Selling CCELLs: Arizona Firms Prosper With Popular THC Vape Cartridge From China

By Phoenix New Times 2019-01-04

Have you ever wondered why all your vape cartridges look the same? 

Find out why with Phoenix New Times

 Chris Sinacori, 3 Win Corp president

If you've ever wondered why all your vape cartridges look the same, the answer is less mysterious than some sort of marvel of industry standardization. The truth is that the ubiquitous black-tipped glass cylinders all pretty much come from the same place.

In 2016, Smoore Technology Limited, an e-cig company in Shenzhen, China, founded CCELL, which produces patented ceramic cartridges for vaporizers. Now, CCELL holds the vast majority of the market share.

Most of the vape cartridges you see are their popular TH2 line, which also comes with white or wooden tips, and in three different sizes. Even with only four distributors in the United States, CCELL supplies nearly the entire country with the vape cartridges used by cannabis dispensaries and their oil-producing ancillary companies.

Jupiter Research and 3 Win Corp, two of those CCELL distributors, are located in Phoenix and Tempe.

"I don't think they realized we were so close to each other when they gave us the contract," said Chris Sinacori, president of 3 Win Corp.

The license to sell CCELL products, which also include vape batteries, contains a clause requiring companies to distribute only CCELL products. That doesn't bother Sinacori.

"We didn't want to have a line of really good products and another of inferior products," he said. "We only wanted to sell one line of quality products."

One thing is clear: The public has chosen CCELL’s design as its favorite. Before CCELL came on the scene, most cartridges heated oil (mostly for e-cigs back then) with a wick. CCELL's innovation was using ceramic heating elements, which reduced the likelihood of burning the oil.

From there, CCELL took over.

Jupiter Research sold $25 million worth of products in 2017. In 2018, that number shot up to $100 million, with no signs of slowing down.

The action caught the attention of Tilt Holdings Inc., a "vertically-integrated infrastructure and technology” company, according to a January 3 press release detailing Tilt’s $210-million acquisition of Jupiter Research.

"It's been a wild couple years," said Mark Scatterday, Jupiter Research's president. "The mission stays the same, but we’re going to have a lot more resources."

He said it still feels like "the first inning," as the company branches out into new products.

Tilt paid for two-thirds of its acquisition in Tilt shares, so Scatterday said he's still very focused on expanding the company, especially in research.

Jupiter Research is more than a CCELL distributor, Scatterday said. The company also works closely with CCELL to improve vaping technology across all industries as well as other forms of vaping, such as with dry flower. Five of the firm's 35 employees work in China.

Jupiter Research holds the majority national market share, Scatterday said. The company imports about 5 million cartridges a month, and that’s a conservative estimate, he said.

Nationally, he said, CCELL distributors import about 12 to 15 million cartridges a month. Sinacori estimated 20 million.

Despite the proximity, 3 Win Corp and Jupiter Research have an excellent working relationship, Sinacori said. Even nationally, if sales representatives find that a potential client already has a CCELL distributor, they don’t try to poach them.

"We're very friendly competitors," Scatterday agreed. "I have a tremendous amount of respect for those guys."

He even expressed interest integrating with 3 Win Corp for a closer and more profitable relationship.

The distribution companies don't typically sell to dispensaries directly, but license with a few that produce concentrates who, in turn, sell their products in other dispensaries. Sinacori said 3 Win Corp sells CCELL cartridges to about 50 dispensaries in Arizona.

However, Scatterday said Jupiter Research accounts for about 80 percent of the cartridges in Arizona. He said that Jupiter’s clients may capture more of the overall patient market.

With CCELL's patented technology, clients have few options for where to go for cartridges, but are always looking to differentiate themselves, Scatterday said. They can't change the hardware, but they can make custom mouthpieces or print designs on the cartridges.

Still, no matter how you dress it up, it's still a CCELL cartridge, and probably will be until the next best thing comes along.


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