CannaKorp aims to bring the world’s first single-use, pod-based vaporizer to cannabis consumers by fall of 2016
By Garrett Rudolph
When Keurig introduced its single-serve coffee brewers to the American public, an entirely new category of consumer products was born.
Keurig brewers and the now-ubiquitous K-Cups brought a level of speed and convenience previously unmatched by traditional coffee makers and single-serving predecessors.
But convenience came with an additional cost. In 2012, the New York Times reported that many of the popular coffee pods cost the equivalent of $50 a pound or more — a steeper price tag than even small-batch, artisanal cups of joe that are typically only enjoyed by well-to-do Javaphiles.
Yet, consumers have been more than willing to pay the price.
It is estimated that one-quarter of American households have a Keurig.
In 2014, parent company Keurig Green Mountain generated more than $800 million in sales from brewers and accessories, while the higher-margin K-Cups accounted for about $3.6 billion in revenue. According to Bloomberg, Keurig estimated in early 2015 it had sold about 20 million of its brewers in the U.S.
“In the coffee business, making a cup of coffee with a K-Cup is three times more expensive than making it out of a tin can, but people are willing to pay for it all day long,” said Dave Manly, a former senior vice president at Keurig Green Mountain.
Manly retired from Keurig in 2014, but expects his latest venture to have the same impact on cannabis consumers as the revolutionary K-Cup did in the coffee world nearly 10 years ago. He is now the chief executive of Massachusetts-based start-up CannaKorp, which plans to bring an entirely new type of vaporizer to the market in the fall of 2016.
Manly and his team at CannaKorp have embraced the challenge of reinventing the vaporizer and changing the way consumers use marijuana.
The CannaCloud is being billed as “the world’s first single-use, pod-based cannabis vaporizer system.” It was designed to look just like a home appliance. The sleek curves and subtle color scheme won’t look out of place in a high-end kitchen or on a living room end table.
“At Keurig, our customer profile was that both males and females used the product, but females bought it,” Manly said.
With that demographic in mind, Manly said the CannKorp team recognized the importance of catering to both men and women. It was imperative to make the CannaCloud “something women would not be embarrassed to have in their house,” he said.
But it’s not just the look that makes it a game-changer. The patent-pending system incorporates individual pods (called CannaCups) that contain a pre-measured amount of marijuana, to give consumers a consistent experience.
The company will initially be marketed toward states where medical marijuana is legal, but Manly said he expects consumers in recreational markets will also be interested in the CannaCloud.
Manly said the concept originated from consumer experience — “just like all great products,” he added. According to Manly, one of the company’s co-founders was told by his doctor that medical marijuana might help with an ailment he was experiencing. At the time, there weren’t medical marijuana dispensaries in Massachusetts, so he had to do what millions of others have done in prohibition states — he went out and bought weed off the street.
But when he got home, he didn’t really know what to do next. How much should be taken? How should it be consumed? Unlike traditional prescriptions for pharmaceuticals, marijuana doesn’t come with instructions or dosage information.
Not only will the CannaCloud simplify the process of using medical marijuana, it’s also a more modern, mainstream approach than the bongs of yesteryear. Pre-packaged doses make it easier to pinpoint the exact amount of cannabis needed.
CannaKorp began promoting the new-age vaporizer at a Las Vegas trade show in November. The response, so far, has been fantastic, Manly said.
“I think it’s going to be revolutionary, based on the technology and how much consumers love it so far,” he said.
CannaKorp will build the vaporizers, but will never touch the cannabis plant itself. Instead, the company will partner with licensed growers in states where marijuana is legal to manufacture the CannaCups. The first units could be ready for sale by September 2016.
“Eventually, we’d like to be able to sell the CannaCloud vaporizer on our website,” Manly said. “It will depend on how the laws evolve.”
Because of federal restrictions, the pods will be produced in the same state where they are sold, so marijuana does not have to cross state lines. CannaKorp will install equipment that makes the pods at the facilities of licensed processors throughout the country.
“We are in the process of signing partners and agents,” Manly said. “We’re meeting producers and growers around North America to get them on board.”
Packaging and labeling will be important, just as they are for all consumer products, Manly said. He envisions a variety of color-coded CannaCups based on potency.
“The key is to make it real simple,” Manly said.
He believes consumers will be willing to pay a premium for convenience, just as they’ve done when buying coffee. Therefore, the CannaCloud will increase the total value chain for cannabis, while driving up the margin per gram of marijuana produced, he said.
When asked if he felt like he was taking a crash course in cannabis economics, Manly said there is a bit of a learning curve.
“The good news is in the 1970s, when I was in college, I learned a lot about the product,” he joked. “I haven’t been that close to it in the ensuing 35-40 years, but I would say not much has changed.”
The Keurig of Cannabis
Manly acknowledges the parallels between Keurig and CannaKorp, but he’s quick to point out that the products are entirely different and completely separate.
However, the comparisons are impossible to ignore.
Aside from the obvious similarities, both companies have New England roots, and several members of the CannaKorp team previously worked for Keurig. Manly said CannaKorp is in “extreme start-up mode,” with seven employees who are all currently working for free.
Within the coffee industry, Keurig created the footprint for the CannaCloud to follow in legal marijuana. Keurig, which was recently sold to a private-equity firm for $14 billion, proved that consumers are willing to pay for speed, simplicity and an unlimited number of individual offerings.
“That really applies from coffee over to cannabis,” Manly said.
It took years for Keurig to convince people that a K-Cup could make a great cup of coffee, Manly said. But now that people are willing to accept single-serving coffee, it’s opened the door for other products to capitalize on the market Keurig has created.
While CannaKorp’s Massachusetts headquarters might be a long distance from the hot-bed cannabis states of the West Coast, Manly said having a great product matters a lot more than location.
“You can be in Timbuktu and people will find a way to your product,” Manly said. “Our product will speak for itself no matter where it is.”