-time on an LED display that ranges from .05 MG to 4 MG, creating an individualized, controlled cannabis vaping experience.

The device is a drastic improvement over existing vaporizers on the market that provide either no control over dosage, or a one-size-fits-all approach using timers to deliver the same dose to everyone.

This $3.5 million raise will go towards expanding partnerships with cannabis oil manufacturers and brands across the country, increasing the size of the R&D team, filing for additional patents, and pursuing medical device certification.

“Dosage control is key to an effective and consistent cannabis experience, and there is no such thing as a universal dosage that is right for everyone,” said Indose co-founder and CEO Benzi Ronen.

Following three years of intensive research and development (and 15 filed patents) the Indose vaporizer features two proprietary sensors which take 10 measurements per second to calculate the precise milligrams of THC and CBD being inhaled by the user. This dosage is presented on the device in real time via an easy to read LED display. Whereas less sophisticated dosage-driven vapes deliver a “standard dose” between 2 and 3 MG, Indose allows users to micro-dose in .05 MG increments.

“We created Indose to address the critical gap we observed with first-generation vaporizers that guestimate dosage based on draw time or by moderating the temperature of the heating element. There is no universal dosage amount that is consistent to everyone regardless of their stature, experience or tolerance level. Dosage needs to be modified to each individual based on their receptors, body attributes and desired effects. With people using cannabis for therapeutic reasons in mind, we’ve developed a science-backed delivery system that’s both precise and personalized.”

Indose is democratizing this medical-grade device at an affordable price point. The vaporizer retails for less than $70, is recyclable, and comes paired with some of the world’s top cannabis oil brands — further customizing the experience. Indose is currently available in select pilot dispensaries in California and will announce a large-scale distribution partnership this summer.

“With decades of combined experience in product development and manufacturing, the Indose team was uniquely positioned to develop this innovative new technology,” said Karan Wadhera, Managing Partner of Casa Verde Capital. “We believe precise, self-regulated and responsible dosage will be the next frontier in vape delivery systems, and Indose is ahead of the curve with a device that brings medical precision to the mainstream.”

 


StaffStaffFebruary 12, 2019
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3min9950

The vape pen category has shown enormous growth in the cannabis industry, but not all vapes are created equal. Consumers are also beginning to show a preference in their purchasing habits when it comes to vapes as well. Kurvana has kept an eye on these trends and has managed to make a product to satisfy multiple consumers.

Cowen & Co.’s senior analyst Vivien Azer wrote that vape pens have grown their dollar share from 5.8% of the market in January 2016 to 14.7% in May 2018. Vapes have become the number two form factor in the cannabis industry trailing flower which commands a robust 52% of the market. However, flower sales have been losing ground to the vape pen sales.

Azer also determined that pricing varies for vape pens according to the market. For example, a vape pen in Washington state averages $26.31, while in Nevada that number jumps to $49.14. Consumers are also demanding to know more about their vape pens as the market gets flooded with products from dubious sources. Some companies buy their hardware from China from the same manufacturers that make e-cigarettes, but tobacco oil is thinner than cannabis oil, so additives are introduced in order to use the hardware.

Kurvana sources only the highest quality raw flower from organically grown cannabis, provided by trusted farmers well-known to the industry. Kurvana uses a proprietary 50-step process to purify the essential cannabinoids, tasty terpenes, and natural ingredients that contribute to the unique experience of vaping with full spectrum Kurvana oil. They never introduce extra terpenes or additives of any kind, because they distract from the plant’s original essence.

Consumers are also leaning more towards mood based vape pens versus strain based. Kurvana has captured both sides of this market. The ASCND pens offer 10 different strains that are clearly marked as to whether it is indica, sativa or a hybrid. Then the company’s website breaks it down even further into an easy to follow chart so that consumers can locate the symptom they want to address and find the pen to best address it.

The products are only available in California at this time, but with this is a high potency, attractive pen with a great taste that consumers will want to find.


Frances ArcherFrances ArcherSeptember 28, 2018
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9min14700

Editor’s Note: This content has been contributed by Vaping Daily.

