The State of America’s Cannabis Vape Supply Chain

Terpene Belt Farms
Terpene Belt Farms

The first vapes that launched in Colorado, Oregon and Washington were a miraculous evolution. Their convenience alone — walking around with medicine in your pocket and being able to control dosing — changed the way we consume cannabis forever. And even though flower was the first true product category and continues to dominate dispensary shelves today, vape carts were the first products that became actually scalable and brandable.

Vape is now the second largest product category across the country and popularity shows no signs of slowing down.

So, how are vapes made and why should the US market take notes from Coca-Cola’s playbook?

Vape cart inputs: “Complete cannabis” is here to stay

The north star of any cannabis vape manufacturer? To recreate the exact same components of the cannabis plant in vape carts.

Between the eVali (aka Vape Gate) crisis of 2019 and consumers buying more “complete cannabis” vapes (vapes with cannabis plant inputs only) in mature US state markets, many manufacturers across the country changed course accordingly.

There are roughly 400 compounds that make up the cannabis plant and they break down into two main components:

  1. Cannabinoids (THC, CBD, CBN, etc.)
  2. Essential oil (everything else that’s not the cannabinoids)

Cannabinoids contribute a lot to the effect of each cannabis cultivar (commonly referred to as a “strain”), but they are not complete medicine on their own. The smell, taste and complementary effect of a cultivar are driven by the essential oil.

You probably understand essential oil based on the terpenes it contains. The largest component of essential oils, terpenes (organic compounds made of hydrogen and carbon) are the volatile aromatic compounds that give plants their unique aroma. All plants, fruits and vegetables have terpenes —  they’re what drive the scents of nature. When you’re walking through a forest and smell the pine trees, you’re smelling the terpenes. Essential oil also contains compounds like esters, aethers, aldehydes, ketones and many other known and unknown compounds that all contribute to the effect each cultivar has on you.

The cannabinoids + essential oil partnership is like a high school slow dance. When “Stairway to Heaven” comes on, the natural state of affairs is two people dancing together. If one person is out there twirling around in a circle by themselves, it doesn’t really work.

Problems in the early days of vape carts

In the early days of vape carts (up until about 5 years ago) manufacturing techniques, talent and overall supply chain were still in their infancy. Most manufacturers were able to extract just one cannabis compound pretty well, that being THC.

THC distillate

THC extracted from cannabis flower became known as THC distillate, a gold colored oil composed of concentrated THC and no essential oil (essential oil gets burned away during the extraction process.) This distillate doesn’t taste great—in fact, it doesn’t taste like anything. Without flavor, you can’t really market any product to consumers effectively. You also can’t create multiple SKUs under the same brand from the same THC distillate by itself.

Botanical and synthetic flavoring

To solve the flavorless problem, manufacturers turned to botanical and synthetic flavoring, as these were the options available at the time. Botanical terpenes (flavoring coming from another plant), provide taste, but they don’t substitute for the hundreds of natural compounds found in cannabis essential oil and they don’t create complete medicine.

Even worse, synthetic terpenes (flavoring that’s artificially made in a petroleum plant, probably somewhere in Texas), is definitely not what anyone should be inhaling. Think fake blueberry flavoring in your muffins. It’s not good fuel for your body and is never preferable over real ingredients.

Live Resin

Along the way, manufacturers learned how to extract both cannabinoids and terpenes from the cannabis plant, which the industry knows as live resin or some derivation of this. But if you can’t take your extracted cannabis across state lines, there’s no way for you to create flavoring that can be used everywhere.

Even more, when you’re growing or extracting one “strain”, you only end up with that one strain and one Live product. There’s no way to create multiple SKUs or product flavors from the same strain when doing terpene extraction in-house.

Enter supply chain specialization

Most manufacturers have decided that creating real cannabis flavoring themselves (i.e., extracting their own essential oil) isn’t worth the time, money or effort.

And with today’s third party cannabis flavoring options, most manufacturers can’t compete in product quality if they do it themselves. The largest companies in the country have drawn the line in the sand and said: We don’t need to do this ourselves anymore.

Instead, they pick their specialty and build partnerships with third party suppliers who can bring the best-in-class inputs.

Learnings from the Coca-Cola playbook

Think about Coca-Cola. There are volumes of local bottling plants across the globe, but we know exactly what we’re getting whenever we pick up a Diet Coke regardless of location.

Coca-Cola has come up with many products that are worldwide hits. Each one of them went through massive R&D and experimentation with different ingredients and carbonation levels until a winning formula was reached.

Coca-Cola sends local bottling plants the winning international “essential” syrup, the packaging, and the labels. Local bottling plants are responsible for the team, equipment and water for local distribution. The local team mixes the syrup with their water supply, bottles it and brings it to market.

Sound familiar? Successful vape brands operate similarly — vape carts were the first product line needing a formula with standardized ingredients. With the right supply chain in place, vape brands can sell CPG style vape products that are packaged the same, taste the same and have the same effect wherever you are.

At the end of the day, we’re all creatures of habit. When we know what we like, we stick to those products and expect consistency. This is especially true when it comes to medicine and wellness products. You want to grab a vape anywhere and get the exact taste and effect you’ve become accustomed to, just like how you can grab a Diet Coke anywhere and it’s always the same.

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