Latest posts by Delton Childs (see all)
- How I’m Selling Vaporizers That Cost Over $100 - October 26, 2015
- Bernie Sanders Wants To Reform Cannabis Prohibition - October 14, 2015
- My First Smoke Shop Disaster - October 7, 2015
- How Was The eJuice Manufactured? - October 2, 2015
I have to say talking with David was a real eye opener and there’s much more to our conversation than I can write about without crafting a small novel.
David cast a bucket of cold water on me with regards the the actual size of our “smoke shop” industry and what we might expect it to become in the future, he basically broke my heart. While I believe hopes are high in this industry, David remains somewhat conservative in this estimations about what this market will actually become in the future. I trust David’s estimations more than my own because of his experience. His successful foresight is no doubt what has lead Grav to become one of the leading high quality glass manufacturers, however, I’m not sure the U.S. has ever seen a force like the cannabis industry come into it’s own.
We’ve always had cigarettes and beer and David warns that this will not become another “Beer” industry were we see sex & good times selling the product in commercials with mass appeal or that NFL jersey wearing man style setting us marketers always sniff out in ads. In short… David seemed confident they’ll treat it more like cigarettes. While I’ll disagree with him at length in this small “after the fact article”, I have to say, he’s given me some pause in my personal estimations of what might happen.
David and I are trying to predict the future. He has decades of real time market experience under his belt, however, I’m not sure the United States has ever seen a force like cannabis come to it’s own as a substance in our society, I’m not sure what exactly we can accurately compare it to and it will take about 20 more years for us to really see who is right as it to becomes what it really is in terms of dollars and sense as an industry. I agree that it will be much more paired down in terms of advertising, however, cigarettes hold a much different social stigma than does medical marijuana or cannabis for personal use.
With cannabis we face the “Dumb Stoner” stereo type that Cheech and Chong has left us with. With cigarettes we face long term health risks and commercials with teens peeling their skin off, carrying around oxygen tanks, etc. It’s not just indoor smoking bans or no smoking areas. Cigarettes are fought on a “public health announcement” level with a style that I’m not sure they can terrorize us with, MMJ being prescribed by doctors. There’s not many punches that they will have that same impact as the health warning with cigarettes. Doctors are prescribing it.
Cannabis is different in the sense that it has actual health benefits and is currently being prescribed as medicine, nothing like cigarettes. In a society where prescription drugs are increasingly popular what happens when we start to introduce a natural substance that has real medical benefits? Additionally, cigarettes are sold everywhere. What will it be like for Marijuana in the coming 10 years? Will it be Dispensaries Only, or will we see more traditional smoke shops pick up the torch… and once the population is more comfortable will it be gas stations, liquor stores and supermarket pharmacies. The bottom line is going to be who is making those dollars and once that social stress of illegally smoking MJ has been abolished, many large companies will want their piece of the pie. Every time I see the news talk about medical and recreational cannabis, they always show stock footage of pot but… stock footage of piles of cash are usually part of the visual montage also. There’s a “Hey Guys! It’s about to be OK!” tongue in cheek feel to what we’re being fed by the media that doesn’t feel as dirty like beer or cigarettes. I think it’s something new and we’ll have to see.
Don’t get me wrong! David even gave a nod to the edible market. I got the impression he’s completely aware of the market factors that will go into this industry moving forward. It’s only the wide spread public perception of the industry where I think our views part. The bottom line is: If David is wrong about what the industry… it will have grown larger than he expected. In the end there doesn’t seem to be a loosing side of the argument for David, either his conservative estimations were correct and Grav will be sitting pretty or things will explode in his industry. Sounds like a win/win to us.
Grav Labs David Daily Interview Transcription
Delton: On this episode of the Head Shop Hero podcast we have a very special guest. We’re gonna be talking with David Daily. David is the CEO and founder of Grav Labs. How’s it going David?
David: Really good. Nice to speak with you Delton.
Delton: It’s good to have you on the show. We wanted to talk about some of the wide spread changes that we are seeing in my clients industry, the smoke shop industry. Ya’ll are a manufacturer of glass, one of the top manufacturers. Your name is a stable in the industry of high quality glass. In the past five years we’ve just seen an explosion in the concentrate market When you go into smoke shops it’s not just your traditional waterpipes you see anymore. It’s all kinds of these new devices, implementations, extensions. When do you feel like that started and how far is that proliferated around the country?