Vaping is one of the fastest developing industries in the world. It’s a good tactic for you as an entrepreneur to focus your efforts where the profit may be more lavish. The global vaporizer market is expected to be worth $61.4 billion in 2025, growing at a rate of 20% by then.

But since the opportunities for business ventures are promising, more and more manufacturers, retailers, and other groups spring up to service it. Be ready to face stiff competition.

To become a successful businessman, you must have a plan and a vision. And you must know where exactly you want to go. Here’re 5 helpful tips:

1. Come up With an Idea.

There are several opportunities for entrepreneurs starting out in the e-cigarette industry:

  • A vape shop. That’s an option for those who have the capital for renting (or building) your own store.
  • An online vape shop. That’s a cheaper option. And since e-commerce is booming, you have favorable conditions for developing your start-up.
  • Vape products, components or accessories as an additional offer. If you own a shop that sells things like glass pipes and bowls for the consumption of tobacco or cannabis, why not to expand the list of goods and add various vape products?
  • A line of e-liquids. This business idea is for those who are good at mixing things and experimenting with flavors. You’ll still need a platform to sell it.

2. Understand Your Target Market 

Your customers will fall into 2 groups:

1) Tobacco consumers who want to quit and look for alternative methods. You can reckon them to buy Vapingdaily e-cig vaporizer by mentioning the advantages of switching to vaping, including health and financial ones.

2) Current vapers that usually know what they want or look for some new vaping experience. To win this type of customers, bring a variety of quality products, offer unique e cigs for true enthusiasts, and make sure the price is also smart.

Additional tip: Choose the shop location that is close to tourists attractions. Many vape entrepreneurs ignore this, but travelers can be a consistent flow of customers.

3. Prepare for the Costs.

Like any other start-up, launching a vape shop means investing a lot of money. Industry experts estimate a budget of $25,000 for a small shop and $50,000 for a large one monthly. The budget includes the following points:

  • Rent – $2,500-$5,000 per month, depending on your location
  • Inventory (electronic cigarettes, parts, and accessories) – $7,500
  • 10 bottles of e-liquid 15ml each in 20 flavors – $15,000
  • iPad and point of sale software – $2,500
  • Electric bill – $150-250 per month
  • Liability insurance – $150.

If you are going to join the franchise system, the initial franchise fee will cost you between $10,000 and $20,000.

Know that it will be tough to get funding. Banks put you in the same high-risk category for loans as the adult entertainment industry. You can try to get a grant from Ventury Capital that has funded a few vape businesses. Fundera helps small businesses find funding but does not originate the loans. It connects people to options from its network of lenders some of which will fund vape shops (although some don’t.)

4. Legal Vape Business Concerns.

Many states are still figuring out vaping regulation. It’s mandatory to keep up to date with the latest laws. The last thing you want is to do a remarkable job of creating your shop and then realize you overlooked your legal bounds. So, research the specific laws in your area. If you have some questions, hire a legal expert for guidance.

Here’s a list of the things you should consider:

  • forming a legal entity
  • registering for taxes
  • opening a business bank account
  • setting up an accounting system
  • getting all necessary licenses and permits
  • getting business insurance.

5. Promote and Market Your Vape Shop

Now that you have a solid plan for your vape shop, it’s time to think about how to attract visitors. The best way of advertising is building online buzz for your retail products.

  • Create social media pages, such as Facebook, Twitter, Instagram, or Reddit. Be active across these media channels even before opening. That will create hype around a new launch.
  • To reach the guests of your city, (travelers we mentioned above), put your shop on Google Maps and Apple Maps. Add it to sites like Yelp.
  • Devoted vapers attend different vape events, like contests and exhibitions. That’s your chance to publicize your shop. It’s also a perfect place to build business relationships with the best e-cig distributors.

Additional tip: before introducing your company to consumers, you should define your brand vision. It’s something that makes your business unique. Customers must understand what you offer and in what way you differ from others.

Do You Really Want to Be a Vape Entrepreneur?

