Analyzing Profit Potential for Cannabis Pod System

The cannabis pod vape is a unique category in the cannabis vape market. It requires a significant investment in terms of funding, oil products, marketing, and distribution. However, if managed effectively, it can offer significant long-term benefits and brand value. The market for pod systems has shown steady growth in recent years. In addition to well-known manufacturers such as STIIIZY, Pax, and Plug&play, well-known cannabis brands have also launched pod system products. This suggests a positive outlook for future pod system product sales.

This article examines the cannabis vape market sales overview of pod system products in different regions worldwide. It also analyzes the challenges and opportunities faced by cannabis businesses when introducing pod vapes. The analysis provides valuable insights for cannabis businesses. It highlights the value that the pod system category brings to the development of cannabis brands.

1. Overview of Pod Products in the Cannabis Market

1.1 Overall Situation

In recent years, there has been a significant increase in government and public acceptance of medical and recreational cannabis worldwide. In the U.S., an increasing number of state governments are legalizing the use of recreational cannabis. Similarly, certain European countries such as Germany are adopting a more lenient approach towards recreational cannabis, with bills proposing its legalization. Consequently, the cannabis vape market has witnessed substantial growth. This growth is evident in the expanding market size and the increasing number of vape brands. The competition within the cannabis vape market has become more intense, with new products and brands constantly emerging.

1.2 Regional Outlook

North America is currently the dominant force in the global cannabis vaporizer market. The United States and Canada play a significant role.
Both Canada and the United States have witnessed the growth of vapor pens. Although the pace of growth in Canada has been slower compared to the consistent growth observed in the United States. By 2022, the market share of vapor pens is expected to increase in both countries. The rate will reach 8.3% in Canada and 23.3% in the United States.

Within the United States, established markets such as Colorado, Nevada, Washington, and Oregon have experienced high rates of market share growth. In contrast, newer markets such as Illinois and Ontario have seen more modest gains. Michigan is the only state where the vapor pen market share has declined.
The use of vaporizers as an alternative to cigarettes is popular among Americans. Particularly for the group under the age of 30. Which has fueled demand for cannabis vaporizers in North America. In addition, Europe is expected to emerge as a profitable region for cannabis vaporizers in the near future.

1.3 Pod System in the Cannabis products category

The cannabis market currently offers three main types of vapes: 510 cartridges, disposable vapes, and pod system vapes. While disposable vapes are affordable and easy to use, they do have some drawbacks. They are not environmentally friendly and have a limited range of flavors. Trying new flavors means having to purchase a whole new product. Apart from environmental considerations, experienced cannabis users may find disposable vapes to be of inferior quality. And are unable to deliver their preferred cannabis taste.

On the other hand, 510 cartridges and pod system products allow for repeated use. Users can simply purchase different cartridges or pods. And switch between different cannabis extracts. 510 cartridges have been around longer and have stable product development. They are less convenient for loading and unloading the cartridge. The plain appearance of 510 carts compared to the pod system vapes is also a pain point.

The Pod system combines the benefits of disposable vapes and 510 cartridges. It offers affordable prices, user-friendly design, environment-friendly design, and improved portability. As a result, the pod system has become an increasingly popular cannabis vaping product.

Since STIIIZY launched its first cannabis pod vape, they have become popular in the cannabis market. It initially launched in California. This brand has gradually expanded to several states where recreational cannabis is legal. The pod system category doesn’t represent a large share of the overall cannabis vaporization market. However, it has grown in recent years, sometimes even outpacing disposable products. Except for the companies that have successfully launched pod products, such as Stiiizy, Pax, and Plug&Play. Other major players in the cannabis market have also introduced their pod system products. This suggests that pod system products still have growth potential in the future cannabis market. And are an important category in the future of cannabis vaping devices.

