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Confirmed: Pax Labs raises $420 million at a valuation of $1.7 billion

Pax Labs, the popular vape maker, has today confirmed the close of a $420 million equity round, including from existing investors Tiger Global Management and Tao Capital Partners, and new investors including Prescott General Partners.

A Pax Labs spokesperson confirmed to TechCrunch that the post-money valuation for Pax Labs is $1.7 billion.

The Information first reported the round, but we’ve confirmed the specific details, including funding amount and valuation.

Pax Labs launched in 2007 with the hopes of creating a cannabis vaporizer. Since then, the company has created vaporizers for just about every corner of the space, including the PAX Era for concentrates and the PAX 3 for flower.

Here’s what CEO Bharat Vasan said in a prepared statement:

PAX is investing heavily in growing its brand as well as developing innovative new products to scale and capture an enormous opportunity. This financing round allows us to invest in new products and new markets, including international growth in markets like Canada and exploring opportunities in hemp-based CBD extracts. We aspire to be the gold standard for safety and good stewards of a product that enhances many people’s lives. We are hiring and investing heavily in our people, who power PAX’s mission of establishing cannabis as a force for good.

It’s worth noting that Juul, the popular e-cigarette brand, and Pax Labs used to live under the same corporate umbrella before Pax Labs spun out of Juul in 2017.

Looking forward, Pax has plans to give users more insight into taking the guesswork out of cannabis. As cannabis becomes legal in more areas, the demographic seeking products in the space continues to grow. Pax wants to help, and believes it can do so through a combination of hardware and software, though Vasan wasn’t willing to go into details on the company’s forthcoming products and features.

“People know about different kinds of alcohol,” said Vasan. “They may know that they’re a beer person or a wine person. But none of that exists within cannabis. They see names like ‘Lemon Haze’ and ‘Cherry Fizz’ and they don’t know what that is. These are all really awesome names for a band but not great to let you know what you’re consuming. We want to provide more clarity around what that means.”

As I said, Vasan was not keen on offering more, but this sounds like more of a data play than a combo software/hardware play, which leads me to believe that we may see an acquisition in Pax Labs’ future. (To be clear, this fictional acquisition is based strictly on my conjecture and not based on any evidence at all.)

“Our biggest challenge is safe consumer access,” said Vasan. “Regulation is a good thing in this space. It makes standards higher and products more transparent.”

Pax Labs, the popular vape maker, has today confirmed the close of a $420 million equity round, including from existing investors Tiger Global Management and Tao Capital Partners, and new investors including Prescott General Partners. A Pax Labs spokesperson confirmed to TechCrunch that the post-money valuation for Pax Labs is $1.7 billion. The Information first […]

Vape Giant PAX Labs Picked 4 Popular Pot Stocks as Its Supply Partners

There are two likely reasons PAX picked these four specific marijuana stocks.

After hiding in the shadows for decades, the cannabis movement is experiencing a long-overdue coming-out party. Following the legalization of recreational marijuana in Canada, and the ongoing push to legalize at the state level in the U.S. and in various countries around the world, the potential for legal marijuana is truly budding.

Projections by various sources suggest that legal marijuana could become, at minimum, a $50 billion a year industry (globally) by 2029, with peak sales potential of as much as $166 billion. That’s not a dollar figure Wall Street and investors will easily overlook.

Image source: Getty Images.

All eyes are on derivative expansion in Canada

But what you may not realize is that traditional dried flower won’t necessarily be the marijuana industry’s workhorse. Rather, the younger generation of adult cannabis users prefer derivative products, such as oils, edibles, infused beverages, topicals, concentrates, sprays, and vapes — the latter of which projects to be a leading source of derivative revenue generation for cannabis companies.

According to regulatory agency Health Canada, all forms of derivative consumption, save for alcoholic infused beverages, should be legal by no later than the one-year anniversary of Canada’s recreational legalization date, Oct. 17. That’s going to roll out the red (or should I say “green”) carpet for these significantly higher-margin products, relative to dried flower, and give cannabis stocks all the more incentive to expand their portfolios to include popular derivative options.

Late last week, that’s exactly what we saw happen.

Vape giant PAX Labs chooses 4 top marijuana stocks to be its supply partners

San Francisco-based, PAX Labs, a vaporizer powerhouse and the company that developed the extremely popular Juul device that was spun out in 2017 via Juul Labs, announced on Friday that it had signed agreements with four Canadian pot stocks to supply it with cannabis extracts, resins, and distillates for its PAX Era pen-and-pod vape system. The PAX Era aims to be the go-to vaping device in Canada, assuming Health Canada does indeed legalize new forms of consumption by this coming October.

The four companies chosen to partner with PAX Labs were Aurora Cannabis (NYSE:ACB) , Aphria (NASDAQ:APHA) , OrganiGram Holdings (NASDAQ:OGI) , and The Supreme Cannabis Company (OTC:SPRWF) . You’ll note that the largest marijuana stock by market cap, Canopy Growth, and one of the more controversial pot stocks, Tilray, are notably absent from this partnership.

Image source: Getty Images.

Here’s why Aurora, Aphria, OrganiGram, and Supreme Cannabis are logical partners

You’re probably wondering why PAX Labs chose Aurora, Aphria, OrganiGram, and Supreme Cannabis as its supply partners. The answer, I believe, is twofold.

First, all four of these marijuana growers have made clear the importance of diversifying into derivatives. For instance, Aphria is constructing an extraction center with 25,000 kilos of annual extraction capacity for the expressed purpose of meeting derivative demand.

Similarly, OrganiGram recently announced a phase 5 expansion at its Moncton facility in New Brunswick, part of which would be devoted to additional extraction capacity. In an interview with BNN Bloomberg, OrganiGram’s senior vice president for marketing, Ray Gracewood, noted that roughly a quarter of its cannabis is being set aside for an expected surge in vape demand.

And then there’s Aurora Cannabis, which has either pushed into or announced its desire to add nearly every type of derivative product at some point. Since derivatives carry a much higher margin than dried cannabis, they’ll be an important component of any successful growers’ lineup of products.

Image source: Getty Images.

The second reason Aurora Cannabis, Aphria, OrganiGram, and Supreme Cannabis make sense as partners is that they bring different consumers and varying product qualities to the table. OrganiGram, for example, caters primarily to the adult-use market. Meanwhile, Aurora Cannabis has a stated focus on the traditionally higher-margin medical marijuana community. PAX has stated that it would like to go after both sides of the aisle when Health Canada waves the green flag on new consumption options, and partnering with cannabis stocks that have a unique focus on the adult-use and medical marijuana market will help it meet this goal.

There’s also strength in PAX Labs being able to offer top-notch quality for its PAX Era device. That’s where Supreme Cannabis comes into play. Even though Supreme Cannabis’ 7Acres facility will only produce a modest 50,000 kilos per year when at full capacity, Supreme is one of a rare number of growers focused on ultra-premium and premium-quality cannabis production. More affluent consumers who don’t have ties to traditional cannabis culture are Supreme’s core customers. And since these well-to-do consumers have money, they’re less likely to have their buying habits changed due to fluctuations in Canada’s economy.

Clearly, there’s going to be quite a bit of vape competition, especially with Altria entering the space via a $1.8 billion equity investment in Cronos Group, which closed in March. Then again, PAX is about as established a name as there is in the vaporizer segment. This suggests Aurora, Aphria, OrganiGram, and Supreme Cannabis may have just landed one heck of a valuable partnership.

There are two likely reasons PAX picked these four specific marijuana stocks. ]]>