ALEXANDRIA, Va. — Sales of CBD products in the convenience channel jumped 390 percent from 2018 to 2020, but this might still be just scratching the surface.
While marijuana remains a Schedule 1 drug that is fully illegal on the federal level, and the Food and Drug Administration has not approved the sale of any ingestible CBD products or CBD products that make health claims, the cannabis and CBD category is growing by leaps and bounds, making it a promising source of revenue for c-store operators — if they approach the category the right way, according to the "Canna-venience Case Studies" education session during the NACS Crack the Code Experience.
Sheetz Inc.'s Paul Crozier, category manager of tobacco, and VERC Enterprises' Tyla Vercollone, project manager, shared insights on entering and succeeding in the CBD category based on their companies' recent experiences.
CBD newcomers should make sure they know the difference between full-spectrum CBD (which contains up to the federally allowable limit of THC), broad-spectrum CBD (which contains no THC, but has other cannabinoids) and isolate CBD (which is CBD alone.)
Operators also should be vigilant about not offering CBD products that make health claims.
Altoona, Pa.-based convenience store operator Sheetz toured multiple CBD facilities in Pennsylvania, Colorado and Canada before launching its CBD program under the purview of its tobacco, lottery and planogram team. The retailer started out with 37 SKUs in April 2019 before increasing its offering to 47 SKUs.
Based on his experience, Crozier recommends asking vendor partners lots of questions and returning to them with additional queries, as more meetings will likely prompt more questions. When it came to legal and regulatory research, he said his team got information and perspectives from vendors and then brought it back to the company's internal legal counsel rather than relying wholly on one or the other.
Crozier also listed a number of key considerations that retailers should weigh when selecting a CBD vendor to partner with:
- Traceability in production
- Certificates of insurance — Retailers will need to determine what level is appropriate for their comfort;
- Certificates of analysis — Does the product have what it claims to have?
- Third-party testing — Is it happening? Is it reputable?
- No health claims
- Company financials
- Plant tours — If the vendor refuses, this is a red flag
- Product quality
Important merchandising considerations that will vary by retailer include whether to place CBD on the sales floor, where there is a shrink risk, or behind the counter, which has limited space; how to handle age restrictions; whether to use vendor fixtures or their own; and how employees will be educated on the category.
Plymouth, Mass.-based VERC Enterprises' CBD program had 16 SKUs when it launched in 2018. Today, the retailer offers more than 100 SKUs. In fact, the chain now sells more CBD than gum, according to Vercollone.
Early on, VERC identified two major areas of concern: CBD education and quality CBD.
Initially, there was little education on the category outside of branded brochures. VERC now requires "CBD 101" level education for all employees. Because store associates are the ones interacting with customers, the more these employees know, the more they are empowered to make sales, Vercollone pointed out.
To rise above the potential stigma associated with buying CBD at a gas station, VERC partners with Ceres Natural Remedies of Vermont as its premium CBD brand. It also opened its first CBD Wellness Center inside one of its stores in Plymouth. Ceres is the center's partnership brand and provides staff education, along with assisting with distribution for some of the more premium brands VERC offers.
"A new business requires new marketing," Vercollone said, cautioning that c-stores that want to offer CBD should be careful not to assume their usual marketing tactics will be effective in the same way. There are also restrictions on advertising CBD in the social media space.
Vercollone acknowledged the challenge of opening the CBD Wellness Center during the COVID-19 pandemic, but stressed that "we are dedicated to brick and mortar." The retailer has found that some consumers would not have sought out the product, but having it in front of them made a difference in their purchasing.
The NACS Crack the Code Experience was a five-week digital event that brought together convenience store industry retailers and suppliers virtually in lieu of an in-person NACS Show this year. The event concluded Dec. 4.