Will Drugstores Grab CBD Brass Ring?

Cross-channel researcher says c-stores are in fight over emerging category
Photograph: Shutterstock

WOONSOCKET, R.I. While cannabidiol (CBD) products have been a hot potato for the convenience channel due to murkiness around federal and state legality, drugstores—more specifically CVS Health Corp.—may have just lit a fire under convenience-store operators’ more cautious approach, according to a Pittsburgh-based retail researcher.

Noting how c-stores have grown to become the largest retail distributor of certain products like cigarettes and vaping pods, Don Burke, senior vice president of Management Science Associates (MSA), Pittsburgh, said the potential for any one channel to dominate in the burgeoning category of CBDs has yet to shake out.

In past studies on products such as e-cigarettes, MSA has analyzed Google searches as an indicator of consumer interest in new products, documenting a subsequent increase in purchase of those products after a surge in online searches.

“We found that the amount of CBD searches has been increasing rapidly, signaling that consumer demand for CBD products will grow quickly and substantially,” Burke told CSP Daily News, noting that besides the CVS chain, CBD products have been turning up in a diverse range of retailers, including Sephora, Neiman Marcus and DSW.

“The convenience channel is better suited than any other retail channel to capitalize on this immense consumer interest,” Burke said, “but it will need to act quickly so that as consumer trial builds, consumers will begin to identify their local convenience store as the destination for these items.”

In mid-March, Woonsocket, R.I.-based CVS Health Corp. announced that it debuted CBD products in stores in eight states. The products, which include topical creams, sprays, roll-ons, lotions and salves, are available in select CVS stores in Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee, a spokesperson for the company told CSP Daily News. CVS has nearly 10,000 retail drugstores nationwide.

CVS is not selling CBD-infused supplements, food additives or edibles, the company said.

“Cannabidiol (CBD) is gaining popularity among consumers,” the spokesperson said. “Anecdotally, we’ve heard from our customers that these products have helped with pain relief for arthritis and other ailments.”

In late 2018, the U.S. Farm Bill essentially legalized products made from hemp that contain CBD oils so long as they contain less than 0.3% tetrahydrocannabinol (THC), the psychoactive chemical in marijuana.

CBD has enjoyed rapid market growth due to its alleged medicinal qualities, and the product category is expected to reach $5 billion in sales by 2027, according to CBD research firm New Frontier Data, Washington; however, there are still plenty of questions regarding its safety and legality, causing concern and hesitation among retailers to get involved.

“This is our initial entry into this emerging product category that we think is something consumers are going to be looking for as part of their health care offering,” the CVS spokesperson said. “We’re going to walk slowly into this new category and continue to actively monitor the regulatory landscape for CBD products, and will expand product availability as appropriate and in compliance with applicable laws.”

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