Hemp-derived products gain traction at retail as consumers seek anti-inflammatory benefits.
Specialty food retailers seeking to break into the booming market for cannabidiol—better known as CBD—can be forgiven if they are a little dazed and confused. Products containing CBD and other compounds derived from the cannabis plant have been proliferating at retail outlets around the country, but a patchwork of state regulations and federal actions have created what some see as a gray area of legality surrounding the items.
Among the cannabis compounds, called cannabinoids, is tetrahydrocannabinol (THC), which is the psychoactive agent that gives marijuana users a “high.” Products containing THC are illegal under federal law but have been legalized in a handful of states around the country for either medicinal or recreational use, or both.
Such THC products are only available through licensed dispensaries. However, the dozens of other cannabinoids, which have been said to provide a range of health benefits, have been widely accepted to be fair game for sale by retailers—provided they are derived from industrial hemp plants, which are cannabis plants that have been bred to contain only trace amounts of THC. Several states have specifically legalized the sale of hemp-derived CBD products.
Products containing CBD and other cannabinoids have been appearing on store shelves around the country in the form of oral supplements, topical applications, and in various edible forms that include chocolate, candies, and other snack foods, as well as coffee and tea.
“The sky’s the limit—almost anything you can infuse, you are seeing infusions of,” says Rob Eder, founder of Firpo Productions, and a retail consultant specializing in cannabis products.
Eder recently moderated a symposium for retail buying platform ECRM on the topic of hemp-derived CBD products. He is also a cannabis entrepreneur who is developing a monthly subscription box called Leafed, which he describes as a “multisensory experience curated around a specific strain of the very best cannabis that’s available in a specific state.”
He says the edibles category has been strong in the adult-use (THC) cannabis market and has potential in hemp-based CBD products as well. In marijuana dispensaries, 22 percent of the volume has been in edibles, says Eder, citing data from research firm BDS Analytics.
According to the Hemp Business Journal, sales for the U.S. hemp industry rose 16 percent to $820 million in 2017, including $190 million for hemp-derived CBD products, $181 million for personal care products, and $137 million for hemp food products, led by the snack food category. Hemp food products include hemp hearts, which are the nutrient-rich seeds of the hemp plant and have been widely available in natural food stores for years.
A new report from consulting firm A.T. Kearney found strong consumer interest in non-psychoactive, cannabis-derived products, especially edibles. More than half of consumers surveyed (55 percent) in the U.S. and Canada said they would be interested in trying infused items such as chocolates, candies, and other packaged foods, and nearly a third—32 percent—said they would be interested in infused non-alcoholic beverages.
Strong Sales at Alfalfa’s
Alfalfa’s, a natural foods retailer in Boulder, Colo., has been merchandising CBD products for the past three years, says Betty Bailey, wellness manager for the two-store operator.
“It’s been really good for us,” she says. “It’s definitely one of the leading categories for us in terms of sales.”
Alfalfa’s has been focused on offering full-spectrum liquid extracts (which contain all the cannabinoids in industrial hemp plants), she says, noting that most manufacturers have shifted away from the CBD-only label on hemp-infused items.
The retailer also carries a range of infused topical products, including balms, salves, and creams, as well as such infused edibles as caramels, chocolates, coconut snacks, honey, and coffee. The items are touted as having a range of health benefits, but customers are often interested in addressing the discomfort caused by inflammation, Bailey says.
One of the brands Alfalfa’s carries is Weller, a locally based manufacturer of Coconut Bites with hemp extract. Weller describes the product as containing 5 milligrams of “full-spectrum hemp extract in every bite.” The company’s hemp-infused Coconut Bites come in original, dark chocolate, and caramel flavors.
The hemp-infused coffee Alfalfa’s carries also is produced locally, by a company called Restorative Botanicals, which offers an organically grown Peruvian coffee product infused with a full-spectrum hemp oil extract from Colorado.
“They’re doing a really smart extraction method where they’re actually infusing during the roasting process so the hemp is driven into the bean,” says Bailey. “It’s definitely one of the most effective techniques I’ve seen for a coffee.”
Alfalfa’s also carries a locally produced honey that is infused with hemp, from Frangiosa Farms. The Colorado Hemp Honey comes in 12-ounce jars containing 1,000 milligrams of “full spectrum hemp extract,” and is available in three varieties: Raw Relief, Tangerine Tranquility, and Lemon Stress Less.
“We focus primarily on local in general as a company and store, but also especially when it comes to hemp products, just because we have so many people doing it so well in their backyard,” says Bailey. “Colorado’s leading the way and has paved quite a solid path for the hemp industry.”
Focus on Quality
Linda Gilbert, managing director of consumer insights, BDS Analytics, says that specialty food retailers need to pay close attention to the quality of the infused products they may be bringing into their stores.
“The first rule of thumb is to be loyal to the practices that have made you successful to-date,” she says. “That means in most instances putting an emphasis on taste and putting an emphasis on that variety of experience that specialty foods bring to people.”