2. Opportunities and Challenges of Introducing Cannabis Pod

The pod system is a unique category in the cannabis vaporization industry. It has the potential for future cannabis market sales. However, launching a pod product requires significant financial investment and high-quality cannabis extracts. Moreover, cannabis companies must maintain high standards in product marketing, and channel promotion, when launching pod products. Despite these challenges, successfully operating a pod system can result in long-term profits and brand benefits for the cannabis business. In the ever-changing cannabis market, building a loyal user base through pod systems can create promising prospects for the company. This is because loyal users brought in by the pod system will continue to purchase pods in the future, ensuring a steady stream of profits and brand benefits for the company.

2.1 Opportunities:

2.1.1 Well Established User Base

In the North American cannabis market, pod systems have become highly popular in most regions. Leading brands have been educating benefits and promoting pod products in different states. The increasing pod usage rate presents a significant opportunity for cannabis companies to market cannabis extracts. It also means that new cannabis brands might not need to educate users about the products. And once users trust the quality of a pod battery, they are likely to become accustomed to the same brand and make repeat purchases. This loyalty often drives the success of many pod brands. It presents a ripe opportunity for the cannabis business to thrive in the highly competitive cannabis market.

Additionally, pod systems can attract users who have switched from e-cigarettes. STIIIZY, is a prominent brand in the cannabis vaping industry. It gained early popularity for its products by creating a similar look to the popular nicotine pod brand. Survey research has shown a considerable overlap in the demographics of nicotine and cannabis consumers. The similarity between cannabis vaping and nicotine vaping appeals to users. This similarity reduces the learning curve for users and effectively attracts potential users from the nicotine vaping market.

Similar to nicotine vape products, cannabis vape products have become popular in the market. This is not only due to stricter e-cigarette regulations in various countries. It is also because e-cigarette retail channels have started selling cannabis vaping products. Especially after the legalization of recreational cannabis in their respective areas. In areas where the market for nicotine and cannabis pod vapes is well-developed, launching pod system products can be a smart move to capitalize on this trend. This approach allows the cannabis business to quickly penetrate the local market and generate profits for the brand.

2.1.2 Avoiding Potential Regulatory Risks

The nicotine-disposable vape market has seen a surge in sales in recent years. However, it has also faced increased regulation and restrictions from regulatory authorities. This has led many nicotine users to switch to cannabis pod vapes. Compared to disposable vapes, pod products have lower regulatory risks, making them a safer option. Interestingly, many cannabis vape users prefer products that resemble nicotine vapes to use cannabis vapes discreetly.

The development and product forms of cannabis vapes closely resemble nicotine vapes. The regulatory trends affecting nicotine-disposable vapes are likely to have a negative impact on cannabis-disposable vapes. From an environmental standpoint, pod system products have an advantage over disposable vapes due to the reusability of vape batteries. Overall, the current market regulations also create favorable conditions for the positive development of pod system products.

Taking the current market trends in the nicotine vape industry into account. The cannabis business could gain valuable insights that can be applied to the cannabis vape sector. These insights can help cannabis businesses anticipate the potential regulatory path for the future of cannabis vape. Based on what has happened in nicotine vapes, cannabis pod vape products have relatively lower risks of lawsuits.

2.1.3 Promising Growth Prospects

Based on the aforementioned analytical data, pod systems show potential for future growth in the cannabis market. In fact, pod systems have shown an overall positive growth trend, outpacing the growth rate of disposable vapes in the nicotine vape market. In 2023, the growth trend of nicotine-disposable vapes in multiple countries worldwide is being limited by legal regulations. It results in a slowdown in the growth trend of disposable vapes. However, this situation creates a significant opportunity for pod-system vapes to experience rapid growth. Given that the cannabis vaporization market tends to mirror trends in the nicotine vaporization market. It’s reasonable to anticipate a possible shift away from disposable vapes. If this happens, pod products could become the next big trend, echoing what’s happening in the nicotine market.

2.2.1 High Entry Costs

The cost of pod system products is higher. When compared to other categories such as cartridges and disposable vapes. If cannabis companies look to introduce pod products in the next phase of their development. They should consider the R&D costs for product development. As well as the cost of pod system battery marketing. Which requires a significant amount of capital turnover.