David: Well we speculate on this alot and unfortunately thats all we can do is speculate. We are in the unfortunate industry of that in a world of big data we have not. So again this is gonna be my speculation but as far as I remember we started to see people consuming concentrates in about 2009-2010 on very small circles. You know there are alot of people that claim that they created the direct inject pipe which for your listeners that don’t know about this market, it’s simply a male ground joint that is kinda the entry point of the smoke into the waterpipe which is really the primary device for consuming concentrates, aside from now with these vape pens and other kind of electronic devices but I’d say we’d seen it around here and there for the past 5 years but the last two years have been profound as far as the advancement of the concentrate market and all that being said I still think that it’s got a really long way to go. We estimate that we’re seeing definitely less than 25% of what we’re selling is for concentrates. We’re still selling 75% for consumption devices for flowers.
Delton: Now thats pretty amazing to me that you say, I’m sorry did you say about 25% are for concentrates?
David: You know again this is speculative so I couldn’t get you exact data but I’m sure there are probably some reports we could drill into and figure exactly how much we are selling for concentrates but if I had to guess I’d say it probably hovers around the 15-20% mark.
Delton: Wow because talking to smoke shops around the country and I talk to alot of smoke shops; Missouri, Texas, New York. It’s so funny because alot of them tell me that they feel like it’s either growing or really strong in their markets. Do you feel that’s mainly concentrated around the states that have already introduced decriminalization and reduced penalties like Colorado and their surrounding areas or do you just really feel like it’s across the country and people are embracing this trend?
David: Well no question it’s more active in the states that have some form of decriminalization or legalization. However it is growing very rapidly but I would even say in places, markets like Colorado, California, Washington, and Oregon even. People are still smoking alot of flowers, more flowers. The truth is that it’s still very expensive to buy concentrates and to address your question about the smoke shops that you speak to that are coming from the perspective of what they are selling out of their shops and I think it’s a skewed perspective. That’s because these people are very advanced users themselves and they are selling to a very specific market. Their customers are advanced users as well so the smoke shops you are talking to that are claiming this to be growing or strong are advanced users in the people they are selling to or are walking in and buying these devices that can creep up into the $100’s and $1,000’s are all very advanced. It’s very difficult to speculate the size of this concentrate market based on head shop sales. How widespread do I feel like it is? It’s definitely growing, they’re right. It’s growing but it”s only growing incremently based on the availability of concentrates.
Delton: Yeah, I have a hunch that your spot on in your kind of felacious thinking on the part of smoke shops that this is the biggest part of the industry right now. Now public perception is changing as far as this type of thing goes. Here in Texas I think on just the 6th of this month in October they started taking steps to decriminalization in a conservative reduced kind of penalty way. What kind of growth in this industry do you feel like you know maybe in the coming 5 years and again I totally understand this is speculation but everybody I talk to is real excited about this market. I know there is alot of business conferences going on in the industry and I’m talking about professional business conferences. You know not shows and concerts that feature vendors or anything. What kind of growth do you feel like we might be able to see in this market, maybe based upon what you have seen in the decriminalized states?
David: Well that’s a great question and your very astuted to recognize there are alot of business conferences going around because there are more and more institutional investors that are getting interested in this market and I attend alot of those business conferences and I think that people actually that the investors think that this is going to be a much bigger market than it actually will become and alot of that has to do with the regulations that are going to be preposed. The powers to be are not gonna let this become alcohol. You know we’re not going to see girls in skimpy clothes advertising cannabis products. This is going to be a very paired down version, something like cigarettes, and it dramatically effects the size of the market, so what we expect to see in Texas is some form of legalization, either medical or full recreational use by 2019. Texas is already an extremely large smoke shop state. In fact, you know people in the industry like to speculate that Texas is pprobably the biggest, even bigger than California. So how’s it going to affect our market? I mean it’s a really good question because I think that as this industry becomes more mainstream that we are gonna see more people enter the consumption device space but I also think that we’re going to see alot of much larger advancement in technology. We’re gonna see more vape pens and those vape pens are going to get even cheaper and so I don’t think that we’re going to see this massive growth in the head shop industry. I think that the consumables themselves are going to be very destructive advancement in our little micro economy. But again the consumption devices, my speculation is that it’s not going to become a two or three billion dollar market across the country. It’s probably going to remain in that one billion dollar range where we speculate it is right now.
