Considering Cannabis in Your C-Store? Start Planning Now

Don’t wait for it to be legalized
NACS presentation “What’s New With Cannabis”
Photograph by CSP Staff

CHICAGO Convenience-store retailers considering cannabis when it becomes legal for them to sell should do their homework sooner rather than later, experts said in Chicago during the 2021 NACS Show presentation “What’s New With Cannabis.”

There currently are no federal regulations regarding cannabis sales—marijuana is still illegal on the federal level—but retailers should keep their minds open for when the law changes, a scenario Melissa Vonder Haar, marketing director at iSee Store Innovations, said via a video presentation. “We view it as a when, not if, scenario,” she said. “We expect Congress to eventually make marijuana legal federally.”

“Access has to come in convenience,” said Trevor Fencott (pictured left), CEO of Edmonton, Alberta-based adult-use cannabis retailer Fire & Flower. “The final frontier is to provide it to the consumer. They want it. Convenience locations are going to be very important.” He added that retailers can and should prepare for this to happen.

The cannabis industry has been growing substantially via dispensaries, and moderator Jon Taets (pictured right), director of government regulations at NACS, presented slides showing growth over the last several years—and projected growth. Eight states that have legalized marijuana since November 2020 could generate between $7 billion and $9 billion in annual retail sales down the road once the markets mature in a few years, said Chris Walsh (pictured center), president and founding editor of MJBizDaily.com. U.S. cannabis retail sales for both adult use and medical were about $2.4 billion in 2014. In 2021 that figure is about $25 billion, and by 2024 it’s expected to be $36 billion to $43 billion.

In an eye-opening chart comparing U.S. cannabis sales to other industries, legal recreational and medical cannabis in 2025 is projected to be a $38 billion to $45 billion business, with craft beer at $27 billion, global opioids at $26 billion, the NFL at $12 billion, New York City’s police budget at $5.6 billion, hard seltzer at $4.1 billion and OTC first aid at $1.6 billion.

This growth is why retailers should care about this industry, even though it requires separate licenses, Walsh said. “We’ve been tracking the industry for 10 years,” he said. “It’s spreading into every aspect of the mainstream business world.”

But retailers must do due diligence, he said. “On the convenience-retail side, you might not be able to sell marijuana or THC soon, but there’s a lot of crossover,” Walsh said. “Start planning your path early. Rules differ by state; there are different regulations and different terminologies.”

“There is lots of opportunity for you going forward, and this is one of the biggest opportunities in a generation. It doesn’t come along very often,” he said. “This is becoming part of your customer base, so start looking into it and caring.”

“This is becoming part of your customer base, so start looking into it and caring.”

Issues to know about include banking, Fencott said. “Cash management is a huge challenge,” he said. “You need to tackle this with smaller banks because there are federal hurdles that prevent marijuana companies from banking with bigger banks.”

Supply chain issues are also a challenge. “There’s a product crunch,” he said.

Even though c-stores can’t sell cannabis, there is another angle they might want to consider, Walsh added. “You can open your own cannabis store,” he said. “If you operate a c-store now, that is a big opportunity depending on the state you’re in. You can apply for a license and run that store separately from your c-store. You know retail and can apply your lessons into cannabis.”

The biggest challenge here, though, is the licensing process, which varies by state, he said. “There might be caps, your state might have a (license) lottery. In other states, it’s merit based, and you have a massive application process. Look at states you’re in and learn the regulations and how to adapt to them.”

Walsh also said to understand the customer base in your area. Just as customers in general differ in various areas of the country, they’re also different regarding cannabis. “The cannabis market in California is different in some key ways than New York, and it’s an evolving customer base,” he said. “You might want to branch out to edibles if they’re allowed in your state.”

Also keep in mind that the consumer base for cannabis is growing as the stigma subsides, Fenton said. “The high-growth market is older people, those over 55,” he said. “Women are a bigger market now. Initially, all depictions were of men, and no one targeted women in the right way.” That’s changed, however, “And now people are effectively going after the female demographic, who don’t feel marginalized anymore,” he said.

Finally, in addressing the synthetic Delta-8-Tetrahydrocannabinol (THC) ,Taets said NACS advises caution in getting into selling this product.

Added Walsh, “There’s a loophole. If the DEA chose to enforce, they do have the authority to do that. I wouldn’t dabble in it.”

“Stay away from it,” Fencott added.

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