Taking the example of the well-established pod product brand STIIIZY. The sales of pods depend on the number of batteries already sold in the market. Early promotion of pod batteries requires a significant capital investment. However, STIIIZY has successfully established extensive distribution channels. It is sold in 14 states in the United States and has the leading market share in 8 states. However, there are still 11 states in the United States with legal recreational cannabis markets that STIIIZY has not yet covered. It creates opportunities for other brands to enter the market.

Developing a pod system product line requires a significant level of expertise. As well as a relatively long timeframe. However, the technological barrier for pod products in the cannabis vape industry is not high. And product iteration is not particularly fast. In essence, the most advantageous choice for entering the pod system product line in the current market situation is to seek collaboration with a professional pod system manufacturer.

2.2.2 Comprehensive Quality Testing

The introduction of the pod system product line requires a high level of quality. It encompasses both the pod system device and the cannabis extracts. Some pod system products may have compatibility issues. For example, the magnetic pod can easily shake or become loose when inserted into the battery. These may be due to improper reserved space dimensions. However, it can negatively impact the vaping experience for cannabis users. To address this issue, stricter control over pod design and production is needed to improve compatibility.

Many pod batteries on the market have a short lifespan and are prone to damage. To encourage customers to keep buying the same brand of pods, durable pod batteries are essential. Although STIIIZY is a leader in Pod system products, its battery quality control is lacking, resulting in a 25% chance of customers purchasing defective battery poles. To achieve higher compatibility standards for pods, Artrix has established the “Product Quality Standard System“. This system effectively guarantees product quality by establishing 4 product aspects and 13 detailed standards. Ensuring that Artrix vape devices have undergone rigorous market testing.

If a cannabis company is preparing to launch a pod product, it is crucial for them to also prioritize the sourcing of cannabis extracts. The quality of these extracts is essential in guaranteeing a satisfying experience for customers from their initial purchase. It in turn promotes repeat purchases. Furthermore, continuous research and development of terpenes or cannabis extracts with unique effects is necessary to provide users with new and distinctive experiences. Ultimately, these endeavors will result in a consistent stream of long-term profits for the company.

2.2.3 Increasing Marketing Challenges

Marketing pod system products comes with challenges. The vape battery of a pod system is relatively expensive. Convincing customers to purchase the vape battery and continue repurchasing pods presents a significant test for brands in terms of marketing and customer engagement. Since the profit from pod system products largely relies on customers repurchasing pods. Hence, building customer loyalty becomes crucial. With the cannabis vape pod product market becoming more mature, competition between brands has intensified. Making it harder for new entrants to establish themselves.

Increased competition also means higher risks. Brands need to invest more in marketing to stand out in a crowded market. Building and maintaining customer loyalty, and guiding repurchasing, are important challenges for cannabis brands. They need to address this in their marketing strategies. Recognizing the challenges faced in the ever-changing cannabis market, Artrix provides high-quality vape hardware and marketing support services. Artrix helps optimize cannabis vape marketing strategies to increase productivity and reduce costs. Customers can enjoy free marketing support services after ordering vape hardware from Artrix, without any additional cost.

3. Who can benefit from the introduction of Cannabis Pod?

3.1 Cannabis businesses looking to increase brand impact

Some cannabis businesses already have a strong brand foundation, a loyal consumer base, and market share in certain areas. However, they still need to expand their brand influence and capture more market share. The increasingly popular pod system appears to be a promising market to enter. However, these cannabis companies often struggle to find reliable equipment suppliers. They have concerns about the quality of existing pod systems on the market, particularly the knock-offs of STIIIZY’s products. Therefore, it is critical for cannabis companies to carefully evaluate and select high-quality product suppliers for cannabis pod vapes.

In the current cannabis pod vape market, STIIIZY dominates with a significant market share. It creates competition for other cannabis companies with cannabis extract products. To meet the different taste preferences and needs of different consumers. These companies can introduce their cannabis extracts in different product forms. Pod system products provide an excellent opportunity to reach consumers with different cannabis extract flavors. This action also differentiates them from STIIIZY. It allows them to target end users who are looking for alternatives to STIIIZY, while also meeting the demand for a variety of cannabis products.

