The CBD Wellness Era
Can convenience be a wellness destination? With Adroit Market Research projecting the global wellness supplement market to hit $215.66 billion in 2020, it’s certainly worth considering—especially as both physical and mental wellness remains front-of-mind for consumers.
A July Kaiser Family Foundation tracking poll showed 53% of adults saw their mental health deteriorate because of the pandemic, with 35.2% reporting anxiety symptoms. A year ago, just 10% of respondents reported anxiety symptoms. In this time of heightened stress and uncertainty, consumers have turned to wellness products to cope, including cannabidiol (CBD).
According to a June 2020 consumer panel by the cannabis data company Aclara Research, 20% of CBD consumers were using more CBD because of stress and anxiety related to COVID-19. Some 88% reported using CBD a few times a week or more. “Basket size is up, consumer spend is up,” said Kristen Nichols, editor of Hemp Industry Daily. “All the numbers show CBD really booming.”
The question for convenience retailers is where exactly is that overlap between CBD and wellness—and how can they legally benefit from that intersection?
All of the reported benefits of CBD clearly line up—whether it’s sleep, stress, tension, general sensitivity—to health and wellness.
Of the 3,000 consumers surveyed by Aclara Research, the top reasons for using CBD included pain relief, anxiety, relaxation, sleep and general wellness.
Aclara’s survey data were very similar to the results of Denver-based BDSA’s Q1 2020 Consumer Research report, which found two-thirds of respondents increased or maintained their shopping frequency due to COVID-19, three-fourths said their cannabis consumption had gone up, and the top reported benefits of cannabis products (including CBD) were relaxation, stress relief and reducing anxiety.
“All of the reported benefits of CBD clearly line up—whether it’s sleep, stress, tension, general sensitivity—to health and wellness,” said Miguel Martin, CEO of the Edmonton, Canada-based Aurora Cannabis Inc. “We’ve seen a massive increase, whether it’s in Google searches or in-store inquiries.”
Ray Johnson, operations manager for Las Vegas-based chain Speedee Mart, has seen this interest in his stores, adding that it’s crucial that convenience shoppers see “CBD” vs. “hemp” when it comes to wellness.
“The marijuana guy understands hemp, but the person buying it thinking it’s going to relieve stress, pain and those things—they’re looking for CBD,” he said. “They don’t even associate it’s the same thing.”
A Fine Legal Line
Marketing a product as CBD is one thing. Marketing it as a potential solution for sleep, stress or anxiety is another, at least in the eyes of the U.S. Food and Drug Administration (FDA). While the agency has not yet released guidance on how ingestible CBD products will be regulated, it has held a very firm position about any type of CBD product making health claims.
“Selling unapproved products with unsubstantiated therapeutic claims—such as claims that CBD products can treat serious diseases and conditions—can put patients and consumers at risk by leading them to put off important medical care,” FDA Commissioner Ned Sharpless, M.D., said in a July 2019 press release.
“The FDA has been pretty consistent,” Martin said. “You can’t make health claims.”
While the agency maintains no ingestible CBD product has been approved for sale in the United States, it has focused its enforcement not on a specific type of product, but products making health claims. Since 2019, the FDA has issued warning letters to more than 30 CBD makers. Every one of those letters focused on explicit therapeutic claims.
“The only area where the FDA has been aggressive in reaching out to companies to tell them to cease and desist is in conjunction with health claims,” said Scott Sinder, NACS general counsel and a partner at Steptoe & Johnson LLP, Washington, D.C. He noted that so far, enforcement efforts have been directed at manufacturers, but that retailers should “exercise caution there because that’s the place [FDA] is most focused in terms of enforcement.”
The majority of the warning letters thus far have been directed at fairly extreme medical claims, regarding treatment of COVID-19, cancer or Alzheimer’s. While the larger vitamin supplement industry has been comfortable with more general claims—like “may help with sleep” or “immune-boosting”—Sinder advised caution for now. “What that line is between ‘it enhances your well-being vs. talking about specific maladies,’ it’s delicate,” he said. “There’s not clear law.”
And for the most part, retailers are being cautious when it comes to marketing CBD for specific wellness needs. “It’s a fine line with health claims,” said Don Rhoads, CEO of the Vancouver, Washington-based Convenience Group. “If you look at a number of the other products we sell, there are health claims. With CBD, it’s front of mind with our regulatory agencies. You’re not going to see health claims with these products in my stores—sooner or later it will just get pulled.”
Johnson follows the same rule in his stores. “It’s simple: We just don’t make any claims,” he said. “People can look that up online.”
Martin said that rule also applies to responsible manufacturers: no health claims and no testimonials that might allude to health claims. Which begs the question: How can retailers leverage consumer interest in CBD as a health and wellness solution when they can’t say it’s a health and wellness solution?
Let the Product Speak for Itself
In this regulatory gray area, it may not be about what the label or marketing materials say—but what the product format says in the mind of consumers. “There are a variety of different formats and options of CBD that seem to be meeting the needs of consumers who are interested in health and wellness,” Martin said.
Topicals (especially roll-ons and salves), capsules, even gummies are associated with health and wellness, even if those messages don’t appear on the label. “A gummy is a delivery method, not candy,” said Johnson. “I have a gummy vitamin every morning.”
Research conducted by Nielsen and Hemp Industry Daily suggests that the types of CBD products consumers are most open to either have an explicit or implicit association with health and wellness. Nielsen found 59%-68% of consumers would try CBD capsules, 57%-68% would try topicals, 54%-64% would try edibles (which include gummies) and 51%-58% would try tinctures, sublignuals and oral sprays. By comparison, only 22%-29% would consider using a CBD vaporizer.
Over-the-counter CBD supplements, such as capsules and tinctures, already make up more than one third of all CBD sales ($588 million in 2020). Nielsen projects the segment will remain the largest piece of the CBD pie, increasing to $1.5 billion in sales by 2025.
Though it might not seem like a natural fit in convenience, some retailers are succeeding by offering the right size and format of CBD beauty/skin/bath products.
But it’s not just those formats that look like vitamins that are succeeding in the wellness space. Nielsen predicts “prestige” CBD products (described as high-end beauty and skincare products) will grow by 1000% over the next five years.
Though it might not seem like a natural fit in convenience, some retailers are succeeding by offering the right size and format of CBD beauty/skin/bath products. Speedee Mart, for example, carries CBD bath bombs. “When I first saw it, I wondered how anyone would even know what it was,” Johnson said. “But they’ve been selling. I never would have thought of that!”
Offering some of these traditional health and wellness CBD products doesn’t just allow convenience retailers to benefit from a current consumer trend, but it also reinforces the fact that convenience is no longer just a place for gas, cokes and smokes. “The reality is, convenience stores are serving a broader role in their communities in a lot of different ways,” said Martin. “There’s been a massive evolution in convenience stores as a place where you can find many items that would historically have been found in a pharmacy. I don’t see CBD any differently.”