Cannabidiol (CBD) and hemp are trending in a big way in 2020, and their presence is expected to only grow bigger.
The 2018 Farm Bill legalized the production of hemp when it removed hemp from the definition of marijuana in the Controlled Substances Act. Because CBD is found in hemp, it effectively legalized CBD at the federal level, opening the door to an entire new product category.
But as CBD and hemp become mainstream, hurdles continue to appear. One big one is that consumers are still confused about the products. They remain uncertain about which manufacturers to trust and how CBD and hemp can help them. Retailers have a key opportunity to educate customers, allay concerns and introduce customers to quality products.
VERC Enterprises is one c-store chain delving into the new CBD market at 33 locations in Massachusetts and New Hampshire. “We carry (CBD brand) Ceres Natural Remedies in all stores along with a few other brands,” said VERC Enterprises CEO Leo Vercollone.
VERC will also be adding Ceres Natural Remedies-branded mini stores inside its c-stores, which will feature the brand’s CBD products and a few others, similar to how some c-stores feature quick-service restaurants within their stores. This will provide a central area within the store where people can talk to an employee who knows the products and can answer questions about CBD.
Plus, there’s less overhead and better margins than foodservice, according to Vercollone.
“It’s something that I think our industry, as we explore this, we really want to make sure that we partner with companies that are legitimate and that are testing their product, that are certified, that are regulated and are doing it right,” he said.
Given the current chaotic legislative landscape, questions abound regarding which products are legal and in which states. Even so, the market is expected to keep steaming forward.
“We project that the U.S. hemp-based CBD market could be a $2.25 billion to $2.75 billion industry in 2020,” according to Rich Maturo, an analyst for information and data firm Nielsen. “These conservative projections already account for hampered Food and Drug Administration (FDA) rulings and other possible speed bumps for the hemp-CBD marketplace.”
An opportunity also exists in 2020 around the current chaos surrounding CBD. Brick-and-mortar retailers have an opportunity to educate consumers about products and uses.
Traditional retail will drive the CBD market to nearly $25 billion within the next five years, according to CBD market research firm Brightfield Group.
In its favor, both millennials and baby boomers are prime consumer demographics. A Consumer Reports study from 2019 found that of millennial users responding, 32% use CBD to reduce stress and anxiety. Of baby boomers, 42% use it to ease joint pain.
Given the lax testing requirements in the marketplace, Consumer Reports advised retailers to ask for a certificate of analysis (COA) that proves the product contains what it says it does. That’ll go a long way in assuring customers.
Also, consumers are going to want to touch the product. A great deal of that will come from personally speaking to retail representatives who know what they’re talking about. C-store operators should be ready to either train store associates in the CBD product line or bring in an outside company and its employees who already have the training.
And don’t overlook the CBD market for pet care. The 2020 Pet Industry Green Paper from Nielsen and Headset reports 74% of CBD buyers own pets.
All of these factors point to consumers favoring traditional retail.