Prior to starting a business, it’s important to understand what it means to be a vape entrepreneur. Assess your skills and abilities.

That’s what your typical day at a vape shop will be:

  • interacting with customers
  • networking with other representatives of the industry
  • checking inventory
  • placing orders
  • ensuring workspace is clean
  • completing administrative tasks
  • managing staff and delegating responsibilities

As an owner of a shop specializing in electronic cigarette technologies, you should keep up with current events in this field. Industry news, tendencies, trends, and fads will help you see new business opportunities.

I suppose you already are a fan of vaping. If not, become it quickly. It’s so much easier to advertise and talk up something that you strongly believe in.

Some people who will visit your shop will be real aficionados, and the ability to help the conversation on is necessary. The vape community enjoys discussing new e-cigs, flavors, or rising vape stars. Every loyal customer that you manage to earn will put you one step closer to having a prosperous vapor shop.

Entrepreneurship is always risky and challenging. But it can also be rewarding. Just make sure your every step is well thought-out.

Good luck with your vaping business venture!


Jack SmithJack SmithSeptember 19, 2018
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4min20320

The cannabis market has received a bit of good press recently, as Coca-Cola said it is “eyeing” the cannabis-infused drink market, following Constellation Brands investment in Canopy Growth last month.

But it’s one sub-sector of the market, cannabis concentrates, which may be the true star of the show.

Cannabis market intelligence and consumer research firm BDS Analytics has issued a new report showing that cannabis concentrates are expected to hit sales of $2.9 billion in 2018, up 49 percent year over year. That would make the concentrate market the second largest, behind only flower, according to the report.

“As the cannabis industry matures, we’ll likely see new product categories catch fire with consumers,” said Troy Dayton, CEO of the ArcView Group in a statement. “Concentrates are the first category to do that, but it’s just the beginning of a revolution in how cannabis is consumed now that it’s becoming legal around the world.” Arcview partnered with BDS on the report.

By 2022, concentrate sales are expected to nearly surpass flower sales in terms of size, at $8.4 billion, compared to $8.5 billion for flower sales.

“For consumers, it’s a discreet and healthier choice that will likely make cannabis consumers of people who would never dream of inhaling smoke,” Tom Adams, Editor in Chief of ArcView Market Research wrote in the report. “That will cause the category to represent ever more retail display space, and likely spawn vape-only stores and on-premises consumption venues.”

Adams added that concentrates are able to cut costs at different parts of the supply chain, making them more efficient to extract and distribute.

“But the main savings will be at the agriculture level, where expensive warehouse and greenhouse grows designed to provide pretty buds give way to traditional outdoor growing of a commodity crop. The cost savings—and broader consumer appeal of concentrates—will prove critical as the legal market struggles under the weight of heavy tax and regulatory loads to compete with the illicit market,” he wrote.

The concentrate market, which includes products such as vaping, is expected to grow to 27 percent of all U.S.-related cannabis sales in 2018. That’s a stark contrast from 2014, when it was just 10 percent of cannabis sales, indicating healthy and growing consumer demand for these products, experiencing 70 percent annual growth.

Of that exceptional growth, 58 percent of spending will come from prefilled vaporizers, deemed to be a “market dominance likely to grow over the next five years.”

“Technology is revolutionizing a product category that began as hand-rubbed hash in the Middle East centuries ago,” said Adams in the statement.

Adams continued: “We believe the growth of the concentrate market will continue as the cannabis industry evolves and consumers look toward new and innovative delivery methods that fit their lifestyles.”


Anne-Marie FischerAnne-Marie FischerAugust 21, 2018
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8min56202

As the July 1 regulations had most California cannabis companies scrambling to meet compliance standards for cannabis products, two companies implemented the best practices they had been planning since January 1 and are now dominating the California cannabis industry.

Headset, a real-time data source for the cannabis industry released their Insights Report where Caliva and Papa & Barkley are creeping up to the top, holding 50 top-10 rankings across the state of California.

