Vape Cartridge Leader Talks About The Market – Ralph Morgan of O.penVape

Ralph Morgan of Open Vape

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Matthew: Hi. I’m Matthew Kind. Every Monday look for a fresh new episode where I will take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. We’ve talked about CBD or cannabidiol on the show many times. Just to review thought, CBD is a non-psychoactive compound from the cannabis or hemp plant that has many benefits. Now our friends at Treatables have put together a one list chew that can help your dog or cat become more calm and balanced. Valerie wrote in to tell us about her experience with Treatables.

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Vape pens continue to take up a larger and larger portion of the cannabis market. To help us understand the latest in vaporizer technology and consumer preferences is Ralph Morgan, co-founder and CEO of Open Vape. Ralph welcome back to CannaInsider.

Ralph: Thank you very much. I appreciate the opportunity.

Matthew: I like to give listeners a sense of geography. Can you tell us where in the world you are today?

Ralph: Yeah. I’m based in Denver, Colorado. Open Vape is based in Denver but enjoyed everywhere.

Matthew: Yes and where are you today?

Ralph: I am in Oakland at a national industry gathering called the NCIA. It’s the third annual business symposium and it draws folks who are interested in getting into the space and also all the movers and shakers in it and NCIA I think is one of the best examples of a national association that anyone interested in the space should recognize, pay attention to, and be a part of.

Matthew: Ralph the last time you were on the show was back in January of 2015 but for new listeners that are not familiar with Open Vape can you tell a little bit about yourself and the company and why you started it?

Ralph: Sure. So before I got into cannabis I was in sales and marketing in the medical sector. I worked for companies such as Smith & Nephew and Stryker which are orthopedic implant companies. So I was selling products to surgeons specifically total joints; knees and hips and it was really an opportunity for me to participate in healthcare and when I saw cannabis continue to pop up on the news I was pretty ignorant to the subject. I was just intrigued. Did my due diligence. My wife included and we discovered that there was tremendous medical efficacy and that this was clearly going to be something that we felt was going to be a part of history and we wanted to be on the right side of it. So we jumped in, opened up a dispensary, and really relished the interaction with end users. People who are looking for a natural alternative to synthetics and pharmaceuticals and it really took off from there.

We saw an unmet demand in the market. The products that were healthier alternatives than smoking and from that unmet demand in the market we started this little company called Organa Labs and invested in a CO2 extraction machine, supercritical CO2 extraction machine where we could extract safely the essential oils of cannabis and put it in stuff. That’s how we got our start and then in 2012 we met a couple other entrepreneurs in the space. Some successful dispensary owners who really thought that a personal portable vaporizer with a disruptive technology that the efficiency of it, the discreteness was going to be disruptive, and we all agreed to give it a go together and we started a company called Open Vape and it’s been successful and wild, wild ride since then.

Matthew: Yes. I’ve looked at the stats on what’s selling in dispensaries and you really are doing an excellent job in terms of grabbing market share so kudo’s to you. One thing that I’m curious about is how big an impact was it owning a dispensary in terms of how well you could then turn around and speak to other dispensary owners about the benefits and scratching their itch. I mean did you know how to speak the language as a dispensary owner yourself so was that a huge help or just a small one? Did the product do most of the talking? I mean what was it like getting in the door with other dispensaries?

Ralph: Great question. I would say that the product did most of the heavy lifting. The perspective we gained by being dispensary owners was invaluable however because that experience gave us the benefit of knowing how enthusiastic people were about this product. When we first started dabbling with vaporizers it was all geared towards electronic cigarettes. So the technology wasn’t specific to cannabis which means that the failure rate was horrible. It was up around 40 percent and people still were enthusiastic about it. We had a no hassle, no questions asked return policy to help start to address that quality issue early on but it was truly a testament to the product. The ease of use, the discretion of less smell, and great value factor. There’s no waste to burning like a joint and we could get the same amount of money compared to regular flower or a cone joint or something was profound. So the experience from dispensary was great but it’s really the product that gets all the credit.

Matthew: And to give listeners a sense of how big Open Vape is and your footprint can you tell us how large Open Vape is and where exactly people can find Open Vape cartridges and pens?

