87 / 102
’’
gree, 3
rd
Degree and 4
th
Degree, adds Verleur, who
notes that while the company is excited about entering
a new market, it is by no means abandoning its tradi-
tional nicotine-based vapor business from an innova-
tion and marketing standpoint. That’s partly because
the company’s cannabis market strategy—i.e. not sell-
ing actual cannabis—foregoes much of the emerging
category’s profit potential.
“The vast majority of what makes up the MSRP of
cannabis is actually the cannabis liquid, not the device,”
explains Verleur. “We believe the space is an $800 mil-
lion category, but to the electronics manufacturer like
me, the most we can achieve of that MSRP would be 20
percent—and that’s without giving up a margin—and
retailers in the head shop space are accustomed to a 50
percent margin.”
On the plus side, however, customers willing to shell
out for costly herbs are less price-sensitive when it comes
to the cost of the device they’ll use to vape them. Also,
the players in the space are relatively unsophisticated,
which gives VMR, which has a wealth of experience
in both vapor manufacturing and retail, a window of
opportunity. “I can pick up share without much inter-
ference from competitors, other than Firefly and PAX,
whereas in vapor I’m competing with Big Tobacco and
the Goliaths,” says Verleur, who nevertheless remains
committed to the vapor marketplace.
VMR’S
VAPOR POSITIONING
After the FDA’s deeming regulations were released in
May of 2016, VMR CEO Jan Verleur issued a state-
ment charging that the “all-or-nothing approach” that
would “subject electronic vaporizers to an unnecessar-
ily onerous approval process” threatened “to eliminate
99 percent of the electronic vaporizer industry.” Iron-
ically, a year later, it’s that very scenario that is paving
the path for VMR’s continued success.
Even as he argued vigorously against FDA regulations
that would subject vapor products to the same restric-
tions and regulations as combustible cigarettes, Verleur
also hedged his bets, working strenuously to bring a slew
of prototypes onto retail shelves before the first deeming
regulation predicate product deadline hit. Now that fore-
thought is paying off. “Everything we are launching un-
der the V2 brand between now and the end of 2018 are
things that were actually precepted prior to the August
8, 2016 deadline,” he explains. “We rushed about 150
prototypes to market, many of them handmade because
we didn’t have time to complete the industrial tooling, in
select stores in the same packaging it would ultimately be
sold in. Now we’ll be [rolling] those products out in the
next few quarters and over the next year without having
to undergo the PMTA process.”
VMR banked on getting those new introductions
into continuous commerce before the August 8, 2016
The vast majority
of what makes
up the MSRP
of cannabis is
actually the
cannabis liquid,
not the device.
’’