In this competitive landscape, having a high-compatibility pod system product is important. Artrix Fitty meets this requirement. By introducing Fitty, a highly compatible new product. Cannabis companies can increase consumer loyalty to their brand. As well as address the pressing need for compatible products with greater variety. Fitty is known for its excellent and reliable quality, impressive vaporization capabilities, and lightweight and slim vape battery design. It avoids the product material defects issues commonly found in imitation pod systems available on the market.

3.2 MSO Cannabis Businesses Exploring New Markets

For MSO cannabis businesses, the initial cost of implementing a pod system is significant. It requires investment in establishing a product line. It also means allocating funds for initial marketing efforts. However, as MSO cannabis companies seek to enter states with high demand for pod systems, they may consider prioritizing the launch of pod products. This approach presents both benefits and challenges, as well as opportunities and obstacles.

The benefits and opportunities are clear: MSO brands no longer need to educate the market and users. In these states with high demand for pod systems, customers have already been educated by other brands. They are accustomed to pod system products and already have compatible vape batteries. So they can directly purchase and use pod products. However, these MSO brands also face significant challenges and difficulties. They lack innovative marketing and promotional methods.

For MSO cannabis companies that want to enter those states with high demand for pod systems. They can attract consumer attention through lower prices and stable quality. Topop is a pod system product that can be easily introduced without a large investment. As a pod product, its vape device has similar investment costs to disposable products. In addition to saving MSO cannabis companies market development costs, it also expands their product line and increases profit margins. At the same time, Artrix offers vape products with business consulting and marketing support for cannabis businesses. All of these comprehensive services are free when you order Artrix products. This eliminates cannabis companies’ concerns about developing pod system product lines. It solves sales bottlenecks and keeps up with market trends. As well as effectively competes for market share with other competitors.

4. Business Value of Pod System Category for Cannabis Brands

4.1 Economic Value

4.1.1 Cannabis Pod Brings Long-term Stable Profits

Pods have a higher product premium than other cannabis vape types. Although there is a significant initial economic investment in building a pod product series. The continuous repurchase of pods can provide longer-term and more stable profits for the cannabis brand. The market for pod systems is relatively stable. Currently, the cannabis pod category is dominated by STIIIZY Pods, Vfire Pods, Dart Pods, and other low-cost imitation pods.

In the leading states for legalized recreational cannabis in the United States, these brands have a strong hold on the pod market. This makes it difficult for consumers to purchase pod products from alternative brands. This means that the pod products available to consumers are highly homogeneous. Users need new pod system products to provide them with differentiated options.

According to Artrix Infobank, the market size of the pod category in the United States is approximately 30 to 35 million units per year. This includes STIIIZY (30 million units/year), CLAW (over 5 million units/year), PLUG&PLAY (2.4 million units/year), and Trulieve (over 6.42 million units/year). Stable market demand implies that the pod system product line will continue to bring long-term economic benefits to the brand after the smooth operation.

4.1.2 High Compatibility Adding Extra Value to Cannabis Pod

Taking inspiration from the nicotine vaporizer industry, similar compatible products have emerged in the nicotine vaporizer market. The sale of just one device can result in the sale of nearly 4 pods for e-cigarette brands, indicating a substantial market volume and a significant portion of long-term revenue. Taking the VEEX electronic cigarette as an example, the first-generation VEEX pod is compatible with an industry-leading brand’s battery, while the second-generation VEEX’s battery is also compatible with the YOOZ pod. This is a typical case of compatible products that also come with their own branded battery device. This high compatibility has created new sales channels for the product. Due to its high compatibility, it may attract the interest of customers who currently use the two other brands.

Based on consumer feedback, some flavors of the YOOZ pods are often out of stock, while the VEEX cartridge offers a wide range of flavors and is highly rated by consumers. The VEEX pod is more transparent, has a better appearance, and is more cost-effective. By addressing these different aspects, VEEX effectively enters the electronic cigarette pod market and meets the needs of users. In this case, pod products with strong compatibility and compatibility capabilities are a promising direction to explore.

