CVS and Walgreens announcements could have huge implications on new category.

by Dave Hanson

March was a landmark month in the growing CBD product category as CVS and Walgreens announced they would be carrying the cannabis-based products in a handful of states. CBD, short for cannabidiol, has come a long way in the past few years, going from a somewhat controversial fringe therapy to a much more mainstream solution for anxiety, depression, pain and movement disorders.

Derived from the non-psychoactive portion of marijuana, CBD can now be found in a variety of topical creams, lotions, ointments, sprays and beauty products in a few select parts of the United States. Outside of the U.S., CBD can also be found in a variety food and beverage products, and many experts feel it’s just a matter of time before those are available domestically, as well.

On March 21st, CVS announced it will now offer products from the CBD category in 800 stores across eight states as part of a distribution deal with Canadian company Curaleaf Holdings, Inc.

Just one week later, Walgreens followed suit, announcing they would be carrying CBD products in 1,500 stores spread over nine states, including Oregon, Colorado, New Mexico, Kentucky, Tennessee, Vermont, South Carolina, Illinois and Indiana.

So why the sudden rise of the new category? The floodgates opened on December 20th, 2018, when President Donald Trump signed the new $867 billion 5-year Farm Bill into law. The bill legalized the domestic production of hemp, which contains high levels of CBD.

The legalization of hemp farming was a bipartisan effort, strongly championed by Senate Majority Leader Mitch McConnell (R-KY), whose agricultural constituents have been hit hard in recent decades by declining tobacco sales. The farming of hemp and the lofty projections for CBD sales open big doors for new revenue streams in agriculture, even if recreational marijuana use remains illegal on a federal level.

In an article from Inc., published just a couple of short weeks before Trump signed the bill into law, experts from Brightfield were estimating the industry would grow from its current level of $591 million in 2018 to as much as $22 billion by 2022.

Since then, estimates have become even more optimistic. According to a CNBC article in late February, analysts at Piper Jaffrey say they are beginning to look at CBD as a standalone category due to its rapid growth, and it could end up being worth anywhere from $50-$100 billion in the near future.

One of the earliest U.S. adopters of the new products has been beauty supplier Sephora, who has begun carrying CBD products from the likes of Lord Jones and Herbivore. Barney’s and Neiman Marcus were also quick to adopt, announcing that they would be carrying CBD beauty products at a handful of locations in the weeks that followed.

The announcements from Walgreens and CVS, however, are a massive landmark step. Even with their launch in just a small handful of states to start, the combined reach of 2,300 stores will no doubt have a massive impact on the new category. And there’s no doubt more states will follow in the future.

What do you think about the rise of CBD products? Will this early momentum continue, resulting in a long-term standalone category? How long do you think it will be before CBD makes its way into the food and beverage industry? Sound off on social media now and join the conversation.