How Will Canopy Growth Capture the US Vaping Market?

Recently, we discussed why vaping gained significant interest. The vaporizer segment’s market potential will likely be 20%–30%. Many people think that vaping is an alternative to smoking. Vaping is also promoted as an alternative for individuals who want to quit smoking. To learn more, read Vaping Cannabis or Smoking Tobacco: Burning Questions. We’ll discuss how Canopy Growth plans to deepen its presence in the US vaping market.

There’s a general sense that vaping is less harmful than smoking. The same logic has been carried over to the cannabis industry from the tobacco industry. As a result, many cannabis companies will likely focus on the vaporizer segment to grow their respective businesses.

Canopy Growth and Greenlane Holdings

On Thursday, Canopy Growth (WEED) (CGC) announced its entry into the US vaporizer market. The company entered into a distribution agreement with Greenlane Holdings. Under the agreement, Greenlane Holdings will distribute the company’s vaporizer in the US. Canopy Growth acquired Storz & Bickel’s vaporizer business earlier last year for 145 million euros. Interestingly, the agreement to distribute the Storz & Bickel vaporizer with Greenlane Holdings isn’t new. Greenlane Holdings has been distributing Storz & Bickel vaporizers in the US since January 2018. Greenlane Holdings also indicated that it has launched several products for Storz & Bickel since 2005. Canopy Growth might have been inclined to acquire Storz & Bickel due to its solid history with Greenlane Holdings.

In the press release, Canopy Growth called Greenlane Holdings “one of the largest global sellers of premium cannabis accessories.” Greenlane Holdings has more than 11,000 retail locations. The company will be an important distribution network for Canopy Growth. The agreement should generate higher revenues and margins for the company. 

What makes the company attractive?

Canopy Growth and Cronos Group (CRON) are attractive stocks. Jim Cramer favors the companies due to their deep wallets from Constellation Brands (STZ) and Altria (MO), respectively. The financial backing allowed both companies to acquire businesses quickly. With the addition of Storz & Bickel, Canopy Growth will likely capture the US CBD market under the vape format without having to build the business from scratch. To learn more about different formats, read Investing in the Cannabis Industry.