The CannaCloud is a desktop vaporizer product that has raised over $6 million dollars from investors and the product hasn’t even reached the market yet. Sales are planned for the end of 2017 or maybe 2018. In the meantime, the investor money will be used on manufacturing, building partnerships and marketing. But is there a big enough market for this product to return a profit to these investors?
There are already a handful of desktop vaporizers on the market like the expensive Volcano, that retails for $479 on Amazon or the Arizer at $169. These machines and big and bulky and come with attachments like balloons for a complicated method of consumption. The user grinds up the marijuana to put in the machine to be vaporized. The CannaCloud is different and uses a recyclable Keurig-like pod device that skips the grinding step and then releases a controlled cloud for the user. The most obvious question is “why not just use a vape pen, which is more convenient and mobile?”
Greg James, Sr. Vice President of Sales and Marketing of CannaKorp expects that question saying, “Every other vaporizer for flower, you have to do all the grinding. You must do all the measuring, packing, touching and that affects consistency. With our device, because its packaged in this premeasured pod by the licensed producer we partner with, the patient know what they’re getting every time.”
The real benefit of the CannaCloud in James’ opinion is that it creates its vape from the original flower and not a concentrate. “A lot of cases with oils, or extracts or pills, you’re getting some of the compound, but you’re not getting the dozens of other cannabinoids that are a part of that plant. We’re believers in the flower.” He also thinks that the target audience will be the medical community that is most likely to consume in the home and not have the need for convenience.
Ben Ward, CEO of Maricann said, “We believe the best way to ingest cannabis for medical use is through our capsule technology, which is differentiated by its capability to be absorbed in the stomach and intestine, like most traditional methods. Inhalation, while popular, will become a recreational/lifestyle. If you don’t have to inhale, and can have the same effect, why bother?”
James believes adult use consumers will also appreciate using the product as part of a wellness device. “I think we fit well in-between medical and recreational for people looking to use the product like using it to help sleep.” The pods are recyclable and believe they have learned from Keurig’s mistakes which made pods that weren’t able to be recycled. He also suggested that a “new to cannabis” consumer would also appreciate the pod device as less unusual. “They’ll be looking for a consumer product that’s easy to use, measurable and consistent. It’s not offensive. You don’t have to put it away when Mom comes over.”
“The CannaCloud is a good product for a novice or elderly patient due to ease of use and consistent dosing, but as with any single-use product, there is always a risk for unneeded waste,” Matt Gray, the Chief Executive Officer of lifestyle site HERB. “While the pods are made from recycled materials, the consumers are still responsible for recycling them, which may be unrealistic.”
Canada’s MedReleaf seems to agree and has signed a multi-year agreement with CannaCloud in which they will fill, package and distribute the pods to their patients. However, as of Aug 2016, there were only 91,178 registered patients in all of Canada and it can be assumed that only a fraction of these will choose this product. So, the market could be a great test case and a nice place to start, but it isn’t big enough to be sustainable for the company.
With regards to the American market, in states where adult use is legalized medicinal use tends to drop. Further clouding the future for this device. The biotech pharmaceutical companies are focusing their efforts on pill formulations or in the case of AbbVie’s (ABBV) Marinol a potential chewing gum formula. To CannaKorp’s point, many patients don’t like the idea of smoking medicine and the vape delivery seems to be a better alternative.
This is where the convenience of vape pens competes with the desktop machines. Vape pens can be created for medicinal purposes and this method of consumption has proven to be very popular as sales are in the millions. Point of sale reports from dispensaries frequently point to products from O.penVAPE or Evo Labs or even Cura’s Select brand in Oregon as top sellers, but you rarely see desktop vaporizers as top sellers. Online vape outlets did not respond to requests for sales or trend data on desktop units.
In addition to that, CannaKorp isn’t the only company making a pod based delivery play. Brewbudz is offering a pod based product that is used to infuse coffee, tea or cocoa with the chosen cannabis blend. This company claims to be more mobile than the CannaCloud, but offers the same customer desire for pod based delivery. Instead of needing a new machine like CannaCloud, the pods can be used in the traditional Keurig style machine. The pods come three per box and retail between $22-$28.
The CannaCloud will retail between $149-$179, but their end goal is to sell pods. Some cannabis industry insiders questioned the need for the product, while not wanting to publicly dismiss it. “What problem are they really solving?” said one. Another said, “Why not just use a vape pen?” A cultivator said, “The money that has been raised seems to be based more on the pedigree of the founders than the need for the product.” Indeed. The team consists of heavy hitters from Keurig, P&G, MIT Lincoln Labs and Redfin. Not too shabby.
Ultimately, the customer and the market will decide whether this product will be a success or not. Investors believe it is a winner, while several in the industry remain skeptical that a desktop product can win over a vape pen.