When PAX Labs ,formerly Ploom, released their dry herb vaporizer in 2007 named simply the “PAX” it seemed as if vaporizing cannabis would supersede smoking as a healthier alternative in no time.
Sales of this new blockbuster vaporizer were so astounding that millions of dollars in VC funding poured into the company and upgraded models of the PAX ( PAX 2 and PAX 3) vaporizer followed. But while vaporization of cannabis has grown, it still remains a small subsect in an ever changing cannabis space that sees new competitors hopping in daily.
PAX Labs already commands a lion share of the vaporizer market with both their PAX herbal vaporizers and the PAX Era – A cannabis vaporizer that mimics the Juul’s design but instead utilizes prefilled cannabis oil pods one purchases at a dispensary. Even with this dominant share of the market, 2018 revenues were just a tad over $100 million. Not exactly the same as being market dominant in let’s say Cloud Computing or Rideshare.
However with a fresh $420 Million raised, making PAX Labs worth $1.7 Billion, PAX may be looking to expand outside of the vaporizer market. In a recent Tech Crunch article PAX Labs CEO, Bharat Vasan, said they plan to use the funding to focus more on “taking the guesswork out of cannabis as it becomes more legal and reaches newer consumers”. He went on to talk about how educating the consumer about cannabis is a very important aspect PAX wishes to be part of. While Vasan did not further elaborate on this with specifics, it does appear PAX will seek to remain the leader in vaporizer hardware and technology while looking to expand into information technology.
To date PAX has sold more than 1.8 million PAX 2 and PAX 3 vaporizers and 500,000 PAX Era concentrate pen vaporizers. We would imagine them to put more R&D into developing on the PAX Era device as the the prefill pods make it a recurring revenue play and we are seeing the demand for vape pens outpace that of their dry herb counterparts.
It comes as no surprise that PAX may be looking into other markets outside of vaporizers. Since releasing their Era device similar vaporizers from manufacturers such as Vape Dynamics and KandyPens have come to cash in on the Era’s hype. Meanwhile Chinese factories have sprung up overnight to churn out countless counterfeits of the PAX 2 and PAX 3 Vaporizers.
PAX Labs also keeps tight control on who and who cannot sell their vaporizers and with thinning margins through multiple price drops, the appeal for retailers to push alot of marketing dollars into selling PAX products is fading. Instead many retailers are turning to China to get into the manufacturing game themselves by making their own vaporizers. We have seen the rise of vaporizers we call “rebrands” where a Chinese manufacturer will churn out a specific model vaporizer and license it to a U.S , E.U or Canadian retailer who then adds their logo.
When you combine all of the above with a market which is turning out to be not as lucrative as prospected there will be some serious roadblocks to the year over year exponential growth with vaporizers alone. PAX does have the name brand recognition and with ever increasing fat pockets we see them having no issues breaking into or even creating the next market.