DENVER — About 80 convenience-store retailers, experts and suppliers gathered in Denver in April to get to the bottom of one of today's hottest retail trends during CSP’s CBD and the Future of Cannabis Conference.
Over three days, attendees heard insights and asked questions about the blossoming product category made possible by the 2018 Farm Bill, which decriminalized hemp and opened the door to the litany of medicinal products that can be made from it.
“This [category] is legit. That’s what the retailer needs to know,” said Leo Vercollone, owner and president of VERC Enterprises, in describing his stores’ experience with selling CBD products.
Here are seven insights we collected during the forum …
Call it symantics, but some CBD advocates would like to see a change to one common description of cannabinoid products. Many definitions say CBD is a “nonpsychoactive” chemical in cannabis and hemp plants. Some, however, say CBD is in fact psychoactive, said Anna Symonds, director of education for the East Fork Cultivars cannabis farm in Oregon. CBD, she said, is a therapeutic substance that affects a consumer’s well-being at a “much more subtle” pace than THC and without the high that THC creates. Instead, some proponents endorse calling CBD a “nonintoxicating” substance rather than nonpsychoactive.
2. Due diligence
As a family-owned retailer, Top Star Inc. was extra-cautious before choosing to bring CBD products into its stores.
“We got our clerks, our foodservice leaders, our maintenance workers together to sample the products and learn about it,” said Megan Cardine, vice president of retail operations for the Emmaus, Pa.-based company. “If we were going to put a stake in the ground, we needed complete buy-in. And we were shocked to find how many of them knew more [about CBD] than we did. It seemed everybody has an aunt, a family member or a friend who had a success story with CBD.”
Two months into placing products on the counter, Cardine says, the chain has seen some success and is still learning the ropes.
3. On the front line
The CBD and the Future of Cannabis Conference included a tour of marijuana dispensaries in Denver, and several retailers found them eye-opening.
For those who visited The Clinic, a medical and recreational dispensary, one of the highlights was learning the different ways consumers can ingest cannabis. One was to smoke dabs—concentrated doses of cannabis made by extracting THC and other cannabinoids using a solvent, resulting in sticky oils. Joseph Cohen, owner of the dispensary, showed how it’s done using an empty glass pipe. While most of The Clinic’s products were mainly THC, the dispensary also offered CBD-infused tinctures and gummies.
4. The cigarette effect
Tobacco users are more likely to approve the legalization of both recreational and medicinal cannabis than nonusers of tobacco, according to Don Burke, senior vice president of Pittsburgh-based Management Science Associates Inc. This has a direct carryover to CBD as well, and the emergence of CBD in c-stores may cannibalize tobacco products down the line, he said. In states where CBD is fully legal, cigarette sales dropped 5.4% from 2017 to 2018, Burke said. On the contrary, in states where CBD is illegal, cigarettes declined only 4% during this time frame.
“If you’re a retailer looking to boost sales drops from tobacco, [CBD] may help,” he said. “Keep in mind, though: It may cannibalize tobacco altogether.”
5. Source report
Convenience stores have some marketing to do if they want to be seen as a primary source for purchasing CBD products, according to Donna Hood Crecca, principal for CSP’s sister data firm Technomic. Today, most consumers (49%) think of drugstores, online retailers (43%) and even health food stores and vitamin shops (41% each) before c-stores (32%) come to mind for CBD products, she said, citing a January 2019 C-Store Marketbrief by Technomic. While this means that there’s no single retail channel that owns the CBD category—yet—it lets retailers know which competitors their consumers are thinking about in terms of where they’ll get their CBD.
“Drugstores right now are the go-to, and we need to keep an eye on them to see how they’re approaching CBD,” Crecca said.
6. Team approach
The CBD road to legitimacy and legality mirrors that of dietary supplements, according to Alan Lewis of Natural Grocers in Colorado. The dietary segment eventually became highly regulated but remains ever-present in the marketplace. In the case of supplements, he said, it took a smaller group of providers to band together and stand up to regulators and the major drug manufacturers to achieve their goals.
7. Stepping stones
During his presentation, Bob Hoban, president and CEO of Hoban Law Group, Denver, cited a certain misconception that has driven consumers away from CBD products in the past: that they believe CBD is a controlled substance.
“CBD is not nor has it ever been a scheduled substance under the Controlled Substances Act,” he said. “[CBD] is a derivative of a controlled substance, marijuana. This is a misconception among consumers.”
Hoban also advised that retailers who are looking to get involved have a plan beyond just putting product on shelves. “Craft a business plan,” he said. “[Create] projected financials, build a solid team, create timelines for goals and be realistic.”