Demand for cannabis vape pens has been rising and we have been long-term bulls on this vertical of the industry. 

During the last decade, we have seen a significant increase in the number of consumers that have switched to smokeless tobacco products and this is a trend that we expect to become more significant in cannabis over the next decade.

According to data-analytics firm Headset, vape pens were the second-largest category by revenue in 2020 and 2021 (based on data from the six recreational states it tracks). Last year, the vertical generated approx. $2.6 billion of sales in the six recreational states and we expect this number to continue to increase on a year-over-year basis. 

After analyzing the data from Headset, we determined that the disposable vape pen category recorded impressive growth in 2021. Although cartridges account for the vast majority of revenue in the vertical, we will monitor how the disposable vape pen market performs in 2022 and beyond. 

According to data from cannabis analytics firm Brightfield Group, almost half of the vape sales are from consumers who are below the age of 35. We consider this data point to be a powerful statistic that leaves us bullish on the near and long-term outlook of the vape market. 

We have been highly focused on identifying leading North American cannabis companies that are capitalizing on the vape market and consider this to be one of the most attractive verticals of the entire cannabis sector due to the economics that are associated with the product category. 

Last year, a few Latin American cannabis companies announced that they were growing cannabis for less than $0.10 per gram. When compared to North America, the cost per gram is much lower and we expect this to play an important role in the performance of the vape market over the long-term. Since vapes use cannabis oil, cannabis from Latin America can be processed and used in the cartridges sold to consumers. 

Once the vape industry evolves to this level, we expect the vertical to become incrementally more profitable.