The next phase
In the next phase of the cannabis market, companies plan to shift toward value-added products that will have the opportunity to bring in higher margins as opposed to dried cannabis. Canopy Growth (WEED) (CGC) thinks that the vaping product category will have high growth, which led the company to acquire vaporizer maker Storz & Bickel. Read Canopy Growth: Moving to Products with Higher Margins.
Aurora Cannabis announcement
On June 21, Aurora Cannabis (ACB) made an announcement that indicated that it will move towards higher margin vape products as well. In addition, the company also believes concentrates and edibles will command higher margins. In anticipation of this development, the company announced the expansion of its facility to capitalize on growth related to these segments.
Similar to Canopy Growth, Aurora Cannabis will also introduce vape products through its partnership with PAX. The company plans to launch new products in the market to be offered at different price points. In its announcement, the company stated that these products will be “targeted to all major consumer markets through both 510 thread cartridges and disposable single-use units.”
Edibles and other varieties of cannabis products certainly appear to be getting mainstream, which may also indicate that customers aren’t ready to try the traditional cannabis formats, which are usually through smoking.
On June 21, Aurora Cannabis (ACB) closed 1.8% lower, while the ETFMG Alternative Harvest ETF (HMMJ) closed lower by 1.7%.