As the global supply chain encounters massive shortages, getting basic materials like ceramics, stainless steel and computer chips from China has gotten difficult and is now about to hit the U.S. cannabis industry, reported Bloomberg.
As the global supply chain encounters massive shortages, getting basic materials like ceramics, stainless steel and computer chips from China has gotten difficult and is now about to hit the U.S. cannabis industry, reported Bloomberg. The cannabis industry has so far been shielded from supply-chain woes because most of it is hyper-local. But state-specific supply chains can only protect the industry for so long.
“I believe this issue will go on at least until the end of May,” Arnaud Dumas de Rauly, CEO of Blinc Group, a cannabis vaping hardware firm, told Bloomberg. And it’s not just vape devices, added de Rauly. Raw materials, LED lights for grow houses and chips…all of it comes from China.
“We’re trying to order ahead — we’re not paying more, but we’re paying upfront, also we’ve begun to source domestic pools of inventory,” de Rauly said.
When the supply-chain impacts begin to be felt, they’ll hit products like packaged pre-roll joints and vape cartridges more than raw flower, said Josh Krane, vice president of operations at 4Front Ventures, a large-scale cannabis cultivation and manufacturing company.
Vapes: A Large Segment In The U.S. Industry
Jessica Lukas SVP in commercial development at BDSA, a leading cannabis market research company, told Benzinga that inhalables are the preferred mode of consumption. A broader offer of products enables consumers to find new stays throughout the week to consume cannabis. “We are talking about people vaping more and more often.”
Lukas highlighted that cannabis brands are expanding their reach in the US and are beginning to cross state borders, “we’ve seen Colorado and California brands coming to the East Coast and MSO’s bringing their product to more ‘legacy’ markets.”
Some of these products including vapes, oil, distillates and live resin are the most popular among consumers.
Lukas noted that as the vaping segment becomes more crowded, price differentiation will be key to succeeding in a largely unregulated market. Brands will have to innovate and address particular markets.
However, without federal regulations governing the cannabis supply chain, marijuana production and cost structures remain uncompetitive and will continue to exclude smaller producers from accessing markets and achieving the conditions to produce cannabis more efficiently.
Image By Vape Chiara Summer On Unsplash.