Ralph: Sure. So since 2012 we’ve grown to approximately 90 employees in Colorado. We’re in nine states currently with New Mexico coming online this week and of course we have to have bricks and mortar. A production facility, a lab in each state because we’re not able to ship across state lines. So it’s a lot of effort, a lot of investment, and in total we’re in approximately 1200 dispensaries or collectives; retail locations and to find a location you can simply go to the Open Vape website or you can download the Open Vape app. The app will give you suggestions of where you can shop based on your geographic location.

Matthew: So let’s just review. Why are consumers choosing Vape pens? You mentioned they’re discrete but what are some of the other benefits?

Ralph: It’s discrete and there’s little fiddle factor. There’s nothing lost in the bottom of your pocket or your bag. It’s just so convenient and it’s a healthier alternative to smoking. You’re boiling liquid and you’re breathing in vapor as opposed to breathing in burnt plant matter.

Matthew: Okay and since we last talked a year and a half ago roughly how has the market for vape pens changed?

Ralph: Well we’ve seen statistics by ArcView. They put out an annual report; the RAND report. Reliable sources that talk about the trend of concentrates and largely that’s made up of vaporizing devices. Last year it was 39%, this year it’s 42%. If you include edibles which are largely infused by concentrates or oil we’re well over 50% and concentrates make up more than 50% of all cannabis consumed which is a huge statistic. So over the last year we’ve seen the trend of vaporization grow exponentially. It’s healthier, great value, and convenient.

Matthew: Now just a few years ago there was really just kind of one vaporizer cartridge but now the markets grown large enough where there’s kind of like a premier type of cartridge where there’s maybe no solvents but there’s still some cartridges that have glycerin of some sort. Can you talk about how the market has kind of grown to include new segments of products?

Ralph: You bet. When we first launched in the original formula it does include an excipient. It was the safest excipient we could find on the market then and so it remains so today and it’s something that was used by and it’s currently used by the pharmaceutical industry namely AstraZeneca and Johnson & Johnson as a safe inhalant. Today most of our skews are cartridges that do not include an excipient but instead have various levels of purification and the reintroduction of volatiles namely terpenes. So during the extraction process you’ll remove the volatiles first because they’re the most sensitive and we save those. We then refine the oil and mix again as a final stage the terpenes, esters, alcohols, flavonoids, and offer a really tasty, high quality product that has the benefit of all the volatiles and all the terpenes as much as we can preserve and capture and we call that top tier product craft reserve and that’s a trend we see in the market is with the competition it’s a race for purity and it’s really fascinating to watch.

There’s a lot of competition. There’s a lot of technology. There’s a lot of scientists that are entering the space many of which were from big pharma and now they’re in this space. It’s really fun. It’s really exciting and everyone benefits. It’s a win/win when we’re all chasing quality.

Matthew: Now many of listeners have heard of terpenes and flavonoids but they’re not quite sure what those pieces of the puzzle are or how they fit into creating a product. Can you kind of just walk us through how you think about terpenes and flavonoids and what it means in creating an optimized product for your customers?

Ralph: You bet. We refer to those as the volatiles because they’re so easily lost in the purification process. So it takes tremendous care and attention to preserve those and capture those and hold those and what they do is basically give the oil and the strains their individual characteristics in that Sour Diesel has a very distinct taste and it’s those things that give it that character. So you can have dominance and you can have an oil that’s virtually tasteless and you have folks and cannasseur’s that really want to enjoy the characters of each strain and those folks are the demographics for folks who really appreciate the additional cost associated with preserving those characteristics.

Matthew: Now most people at this point are familiar with what indicas and sativas are and they produce a spectrum of different feelings for the consumer. Do you see new possibilities for customizing and kind of dialing in the effects of cannabis with vape pens?

Ralph: I do. I think the industry saw a race for purity and with purity comes potency and that ship has sailed with various purification methods like chromatography. You can isolate the cannabinoids and you can have something close to a 100% THC. So once that hype has calmed down people have really gravitated towards the characteristics and the quality of the specific strain. So what we’re seeing now is a lot of attention paid to preserving that specific effect that that strain offers. The next I think trend is going to be dialing that in even further and I’m looking forward to the industry coming up with a way to characterize that. So for example if you’re a fan of Sour Diesel and you found a specific phenotype and flower product that really spoke to your ailments or really gave you the effect you’re looking for medicinally or recreationally and you wanted to repeat that it would be great to know more information about it like the fingerprint of it.

