Industry analysts have estimated that between 90% to 95% of all components that comprise a cannabis vaporizer are manufactured in factories in Shenzhen, China, with only 5% to 10% sourced in the US. To this effect, when the outbreak began in December 2019 eventually causing all factories to close down, cannabis businesses had very few alternatives as they waited for factories to resume operations.
While today some of the factories have reopened, they are still not operating at full capacity, as some workers are reluctant to return to work, while others are still quarantined. “We’re going to be looking at a few weeks of delays in raw material,” said Arnaud Dumas de Rauly, founder and CEO of New York-based The Blinc Group. he added that some of his Chinese partners were at least able to ship him some equipment.
Dumas de Rauly explained that the cannabis companies most vulnerable to this supply disruption, are those that either own a single Chinese hardware-production factory, or partner with only one factory. “If they don’t have redundancies built in, they’re not able to pivot,” he said.
US suppliers remain hard-pressed for options
Sadly U.S. cannabis companies who are looking for local suppliers remain hard-pressed for options, as US hardware companies struggle to keep up with the pace of innovation and automation occurring in China. Despite these setbacks, added Dumas de Rauly, if every supplier has weeks of delays, that’s fewer domestic sales being made, and in his case he will be able to secure the needed hardware thanks to his connections in China.
However, his competitors may not be as lucky. “The coronavirus outbreak in China has caused production delays across all industries, including ours, which produce products in Shenzhen and other manufacturing hubs,” said Mark Scatterday, CEO of Tilt Holdings, and its subsidiary – Jupiter Research. “Jupiter’s customer’s orders are being produced and shipped.”
Dwindling vape stock in down under
Similarly last month, the Australian vaping industry voiced its concern about their dwindling stock piles of vape hardware, and while some had already run out of certain items, others were fearing that they would only have enough supplies to last a few weeks. “We’re feeling the pinch on our more popular devices,” said Chris Monchgesang, the chief operating officer for Vape Traders, a major distributor. “It hasn’t been the most enjoyable time.”
The vape shortage is just one example of what’s been described as the ‘second wave’ of economic chaos resulting from the coronavirus outbreak, which is disrupting business trade on a global level. The first wave naturally affected mostly the tourism and aviation industry.
Monchgesang had pointed out that the next most plausible step for the Australian industry would be to start importing from the US and the UK. “It all depends whether or not coronavirus starts to peter out or continues on. Importing from US and UK markets, which have much larger stockpiles of hardware, is the last go-to option. But they’re running low and at some point they’re going to run out.”
Read Further: Marijuana Business Daily