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Retailers See Promise In CBD And Hemp Products

Thanks to the passing of the Farm Bill in late 2018—containing a provision legalizing hemp, a species of non-psychoactive cannabis that CBD can be extracted from—hemp and CBD are on major retailers’ radar.

The CBD market is moving towards mainstream retailers and is projected to be over $20 billion in sales by 2024 . Walgreens, Sprout, CVS, Ulta Beauty, GNC Holdings, Urban Outfitters are just a handful of retailers offering or looking to offer, CBD products to consumers.

According to Christina Hartwell from Little Mary and Jane, ”the industry is on the verge of moving beyond merely CBD and exploring the full spectrum of Hemp (Cannabis Sativa L).”

The potential of CBD and hemp products appears to be endless due to newly emerging scientific data.

“The industry is on the verge of moving beyond merely CBD and exploring the full spectrum of hemp (Cannabis Sativa L). Scientific studies thus far have been somewhat limited due to the stumbling block of THC due to potential adverse side effects and regulations. However, the studies being done on full-spectrum hemp and the multitude of cannabinoids in the plant are promising, CBN is beginning to come to the forefront and is potentially more beneficial for treating insomnia and anxiety than isolated CBD,” Hartwell added.

Retailers jumping in

Several retailers for natural supplements are expected to have CBD on their shelves. Dillards Department Store, a chain with a total of approximately 292 stores in 29 states, is beginning to roll out several Hemp Depot while-labeled CBD products. Kroger announced in July another 1,000 locations in 22 states where their grocery stores will begin to carry CBD products.

“Because of the tremendous range of products in which CBD is a fit, we expect to see it on shelves, literally, everywhere. Wholesale order numbers are climbing dramatically, which is one of the first signs of significant market expansion. When we started, we were taking orders for small companies ordering 500 units at a time. Large company orders are projected to reach 100,000+ units in the next 18 months, which is going allow wholesalers like Hemp Depot to manufacture products on a larger scale, thereby reducing CBD product prices by the end of 2020 to a forecasted $20 to $30 as with standard vitamin supplements,” said Andy Rodosevich, CEO and cofounder of Hemp Depot .

In July, adding to the momentum, Toronto-headquartered Abacus Health Products announced new retail purchase orders from CVS for its line of CBDMEDIC pain relief and skincare products, sold to consumers via retail chains and the company’s e-commerce platform.

“We are encouraged to see the continued interest and growth in CBDMEDIC among leading retailers throughout the United States. In particular, the fact that CBDMEDIC products are now being positioned in-line demonstrates the acceptance of our over-the-counter products within the traditional pain relief and skincare categories and we look forward to seeing the continued growth in the number of retail locations in which CBDMEDIC is available,” said Perry Antelman, the CEO of Abacus Health Products, maker of CBD CLINIC and CBDMEDIC.

Also in July, Green Growth Brands announced a deal with American Eagle to begin selling its CBD-infused body-care products — including muscle balms and lotions — in nearly 500 of American Eagle’s stores and online, with sales expected to begin in October. This follows apparel retailer Abercrombie, which also plans to sell GGB’s products in more than 160 stores across the U.S.

“The cultural conversation around CBD is growing and I think we are beyond CBD being only for early adopters. The push to major retail outlets like Kroger, Walgreens, and CVS seem to support that,” said Paul Miller from Lokus Nutrition .

Risks remain

The FDA is in the midst of creating guidelines for CBD manufacturers and will likely eliminate some manufacturers currently participating in the CBD boom and open the door to some large scale, mainstream manufacturers. The details of the FDA regulations will inform the specifics of how large the OTC piece of the CBD pie becomes.

“We’ve seen major chain retailers like CVS, Walgreens, and Whole Foods start to include CBD in their product mixes. The larger the entity, the more likely they are to stick with topical products until the FDA provides clarity,” said Kate Heckman from Stratos CBD .

When it comes to CBD oils, presently only 10% of demand is being filled by present growers. The industry has increased by 200% from 2017 to 2018, with about $618 million in sales last year with projected $22 billion by 2022.

“A lot of people want to get into this arena. Some of the problems we are working on are standardization of the industry, genetic variations, for patents and lab certification. It is the wild west, with little or no standard dosages or diagnosis for the public to rely on,” said John Sation, clinic director, and research coordinator from Hair & Scalp Clinics.

The recent FDA warning letter to Curaleaf on July 26 serves as a wake-up call to the industry about statements in marketing or social media that imply that these products can be used to treat medical conditions.

