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OPINIONCBD/Hemp

4 Months After the Farm Bill, Which Channel Is Winning CBD?

Drugstores take an early lead, but convenience channel is primed to battle back
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Photograph by CSP Staff

DENVER — It’s been about four months since the 2018 Farm Bill opened the door for a legal hemp and CBD market. Not surprisingly, the question of which retail channel would ultimately own this new and exciting space was a hot topic of conversation during CSP’s recent CBD and the Future of Cannabis Conference in Denver.

The bad news for the convenience-store channel? Drugstores made the first major strike to become the destination for CBD, with the three major players—CVS, Rite Aid and Walgreens—announcing plans to sell nonedible CBD products at select stores. It makes sense given that the only CBD products not facing legal uncertainty at the hands of the U.S. Food and Drug Administration (FDA) fit in the drug channel’s sweet spot: health supplements and topicals.

The move is paying off. Technomic research shows that drugstores currently take the top spot when consumers are asked where they purchase or would consider purchasing CBD products: 49% said drugstores, compared to 32% for c-stores.

“Drugstores are the first go-to for consumers, the first one to stake a claim,” said Donna Hood Crecca, principle at Technomic, during the conference.

The data suggests, however, that drug may not be the channel most likely to take the CBD crown in the long run. Here are some points made at the CBD and the Future of Cannabis forum that should make convenience retailers smile:

  • Core convenience customers have a big interest in CBD. Technomic data showed that 25% of call consumers described themselves as knowledgeable about and/or having tried CBD. For heavy c-store consumers, that figure was 32%; for daily c-store consumers, it jumped to 50%.
  • Location is a big factor in cannabis purchase decisions. Don Burke, senior vice president of Pittsburg-based Management Science Associates (MSA), pointed to BD Analytics data that showed 67% of cannabis customers listed convenience of location as a top reason for choosing their purchase location. “Convenience is really important for these consumers,” he said.
  • Consumers are very interested in CBD-infused c-store staples: When Technomic asked consumers about their top CBD categories of interest, it wasn’t vitamins or salves that topped the list: 53% listed chocolate candy, 49% nonchocolate candy, 49% baked goods, 42% adult beverages, 39% soda and 38% water. “Interest in edibles is huge,” Hood Crecca said. “Beverage and food products will move the needle.”

The problem, of course, is that those candy, baked goods and beverage CBD products currently sit in a legal gray area courtesy of the FDA. While supplements and topicals have more or less been given the go-ahead, the agency has specifically (and repeatedly) stated its authority over any food or beverage CBD product. It just hasn’t figured out how (or when) it will create that pathway, effectively sidelining the most promising options for the convenience channel.

While I personally am not one to put a ton of faith in the FDA, Bob Hoban, president and CEO of the Denver-based “cannabusiness”-centric Hoban Law Group, was confident the matter will be resolved in a favorable way in the near future.

“The FDA does not want this industry to go away,” he said. “They just want the reins on.”

Here’s hoping Hoban’s right: There’s a $16 billion industry at stake.

Melissa Vonder Haar is a freelance writer and marketing director of iSee Store Innovations. She also moderated CSP’s CBD and the Future of Cannabis Conference.

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