Smoking Sensations

Caliva is leading in the flower, pre-roll and vape categories, proudly showcasing information about the testing standards completed for phase II compliance in California. The San Jose based retailer offers some of the industry’s finest pre-rolls, including “House Doobies” and Dogwalkers, and Toasties, rolled into the Caliva Collection.

By passing the California cannabis standards that came into effect July 1, in regards to packaging, testing, labeling, using child- and tamper-proof technology, and using prominent wording on labeling, Caliva rose to the top.

“We started preparing for July 1 regulations in earnest by January 1st. It wasn’t easy,” says Dennis O’Malley, CEO of Caliva. “We cycled through a couple different testing labs until we felt confident we found the best.”

From the consumer perspective, it was the trust that customers feel in the Caliva experience. “Trust means providing a pristinely compliant product that does what it claims to do every time,” says O’Malley, “At Caliva, we are obsessed about delivering the products the consumers want in the manner and channel of where and how they would like to purchase.”

The Caliva Collection is an excellent example of the best practices in packaging, labeling, and engaging the customer experience.

Topical and Tincture Trailblazers

Papa & Barkley is dominating the California cannabis industry in the way of cannabis tinctures and topicals. Their strategies began early with an “all hands on deck” approach to the changing packaging and labeling regulations. In the ever-changing industry, they never see their job as complete, “We are currently working on flexible on-demand packaging systems in anticipation of more regulation changes,” says Kimberly Dillon, CMO.

Of their success in topicals, Dillon attributes ease of use and a demand for non-psychoactive products; “Topicals are an easy introduction to use as a wellness product,” Dillon says.

Providing products ranging from balms to patches, to body oils, to body soaks under the Releaf brand, Papa & Barkley provides clear labeling on both their products and on their website. Tinctures and capsules allow oral ingestion for those who are looking to use cannabis without smoking or vaping.

When Preparation Meets Opportunity

It required a strong investment to get cannabis products up to snuff for California’s regulations. “We did not predict the large impact that the July 1 regulations would have on the industry,” says Caliva’s O’Malley, “We took our lumps in Q1 of this year,” in preparation for the July 1 regulations.

For Papa & Berkley, the process is continuously evolving as they come out with new product lines and anticipate new regulation changes, demonstrating the need to be nimble in the industry.

Both companies are seeing new opportunities emerge and are working those into their strategies. “Products need to fit into consumers’ daily lives and for the vast majority of the new cannabis consumer, there needs to be micro-dosed options,” says O’Malley. Caliva plans to release products marketed as “fun for you”, “good for you”, and “relief for you” to help consumers get their best cannabis experience.

For Papa & Berkley, it’s all about helping people use tinctures and topicals to explore the vast array of products and medical cannabis therapies available to people. “Some portion of the [new user] cannabis cohort will graduate into other form factors and use cases,” says Dillon. The company plans to expand into new product lines under the Releaf brand, including Whole Plant CBD products that will allow those who aren’t in legal states to access the benefits of their award-winning products.

As new companies emerge, and existing companies merge to pool resources for compliance regulations that are ever-changing, Caliva and Papa & Berkley serve as excellent models of the way for cannabis product best practices in California and across the industry.

 


Debra BorchardtDebra BorchardtJuly 10, 2018
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10min24420

Happy July 10. 710 is a thing for cannabis consumers. If you don’t know what that is, it’s okay. We’re here to help you learn. July 10 is or 710 is becoming a big sales promotion day and is growing in popularity. Cannabis consumers are always happy to find a new reason to celebrate and since 420 has been adopted by even non-cannabis consumers, 710 or Dab Day is the latest insider holiday.

If you turn the numbers upside down, it loosely resembles the word “OIL.” So, fans of cannabis oil as using that as an excuse to celebrate. Not convinced?

According to MJ Freeway, point-of-sale (POS) data from thousands of cannabis retailers across the U.S., Monday, July 10, 2017 sales were 15% higher than average Monday sales. The 15% increase can be wholly attributable to increased concentrate purchases. Concentrate category sales jumped 18% on July 10, 2017.  In the last three years, year-over-year 710 holiday sales growth has averaged 19%.

