The Seed to Shelf Movement

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As regulations continue to evolve from state to state, the plant based cannabodial seed to shelf movement has quickly shifted into the first inning of what feels like the end of the prohibition era. From farmer’s markets to hair salons, CBD’s entrance into retail continues to grow at exponential rates. Growers are expanding their incubation tests with new combinations of powerful molecules, the creation of brands based on more than green leaf imagery is becoming a thing and everyone from millennial consumers to baby boomers to Wall Street analysts are taking close note.

In a recent forum hosted by LB Equity, Vivien Azer, Managing Director & Senior Analyst at Cowen cited that in a Q1 survey she found 6.5% of respondents had tried CBD (in comparison to only 4.3% who had tried vaping) and the variety in form factors was surprising with 40% using tinctures followed by a less surprising 19% preferring CBD in beverages similar to an overall movement we are seeing in consumer’s desires for healthy yet flavorful beverage alternatives such as Kamboucha and Matcha drinks.

So, as we see explosive growth of a new sector, what will set brands apart and position winners for success? The challenges ahead are substantial with regulations still unclear, a lack of consumer knowledge around the definition and differences between CBD vs hemp extract vs THC and the open sky around what’s possible around the combination of cannaboid with the other 113 molecules that exist in the cannabis plant. The benefits touted include pain relief, inflammation management, better sleep and stress relief yet many still feel unsure about how to feel confident in a new brand creating products that don’t fully understand.

Brand Matters – Companies can’t just be an ingredient story

The rules of retail still apply, even more so in such a provocative vertical. Product packaging, brand voice, visual assets and aligning with the right influencers need to be as strategic as ever in order to rise above the noise.

Customers are looking at quality, branding that feels familiar, clean and transparent design. Furthermore brands need to walk a very fine line in language as it will be challenging to scale from state to state as rules vary regarding health claims and benefits. And alignment with influencers will be tricky but a strategic alliance in building trust with end users.

Brick and Mortar Distribution Channels

The touch-feel-taste gap will be crucial for the CBD market. Partially for the social aspect of “feeling mellow together” but even more importantly for the need of higher education, physical retail channels will prove significant for brands to differentiate themselves in the market. Hotels, well known retailers and brand owned stores will push the market forward.

Guests checking into the Standard L.A. can already purchase small batch THC chocolates and gummies in partnership with cannabis brand Lord Jones. Saks Fifth Avenue is debuting The Salon Project, an LB Equity investment in partnership with Joel Warren, educator and co-founder of New York’s Warren Tricomi Salon will host revolving pop-in shops featuring curated collections of CBD beauty products for hair and skin. And, Sephora is helping its fans and shoppers that want to take their beauty regimens to new highs by showcasing a selection of cannabis-derived products from CBD lotions to hemp moisturizers with brands like Herbivore, High Five and Flora + Blast.

Newer brands and multi-brand platforms such as Dosist and Standard Dose, and the current marketplace leader MadMen currently valued above $2B, are also turning to brick and mortar stores to help consumers discover CBD products, gather knowledge and gain information about the market and the potential of new products. Dosist whose products focus on its six promises of unique sensations (calm, bliss, sleep, relief, arouse, and passion) opened its first branded store with Wellness Experience concept in Abbot Kinney, Venice. Standard Dose’s first store slated to open in NoMad end-May is leaning heavily into experiential with their multifloor flagship positioned to foster a deeper understanding of natural and plant-based healing practices with mediation rooms, areas to test and trial products and a rooftop for special events. And MadMen’s environments, who dispense both products with and without THC, embody a futuristic pharmacy meets Apple meets Nike aesthetic.

Traditional Brands Thinking New Will Have Market Advantages

Just over a month ago, Jelly Beans founder released a line of cannabis-infused jelly beans under a name brand called “Spectrum Confections” giving fans bit more than just your average sugar rush. He announced the launch via instagram and it sold out in days, leading to announce they were only taking wholesale orders between 8,000 and 32,000 pieces going forward. Coca-Cola and PepsiCo could be joining the game with CBD infused beverage lines and the cosmetic industry is quickly catching onto the opportunity to capitalize on today’s yearning for access to the Fountain of Youth by launching capsule collections of beauty products that reduce wrinkles, lessen inflammation and potentially unlock more antioxidants than Vitamin C serums. Peter Thomas Roth has a Green Releaf Therapeutic Sleep Cream, Immunocologie is launching Mellow Girafe feautring Cannabis infused sheet masks to “help you find calm above the chaos” and Kiehl’s launched their Cannabis Sativa Seed Oil Herbal Concentrate to name a few.

Consumers are chewing CBD gummies to relieve their anxiety; they are adding a drop from their CBD Tinctures to their morning lattes or brewing CBD infused coffee beans to start their day. They are rubbing CBD creams on their skin for pain relief or adhering a CBD infused skin patch. Across generations people are curious, intrigued and excited about the benefits of the miracle cannabidiol seed, so much so they are even sharing the benefits with their four legged friends with products like CBD chews and drops. It many ways it’s the wild west of opportunity yet still a highly unknown, highly regulated sector. As regulations lighten more and more supply will hit the market, causing pricing corrections and a waterfall of competition. Brands that want to set themselves apart will need to invest in building a brand, compliment their online presence with physical retail touchpoints and foster community.

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