Delton: Wow. Yeah I would agree with you in the sense that Texas is a real competitive market. Here in San Antonio alone we have over 30 smoke shops and I’ve seen a big jump probably in the past five years, but it’s really interesting you say it probably won’t explode in the way that alot of people hope that it will. Thinking about the growth thats already happened I’m not sure how much more volume the city can handle in terms of smoke shops because there are several within blocks of each other. I mean competition’s really high. Now I wanted to take a second to talk about your brand and what are some of the brand lines you guys manufacture that you feel like you’ve seen the most growth in?
David: I think if I had to look at our reports over the past several years that we’d probably see that our brands that are associated with the artists that we collaberate with are the most successful and again going back to the advanced users that are shopping in smoke shops and buying pipes, pipe technology. Their really looking for something that is, that has a good story behind it and thats one of the things we’ve really pioneered in this industry in my opinion is the collaberative production pipe such as our Mike Evans upline, our Helix, our base turbine. These products are some of our leading revenue categories and we are also able to take a portion of those proceeds and give them back to the artist so they can continue their craft.
Delton: Yeah thats really what it’s all about. That’s cool. As far as smoke shops go, which lines are you guys do you feel like these shops should keep on hand because you guys see alot of orders for those?
David: We really take pride in the margins that the shops are able to accomplish with our products and not to alienate the enusers here but we’re all in business and our philosophy is to help businesses succeed with great products and one of the ways that we do that is by offereing products that they can make 100-150% margins on. Some of those products are typically in the small handpipe category such as our spoons and our bubblers, our tasters. These are products that are fast moving and really help the shops pay the rent. At the end of the day this is what we really feel helps small businesses succeed is products with great design, great construction, that we support on the backend. It’s rare that we ever ignore an enuser in asking for us to replace a pipe they accidently broke. If it’s got a good story and these people are good customers, we take those people very seriously and we often send out free pipes and that’s the kind of support we like to provide and It ultimately drives the brand and sells more pipes in these stores.
Delton: You talked about not to alienate the enuser, well all of us enusers, we respect that Gravlabs brand and that’s one of the reasons we pick up those tasters. You know those little things, and I know that I could buy just a cheapo taster but I do like the one with the Grav Labs logo on it. And I know that it might cost me an extra couple bucks but it’s having pride in your tools and we appreciate the quality you guys deliver.
David: Yeah and for us it’s about delivering the value at hand and we recognize that while our products may be a couple dollars more expensive but they are also not the most expensive. We really like being right there in that middle ground and then it’s only a couple bucks extra to get the reassurance that your buying something that has support behind it.
Delton: Yeah and a quality product, no one wants to have that buyers remorse. I feel like you guys really deliver a quality product. Now I know we didn’t talk about this, we are about to wrap up but I wanted to hit you with this real quick. Alot of shops buy glass from local artists, are there any quality issues with those that you feel like shops should look out for?
David: That’s kind of a loaded question. I like it . That’s actualy very relevant. This is a buyer beware market. These shops are often, some shops are great buyers and some are not and it’s up to the buyers to recognize the quality. You can get great quality from a Chinese pipe just as much as you can get from an American pipe and likewise. I’ve seen many American made pipes that are far worse than anything that comes from overseas. This is a situation where the buyers at these retail stores have an obligation to make great relationships with really good craftsman and women. They are actually offering a fair value to the end user for a product that is made with good quality. So the emphasis is on the small glass blower to bring a product that can drive sales for these head shops. At the end of the day alot of these artists only see themselves as artists, not as business people. I think thats a big mistake.
Delton: Alright David. Such valueable information was shared. We really appreciate you being on the show. We appreciate the insights you’ve given us into this market and we look forward to having you back on here.
David: Thanks Delton. I really appreciate you having me on. I really love what your doing with this podcast. Hope to talk to you soon.