4.2 User Value

With the Pod System product line, brands can attract and retain more engaged users. Indeed, repeated purchases by users contribute to economic value. However, a deeper analysis reveals that when users repeatedly buy the same brand of pods or new batteries, they gradually become brand advocates. This phenomenon is beneficial to the brand because it fosters deeper customer loyalty, making users more engaged. It even has the potential to attract more high-end customers.

4.2.1 High Compatibility Leverages Cannabis Pod Popularity

Within the Pod System, consumers can use a modular design to select Pod products with different cannabis extracts based on their preferences. The modular design allows for compatibility with Pod products from the same brand (under certain circumstances, it can also be compatible with other brands). This allows users to purchase Pods in bulk during promotional periods and use them with different styles and shapes of battery, providing a more personalized and customized experience. In addition, a single battery can accommodate Pods with different capacities and resistance levels. By changing the Pod, users can enjoy different cannabis extract flavors or vaping resistance to meet a range of needs. For example, for short trips, users can simply swap out the Pod with a larger capacity.

Throughout the life of the battery, consumers only need to change the Pod to enjoy a variety of cannabis extracts. This is a low-cost option for consumers. According to Fogcore Technology’s prospectus, they sold a total of 5.6 million Yoke vape pens and over 120 million cartridges in the first three quarters of 2020. In the consumer market, electronic cigarette kits are usually sold as “one pen, two pods”. Considering the price of 99 yuan per box of 3 cartridges for Yoke, it means that for every vape pen sold, the brand would sell nearly 4 boxes of pods.

In addition, new users tend to repurchase more frequently, so the actual sales data may be even more promising than estimated. Selling compatible and interchangeable pods can be a convenient way for cannabis companies to enter the market. By leveraging the existing popularity of mainstream brands and offering high-quality cannabis extracts, new entrants to the pod system product space have a good chance of retaining the majority of users as loyal customers.

4.2.2 Cannabis Pod Gains User Loyalty and User Retention

Brands often prefer to use vape pod systems that are specific to their product line and not compatible with pods from other brands. This approach ensures that consumers will consistently purchase pods from their preferred brand. The Artrix Fitty, however, stands out for its impressive compatibility, as it fits perfectly with several popular pod systems due to its size-to-size fit.

The pod system is also the most effective product form to promote user loyalty and high user retention. Using nicotine e-cigarettes as an example, if a user purchases a set of Pod System products, they are likely to continue purchasing Pods from the same brand after using up the initial Pod, because they still have the pod battery. In addition, as the pod battery is relatively expensive, users usually do not discard it after a single use. In contrast, disposable vapes are thrown away after use, and 510 cartridges achieve industry-wide compatibility, making it inexpensive or nearly free for users to switch brands. The Pod system only allows compatibility between specific brands, setting a threshold for users to switch brands. By ensuring the quality of the battery and cannabis extracts, brands can significantly increase user retention.

4.3 Enhancing Brand Value

Pod system products play a critical role in enhancing brand image and influence while fostering long-term interaction and connection with customers. In the cannabis market, pod products are currently experiencing a surge in popularity, and their market share is expected to continue to grow in the future. Not only do pod products offer a more stylish design compared to 510 devices, but they are also more environmentally friendly than disposable vapes. From a consumer perspective, pods offer a more cost-effective solution in the long run and allow for convenient switching between cannabis extracts or flavors. Taking these factors into consideration, the introduction of pod products can significantly increase the overall value of the brand.

Looking at the development model of the pod market in the nicotine industry, two new directions can be observed. Firstly, there is a trend towards increasing functionality beyond vaping. Today, new products from well-known brands often include Bluetooth features that provide additional benefits such as unlocking, usage tracking and positioning. Second, there is a focus on category integration, which involves launching low-cost Pod system products with price advantages. This approach is suitable for smaller companies with relatively limited distribution channels, brand influence, and customer loyalty.