In addition to that, MJ Freeway predicts a sales spike of more than 25% today. Of course, these sales pale in comparison to 420 sales, but it is significant enough for dispensary owners to recognize it. Plus since 420 has been so heavily commercialized, it gives cannabis consumers a new secret handshake.

Cannabis oil can also be described as concentrates or extracts and has become one of the fastest growing categories for sales. It’s been well documented that flower sales have either stalled or declined as oil sales increased. MJ Freeway noted that the flower category share as a percent of total product sales has declined 14% since 2014. Comparably, edible category share growth is up 2% since 2014.

The company went on to say that on average, individual cannabis retail locations have experienced the following product sales growth since 2014:

  • Concentrate sales have grown 412%
  • Edibles have grown 272%
  • Flower sales have grown 149%

Flowhub Data

Cannabis data provider Flowhub has also picked up on this trend in sales growth. The seed-to-sale software company tracked a sample set of cannabis consumers on this holiday over the course of one year. They found that there was an 88% growth in concentrate sales when comparing 7/10/2016 against 7/10/2017 for the same sample set of customers. ($15,053.75 in 2016 and $121,802.14 in 2017). In comparison to an average Monday, sales of concentrates increased 34% on Dabs Day 2017, and in comparison to an average Tuesday, sales of concentrates increased 26% on Dabs Day 2017.

Promotions 

Cannabis oil companies aren’t missing the opportunity to use the holiday to promote their products. The Green Solution is offering up to two grams of NectarBee shatter, wax and pie crust concentrates for $24.95 each on July 10. If there isn’t a dispensary in your area, the online cannabis catalog on iheartjane.com currently has over 20,000+ cannabis products specific to the “extracts” category, which is the largest offering in the world.

If companies aren’t sure how to approach this holiday, MJ Freeway has created two retail guides:

 

 

 


Jack SmithJack SmithJuly 10, 2018
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4min24822

Vape pens, a discreet way to let people consume and smoke cannabis, continues to see strong growth in Washington, Colorado, and Oregon, new research shows.

Investment firm Cowen, combined with Headset, which is described as a “leading data provider in the U.S. cannabis industry,” shows that vaping has continued to gain in popularity, outpacing other forms of cannabis consumption.

“Across these three states, vapor is showing notable growth from a category share perspective (averaging 14.7% share),” Cowen analyst Vivien Azer wrote in the investment note. “The growing popularity of vapor looks to be fairly consistent across all three of these geographies, which is similar to the trends that we are seeing for nicotine consumption (where consumers, and in particular younger consumers, are increasingly moving away from combustion).”

Azer added that in markets like Colorado and Washington, vapor share is now at between 13 and 15 percent, up from January 2017. In Nevada, it’s even higher at 18.7 percent, compared to an initial reading of 15.7 percent.

“The distinct trends noted in today’s report around pricing, disruptive form factors and shifting consumer preferences are squarely based on sales data drawn from states representing nearly one-quarter of the total U.S. population residing in jurisdictions that have legalized cannabis for adult-use,” Azer said in a statement, discussing her research.

The findings are significant, as these three states generated more than $2 billion in sales, with Colorado the biggest market at $1.1 billion in 2017. Washington generated approximately $928 million in cannabis sales, while Nevada saw $198 million in sales in the first six months the data was available.

In addition to being popular with consumers, value-added products, which may include vapor pens, as well as other products such as edibles and topicals, could see pricing power, Azer wrote in the note.

“In particular, we see healthier pricing trends for tinctures & sublingual products, topicals and edibles,” Azer wrote. “We believe this better pricing could reflect the appeal that these products have among less sophisticated cannabis consumers.”

Conversely, products that are combustible, have seen a decline in popularity in the aforementioned states. Flower now has a 52.1 percent market share and pre-rolls account for 7.7 percent as of May 2018, but they are ceding market share fast.

“Over time, we would expect to see consumers continue to move away from whole flower purchases as innovative products offer more consumer control and convenience,” Azer wrote in the note.

Azer estimates the U.S. cannabis industry could reach $75 billion in sales by 2030.

 



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