She says there are “a lot of challenges with infused edibles” because the compounds can sometimes be bitter or can impart a gritty texture.
“You really need to do your homework, and make sure that you’re delivering the quality of product that people have come to expect from your brand,” she says. “Just because it has cannabis in it, or hemp in it, or CBD in it, doesn’t mean that people are willing to have a chocolate bar that’s gritty.”
Products need to focus on communicating the experience that the products will produce, rather than the actual science around it, Gilbert explains.
“Is it going to give me energy or help me to sleep? Is it going to relax me or give me that extra edge I need to get through my power walk? It goes back to when we started fortifying foods,” she says. “Consumers don’t want to understand the science of calcium. They want to know that if I drink this, it’s good for my bones.”
Gilbert also suggests that retailers should pay close attention to the experience and skill sets of their suppliers.
“To paraphrase what someone once said to me, ‘The ability of a marijuana or hemp producer to make a fine chocolate is probably far less than the ability of a fine chocolatier to develop an infused chocolate,’” she says.
Gilbert sees ample opportunity for hemp-infused edibles. Many of the products available today are candies and sweets, she says, but consumers may also be interested in a range of savory items as well.
She says she expects a range of suppliers to get on board with these types of products, or to at least explore the opportunities.
“We are going to see everything from startups to very well-established, mainstream companies start to look at this,” she says. “They’re already looking at it. Some are going to decide, ‘It’s not for us.’ Some are going to decide, ‘There’s opportunity for us here.’
But you would almost be negligent or irresponsible today to not be looking at it. It might not be right for you, but you ought to be looking at it.”
Hemp Grows in a Legal Gray Area
Daniel Shortt, a Seattle-based attorney with law firm Harris Bricken who works extensively with entrepreneurs in the cannabis industry, says that specialty food retailers who offer CBD or hemp-infused products need to be sure that the suppliers they are buying from are sourcing their products from industrial hemp.
However, some confusion still exists around the legal definition of industrial hemp, he says. He also notes that some federal authorities issued a statement of principle in 2016 that the 2014 Farm Bill—which legalized the cultivation of industrial hemp—did not allow the commercial sale of industrial hemp products, nor did it allow the interstate transfer of industrial hemp. However, Congress has prohibited the enforcement of that interpretation, Shortt explains.
“Businesses are creating these CBD products from industrial hemp, and for a buyer of specialty foods who’s looking into CBD, it’s important that that buyer is assured that the product is, in fact, derived from industrial hemp and has documents and evidence to support that,” says Shortt.
The 2018 Farm Bill is expected to include the Hemp Farming Act of 2018, which would remove hemp as a controlled substance, formally allow CBD to be sold legally in all 50 states and, observers say, open up the industry to robust market development.
Cannabis Brings Marketing Challenges, Branding Opportunities
Chris Epp, who oversees marketing at Boulder, Colo.-based Alfalfa’s, says marketing hemp-based products can be a challenge. Much of the retailer’s marketing has been conducted in-store and through direct email outreach.
“The hurdle we keep running into is that most of the larger media companies will not allow you to advertise for anything that says ‘hemp’ or ‘CBD,’” says Epp. “You can’t post on Facebook, you can’t use Google Ad Words or any of the traditional or obvious methods to market these things.”
The reluctance on the part of large media companies to carry hemp or CBD advertising could reflect the fact that the legal status of these products has varied by state and has been in a state of flux.
Consultant and cannabis entrepreneur Rob Eder, founder of Firpo Productions, says brand names are an important element of marketing in the cannabis market.
“Brands really matter in this space, whether you are talking about cannabis or CBD specifically,” he says, noting that several celebrities—including Jimmy Buffet, Snoop Dogg, Willie Nelson, Whoopi Goldberg, Tommy Chong, and Melissa Etheridge—have jumped into the space.
“There’s a tribalism in this business,” says Eder. “People are gravitating toward brands that resonate with them.”
Singer-songwriter Etheridge has been marketing a range of cannabis-infused products in California for several years through the Etheridge Farms label. Among the recent introductions is a cannabis-infused wine, available only through licensed dispensaries.
THC, or tetrahydrocannabinol, is a cannabis compound that is the psychoactive agent. In other words, this is what gives marijuana users a “high.” Products containing THC are illegal under federal law but have been legalized in a handful of states around the country for either medicinal or recreational use, or both. Such products are only available through licensed dispensaries.
CBD, or cannabidiol, is a cannabis compound that can be derived from marijuana or from hemp oil. CDB found in edibles is derived from industrial hemp plants, cannabis plants that have been bred to contain only trace amounts of THC. Several states have specifically legalized the sale of hemp-derived CBD products.
Hemp is derived from the stalks and seed of the cannabis crop. For cannabis to be considered hemp, it must have no more than 0.3 percent THC. Hemp oil also only has traces of CBD. Hemp products are widely available, especially in natural food stores.
Mark Hamstra a regular contributor to Specialty Food Magazine and Specialty Food News.