So if it was an X, Y access it might be Sour Diesel, maybe X1, Y3 that really was the products that spoke to you. So if we had a catalog of that information then we will all I think really enjoy learning and understanding and experiencing the nuances between the strains and the phenotypes even within one.

Matthew: Oh very interesting. Has there been any twists or turns that you didn’t see coming? I mean as the industry leader your focus on this market segment is probably the closest anybody can think of but is there anything that’s kind of come out of left field where you said well we really weren’t anticipating this but we’re going to adapt or change or evolve in a new way?

Ralph: Yeah there has been some examples of that and it’s been from regulation. In Colorado in 2014 the voters spoke and said hey we want this legal. We just want it available for adults and they can make up their own mind if this is right for them or not and at that point we thought we really achieved a milestone but that was cast in stone and couldn’t be reversed and this year we’ve had the most active legislative session and we’ve really experienced some steps backwards related to how regulators still view the industry and it was a huge reminder that we’ve made progress but we still have a lot of work to do and anyone who’s in the industry is also an activist because we have so much education and communication to the regulators, the gatekeepers. We need to inform them of the benefits of this product and that work it never rests and we have to be mindful of that.

We had a couple experiences where regulators made some decisions. They didn’t invite the industry to the table for those discussions and we all need to invest in each other and be more active, more involved in our communities, and make sure that we’re spending the time that’s necessary to educate the policymakers to we have responsible regulation.

Matthew: Now I understand you also have a dry herb vaporizer now. Can you tell us about that?

Ralph: Yeah I’m very excited about that. We connected with the Ziggy Marley camp and Ziggy really wanted to have a product that was available to more people. Dry herb vaporizers are notoriously incredibly expensive and he wanted something that was more affordable. So we joint ventured and we created a dry herb vape that was considerably less expensive but of high quality and proud to offer that. Looking forward to seeing where that relationship with Ziggy and his team takes us. We’re really excited about it. We’ve been working on this for quite some time and communicate anybody that we were doing so and just launched his latest album on May 20th and in conjunction with that we launched this dry herb vape. Sales and enthusiasm for the product have been incredible and really proud of the project.

Matthew: That’s great. I bet a dry herb vaporizer has a little more challenges there because with the oil vaporizing there’s essentially a disposable product after you’re done. You’re throwing it away and with the herb vaporizer you’re using that ongoing is that right? What kind of challenges does that present in terms of making sure the components last and so forth?

Ralph: Well just like the rest of our products we offer a warranty on it that’s really customer centric. So if people have issues with it of course we treat them right but they’re very unique products and they have their own challenges and also their own positive offerings for folks that really enjoy flower. This is the product for them and they can grind up their flower; their favorite flower and still have a healthier alternative to smoking and enjoy the benefits that come from that.

Matthew: You mentioned that obviously cannabis is still federally illegal so you have to have kind of a set up in each state where you operate. Do you also look at; is it through licensing acquisition? I mean how does it look exactly when you grow from state to state?

Ralph: Our model is a licensing model. So we license our IP and we sell packaging and marketing to our licensees. Those licensees must qualify and part of that qualification process is that they’re properly licensed with the state. That’s the only way that we’re able to move forward is if they’re in a state obviously that recognizes cannabis as a legal business and they’re responsible for touching the plant and we do not make money from the sale of cannabis in those states. Instead we make money on licensing the IP and selling packaging.

Matthew: Is that just a matter of taking the playbook of like franchisees or something? Do you kind of take the best practices from other industries and then just apply them to the cannabis industry so you’re not reinventing the wheel there?

Ralph: Yeah I think that’s a great analog. Like a franchise you’re sharing a proven process, a proven model.

Matthew: When you look ahead the next two or three years where do you see the vape pen market going to and what excites you the most about it?

Ralph: I’m interested in what the future brings and I think that includes compounding cannabis plus fill in the blank equates to what? I think there’s great application for compounding cannabis with chamomile for more relaxation. What’s a healthy alternative to an energy drink or an alternative to a cup of coffee but in the form of vaporization? I think that’s the future is cannabis mixed with other beneficial botanicals.

Matthew: That’s a great idea. So maybe something like CBD vape cartridge with turmeric to maybe reduce inflammation and things like that?

