The Keurig Of Marijuana? CannaKorp Banks On Pods Filled With Pot
When Michael Bourque, an engineer, was prescribed medical marijuana, he found the whole endeavor of taking it a bit daunting. How much should he buy and how strong was it? How should he prepare it?
Like many marijuana patients, Bourque wanted consistent dosage, standardized packaging, easy administration and no mess. As an engineer he decided he could invent his way out of the problem.
Bourque teamed up with Dave Manly a former vice president at Keurig Green Mountain Inc., maker of the pod coffee machine and James Winokur, a technology executive and now the company’s CEO. The trio dreamed up a machine similar to the Keurig coffee maker, but for marijuana vaporization. Users would insert a single-use pod of cannabis into the device, which would heat it and releases the vapor to be inhaled.
CannaCloud by CannaKorps (Photo courtesy of CannaKorps)
Soon two other retired Keurig executives joined the CannaKorp Inc. team. “They said they missed the entrepreneurial spirit they had at work,” said James. The machine they created, CannaCloud, will make its sales debut in Boulder Colorado at the end of 2016.
Early feedback has been enthusiastic. “We showed our invention off at the Marijuana Business Daily cannabis trade show in Las Vegas last year and the booth got really crowded,” said Winokur. Greg James, who was there to talk to the founders about joining the company, even jumped in and started giving product demonstrations. Now he is Vice President of Sales and Marketing.
The Stoneham Massachusetts company currently employees eight people.
While the $149.95 CannaCloud vaporizers will be sold at dispensaries to patients, the founders have created another device that loads pre-ground cannabis into the pods, the “CannaMatic.” They plan to sell this machine to cannabis growers and processors in different states. Vetted and trained, these partners will fill and sell cannabis pods locally, said James.
“Like razors and razor blades, or printers and printer cartridges, we think once we have a customer using our CannaCloud system, they will stick with it and provide an ongoing revenue stream by buying the CannaCup pods,” said Winokur.
“We’ve even gone one better than Keurig and made our pods recyclable,” said James.
There are a number of other reasons for this distributed business approach. Marijuana cannot cross state lines, so pod manufacturing has to be distributed to the states where the product is grown and sold. Supplying the machines to multiple producers in multiple states will get the product in front of more people faster and grow brand recognition. In addition, spreading the distribution spreads the risk for CannaKorp if one or another seller doesn’t do well. Farmers or processors filling the pods themselves also means that CannaKorp just sells machinery and doesn’t “touch the plant,” a distinction that lets it avoid much of the industry’s red tape.
James says the company plans to roll CannaCloud out slowly, partnering with grower/processor/dispenser Shift Cannabis. “They know the market and their consumers, and can give us feedback on any tweaks that need to be made to the business model,” said James.
From Boulder the company plans to expand within Colorado, then to Seattle, the rest of Washington State, and then on to the East Coast. Beginning with a first-year plan to sell fewer than 50,000 units, CannaKorp hopes to grow to $400 million in sales in five years. Much of that is expected to be in royalty payments coming from the sale of the pods of cannabis.
So far angel investors have invested $1.6M in seed money, surpassing the company’s stated goal of $1M. But this is just the beginning for the company and for medical marijuana, according to Winokur.
“Once medical research has been opened up, we think we will see doctors prescribing a certain dose of a certain strain,” he said, “and the patient could be picking it up in pod form.”In the business tradition of razors and razor blades, this company is making a vaporizer with single-use pods containing marijuana and hopes for many repeated users ]]>