The 2018 Farm Bill did a lot more for convenience stores than just fund the Supplemental Nutrition Assistance Program (SNAP) as usual. It opened the door for retailers to capitalize on the burgeoning cannabidiol (CBD) market. Now, CBDs represent one of the fastest-growing categories, and more and more businesses are stepping into the marketplace.
Cannabidiol is derived from the hemp plant, and anecdotally is said to offer therapeutic benefits. Although some states already legalized CBD products, what was remarkable about the 2018 legislation is that it removed cannabinoids containing less than 0.3% of tetrahydrocannabinol (THC), the psychoactive compound in marijuana, from the Schedule I controlled substance list. That distinction allowed CBD products to be sold in retailers outside of cannabis dispensaries and in states that have not legalized recreational cannabis. Drug stores were quick to add CBD product lines, but so have some c-store chains.
What’s more, there’s been an explosion of different types of CBD items. At first, consumers chose between oil or tinctures and capsules, but in no time, people could try CBD-infused edibles, topicals, and more recently, beverages, lip balm and makeup. Indeed, the product influx fired up the category: Brightfield Group reported 2019 sales in the U.S. jumped 562%. Even a dip during the pandemic couldn’t squash consumer enthusiasm. Early 2021 indications suggest a strong rebound is underway.
Pain relief has always been a prime motivation for CBD purchases. That’s since broaden to include a slate of proposed benefits for numerous conditions, from epileptic seizures to mental health, skin conditions and just general relaxation. Note: The Food and Drug Administration has not endorsed any non-prescription CBD-related health assertions to date.
Curiosity of CBD continues to grow. A few years ago, a High Yield Insights survey showed 40% of adults expressed interest in using CBD products. What’s even more encouraging for c-stores is that a significant portion of current users admit intentions to increase regular usage.
The combination of an expanding product selection plus a growing loyal customer base positions CBDs to be a profitable investment for years to come. In fact, Grand View Research forecasts a compound annual growth rate of more than 21% between 2021 and 2028.
Additionally, research from Management Science Associates confirms the typical CBD customer closely matches an important demographic for convenience stores: younger (20% of CBD customers are 18-29 per Gallup), blue-collar or self-employed, and in many cases, tobacco users.
Despite tough competition for CBD consumers coming from drug stores and other retailers, the category seems a natural fit for convenience stores.