Ralph: Correct. Obviously we’ve got a lot of work ahead of us. We need to study those products and make sure that they’re safer inhalation vaporization but a version of that I think is what the future promises and it will be very exciting to see what comes of it.

Matthew: I like to close the interview with some personal development questions Ralph. With that being said is there a book that has had a big impact over the course of your life when you look back and you say wow this book had a lot of impact. I find myself thinking about it year after year and you want to share it with CannaInsider listeners?

Ralph: Wow that’s a huge question.

Matthew: No pressure.

Ralph: No pressure. I love to read and I’ve got about an hour commute each day so I love to listen to books on CD and I’ll confess that one of my favorites is; man I have a hard time picking a favorite but I’ll mention several. Wayne Dyer is someone that I adore. Deepak Chopra is another one where they focus on you being in control of your destiny and we create our own fortune and good luck but we’re in control so it’s not I hope I have a good day. It’s make it a great day and I love to start my day with that because it’s a reminder that we have got so much opportunity in America and often times we forget. Often times we feel like we have a sense of entitlement and success should just come to us but those authors help remind me that we’re in a real special place and we have lots of opportunity here and I don’t think there’s any better example of American than cannabis.

I think the smell of freedom is cannabis. Freedom smells like cannabis. I don’t think there’s a more American industry when the American flag was; one of the original American flags was made with hemp and the constitution, the original constitution. I’m proud to be an American. I’m proud of hemp and cannabis and I love the intersection of those. So those authors would be my first pick and for all those reasons.

Matthew: Great quote “freedom smells like cannabis.” Is there a tool web based or otherwise that you consider indispensable to your business life or productivity that you would recommend?

Ralph: Wow a tool? Yeah I would say the most powerful and effective tool that’s affected my life and my professional career is; it may sound cheesy but its criticism from my business partners. Cannabis is a new industry. It’s moving a mock speed. We all have to make a lot of decisions in a short period of time and we have no time to waste on pleasantries or being politically correct. So often times partners in the company; the co-founders Chris McIlvaney, Jeremy Hidol, Jim Collins. We will offer each other some corrective criticism and serve up some humble pie often and there’s a lot of trust that goes along with that. You can have an amazing idea so you think and have your partner explain to you all the reasons why it’s a terrible idea but that’s empowering because that means you get to improve.

There’s tremendous cognitive gain from having that level of openness and trust in one another. So that’s been I think one of the best tools and contributors to our success is getting more collaboration. It has allowed us to expand, it has allowed us to partner with others, and share a smaller piece of a much, much larger pie.

Matthew: It’s funny you mentioned that. It’s the “Book of Mastery” I want to say talks about that as the feedback. Having a feedback loop from people that have the ability to help you excel is a critical part in achieving mastery because otherwise you can be on the wrong course and not know it. So it’s vital to have those kind of a little peer counsel that can keep you on track. So it sounds like you have that so that’s great.

Ralph: Yep. Thank you.

Matthew: Ralph in closing can you tell us one more time how listeners can look and find Open Vape in their community?

Ralph: You bet. There’s two suggestions. One you can simply go to our website www.openvape.com and you can also download the app and the advantage of the latter is that it will recognize if you allow it; it will recognize your location and it can make recommendations where you can shop and at places that are conveniently located near you.

Matthew: Great. Well Ralph thanks so much for coming on CannaInsider. We really appreciate it.

Ralph: It was a pleasure. Thank you very much.

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Ralph Morgan, co-founder of O.penVape discusses the vape cartridge and vape pen market and how his company grew 1200% last year. Ralph shares his thoughts on how the industry is maturing and evolving and where the opportunities are now.

Key Takeaways:
[2:53] – Ralph talks about his background and starting Open Vape
[5:45] – Advantages of being a dispensary owner prior to Open Vape
[7:31] – The key attributes of Open Vape products
[9:07] – How has the vape pen market changed over the last couple of years
[12:33] – Terpenes and flavonoid considerations
[13:56] – Vape pens customizing the cannabis effects
[16:08] – Dealing with surprises in the market
[18:07] – New dry herb vaporizer
[20:38] – Opearting in different states
[22:00] – The future of the vape pen market
[23:39] – Ralph’s book and web tool recommendations
[28:17] – Contact details for Open Vape

Important Update:
What are the five trends that will disrupt the cannabis market in the next five years?Find out with your free guide at: http://www.cannainsider.com/trends

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