“It’s in the best interest of the industry to be careful and conservative with any label claims being made. With the passing of the 2018 Farm Bill, each state department of agriculture must submit a state management plan to the USDA outlining how various aspects of hemp cultivation and processing will be managed within their jurisdiction,” said Dr. Sean Callan, CEO of Precision Botanical .

While the opportunity is real, risks remain. According to David Gross from Strategic Value Partners , players in the space should tread carefully as the regulatory framework is currently only taking shape:

More Kroger Co. stores to carry CBD products

Two vendors of cannabidiol (CBD) products plan retail distribution to more than 1,000 Kroger Co. supermarkets.

Charlotte’s Web Holdings Inc. and Veritas Farms Inc. said Monday that they’re rolling out topical CBD items to 1,350 of the Cincinnati-based grocer’s stores in 22 states, including the Kroger, Dillons, Fry’s, Fred Meyer, King Soopers, Mariano’s, Pick ‘n Save, QFC and Smith’s banners.

Boulder, Colo.-based Charlotte’s Web said Kroger Co. stores in multiple states have begun carrying its topical hemp CBD extract oils, with a plan to roll out to 1,350 locations in Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Montana, Nevada, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, Washington, Wisconsin and Wyoming.

Charlotte’s Web noted that the launch with Kroger marks its largest distribution ever through a single retailer.

“Since its founding, Charlotte’s Web has been on a mission to make CBD products available for as many people as possible,” CEO Deanie Elsner said in a statement. “This distribution reach through Kroger’s market-leading network of grocery stores is an enormous contributor to our mission. We are very appreciative of Kroger and all of our channel partners for the continued progress in expanding access to hemp-based health and wellness products.”

Along with CBD oils, Charlotte’s Web’s product line includes hemp-infused balm and cream, CBD supplements (capsules and gummies) and pet products. The company said its U.S. retail distribution includes five mass retailers covering 22 states and 8,000 locations overall.

Fort Lauderdale, Fla.-based Veritas, meanwhile, is expanding its current distribution with Kroger Co. from 945 stores in 17 states to 1,350 stores in 22 states.

The broader rollout brings Veritas’ topical CBD products to Kroger Co. locations in Texas, Virginia, Georgia, Montana and Utah, totaling more than 400 new stores. Items featured in the rollout include Veritas Farms’ full-spectrum hemp oil, salves, moisturizing lotion and lip balm.

“We are pleased to expand our partnership with Kroger family of stores,” said Alexander Salgado, CEO and co-founder of Veritas Farms. “As a nationally recognized leader in retail, their commitment to growing this category signals the success experienced thus far, the potential for continued growth and the importance of these products’ availability to consumers and retailers.”

In June, Kroger confirmed plans to begin selling CBD topical products at 945 stores in 17 states. The company didn’t name the brands but said lotions, balms, oils and creams infused with hemp-derived CBD would be sold at stores in its Atlanta, Cincinnati, Columbus, Michigan, Central, Louisville, Delta, Nashville, Mid-Atlantic, Roundy’s (Mariano’s and Pick ‘n Save), Dillons, King Soopers, Fry’s, Fred Meyer, QFC and Smith’s divisions.

Last December, the federal government changed its classification of cannabis with the enactment of the Agriculture Improvement Act of 2018, or the Farm Bill . The legislation removed hemp — cannabis or derivatives with a very low content of psychoactive ingredient THC — from the Federal Controlled Substances Act’s definition of marijuana. That meant hemp was no longer a defined by the federal government as a controlled substance, even though marijuana remains a Schedule I drug.

Under current federal law, CBD and THC can’t be added to a food or marketed as a dietary supplement, according to the Food and Drug Administration. The FDA maintains regulatory oversight of food, cosmetics, drugs and other products within its jurisdiction that have CBD, THC or the cannabis plant itself as an additive.

Still, various CBD offerings continue to make their way into stores, leaving many retailers uncertain about the regulatory framework regarding the sale and labeling of hemp-containing products. Scientific research on CBD’s potential health benefits also is still in its early stages. Earlier this month, the Food Marketing Institute (FMI) submitted comment to the FDA urging the agency to provide more guidance on the retail sale of food, beverage and other products containing cannabis or cannabis-derived compounds, including CBD.

The potential consumer market for CBD products is lucrative. Nielsen estimates that overall U.S. sales of all legalized cannabis — including hemp-derived CBD — reached $8 billion, a total that could swell to $41 billion by 2025 as more states legalize marijuana for recreational use, now allowed in 11 states and the District of Columbia.

“The face of legalized marijuana has changed dramatically,” Nielsen said in a report last week. “We forecast much of the same in the hemp-derived CBD sector, which is now invading mainstream retail and grabbing headlines along the way.”