Vape oil has become one of the most powerful demand engines in legal cannabis, and that momentum is reorganizing how brands source, make, and scale products. In 2024, vapor pens generated roughly $4.3 billion in U.S. retail sales and ranked as the second-largest category after flower, a position analysts expect to hold as new consumers age into the market.
Why vapes pull white-label forward
Two forces explain why contract and white-label production are expanding. First, category resilience: even through pricing pressure, cartridge unit sales rose (e.g., California cartridges increased 15.9% year over year in 2023 while overall revenue declined), signaling steady throughput for manufacturers that can produce at lower cost. Second, younger buyers over-index to vapes—a 2024 analysis of retail spend found vapor pens command a significantly higher share of young-adult baskets than older cohorts, validating long-run demand.
For brands and retailers, white-label manufacturing converts demand into margin. Contract partners shoulder capex, compliance, and line changeovers while giving clients access to flavor innovation, live resin/rosin SKUs, and newer hardware without building factories from scratch. The growth of disposable formats—whose share of vape dollars jumped +92% between Q1 2022 and Q1 2024—further favors flexible, scale-ready partners that can run short cycles for trend flavors.
The market reality: growth with compression
While vape’s top-line is healthy, price compression is real. Analysts have tracked multi-year declines in equivalent retail prices across categories, and specific reporting on vapor pens notes “pricing compression…driving Vapor Pen prices to new lows.” That combination—rising unit volume, falling price—rewards operators who can manufacture efficiently and penalizes small in-house labs with higher unit costs. It’s a textbook opening for white-label specialists.
Broader industry growth also sets a supportive backdrop. Independent forecasters projected ~10% growth in total U.S. cannabis sales for 2024, with category opportunities varying by state but a clear consumer shift toward convenient inhalables that fit social settings and quick sessions.
Will demand keep rising—and will that lead to over-saturation?
Short answer: demand likely continues to rise; over-saturation risk is localized, not universal. Three data-backed signals support continued demand:
- Vapes’ entrenched #2 category rank and multibillion-dollar sales base.
- Demographic tailwinds, with young adults allocating a larger share to vapor pens.
- Format innovation, especially disposables, which are expanding the addressable audience.
That said, SKU proliferation can outpace true consumer pull, leading to assortment clutter and race-to-the-bottom pricing. In mature markets, regulators and market data show units rising while dollars stagnate, the classic pattern of crowded shelves and promotional churn. Retailers increasingly rationalize menus and shift to house/white-label lines that hit target price tiers with acceptable quality—again concentrating volume into the most efficient producers.
The net result is selective over-saturation: too many SKUs chasing the same flavor and potency promises, especially in mid-tier distillate carts, while differentiated niches—solventless rosin, authentic strain-specific live resin, verified terpene profiles, and reliable hardware—continue to win share. Brands that rely solely on copycat flavors and commodity oil will feel the squeeze; those that use white-label capacity to execute faster, verify quality, and control costs will keep velocity.
What separates winners in a white-label world
- Data-driven product mapping: Build into price tiers and segment gaps visible in category dashboards (e.g., vape remains a growth mainstay and sits behind flower in share across most tracked markets).
- Quality proof points: Publish batch-level testing and hardware specs; transparency supports repeat purchase when prices converge. Compression doesn’t eliminate quality—it demands proof of it.
- Portfolio discipline: Reduce redundant SKUs; chase velocity, not variety. Unit growth with dollar pressure rewards lean assortments aligned to top-turning subsegments (e.g., strain-specific carts vs. generic “fruit” lines).
- Demographic alignment: Merchandise vape lines where young-adult spend is concentrated, but maintain a compliance-forward posture to avoid youth access risks.
Bottom line
Vape oil demand is structurally strong, and it’s pushing more brands and retailers to outsource production to specialized partners. Expect continued growth in white-label throughput, periodic SKU gluts in undifferentiated segments, and ongoing consolidation toward efficient manufacturers with verified quality and responsive R&D. In other words: more white-label volume, but smarter curation—and clear room for brands that pair contract capacity with genuine product differentiation.