Delta-8 has shifted the landscape of the CBD industry. As sales of Delta-8 products rise in CBD retail, marijuana dispensaries see competition while consumer demand, driven by millennial moms, keeps rising at robust rates.
A boom for CBD brands, Delta-8 has unquestionably breathed new life in an industry confronting pressures of an increasingly crowded and fiercely competitive marketplace during the worst of the pandemic.
It has quickly risen to become the bane of the marijuana industry, which on top of health concerns, claims that left unregulated, Delta-8 sales will become a competitive threat, particularly in state’s that prohibit cannabis sales and regulated markets that have prohibitive (cannabis) license fees, taxes and testing requirements.
The concerns come as the cannabis industry is celebrating unprecedented growth and profits spurred by seismic increases in pandemic-related consumption.
Calls for heightened regulatory activity and lane changes are creating more public debate among once civil sectors and is raising questions in an already murky marketplace.
Is It CBD or Marijuana?
If Marijuana and CBD had a baby, they would name it Delta-8. Following its arrival, “paternity and custody” questions have dominated industry discourse.
Until recently, hemp-derived CBD products produced, marketed and legally sold by online and brick-and-mortar retailers – which under the law are required to adhere to a tetrahydrocannabinol (THC) limit at or below .03% – posed little threat to cannabis brands.
But in 2020, as evidence surfaced of more widespread sales of Delta-8 among CBD brands, cannabis brands began to object. The bottom line for them: Delta-8, synthetically derived from CBD oils and exceeding the .03% limit set by the 2018 Farm Bill, belong in in marijuana dispensaries – not CBD shops.
Plus, according to many cannabis advocates and a powerful group of publicly-traded CBD brands, Delta-8 THC’s psychoactive effects make it incompatible with hemp products and related licensing guidelines.
Some users liken Delta-8 to “THC-light,” noting that it offers a less hallucinogenic, natural kind of high.
Many cannabis brands and lawyers argue that its “bloodline” should be questioned, noting that its legality is dependent on the interpretation of a U.S. Drug Enforcement Agency (DEA) rule over “synthetically derived” cannabinoids, which are illegal and, to some, considered unsafe.
That’s just the surface story, according to industry insiders who privately admit that at its root, the industry is in a turf war over market share.
Gaining a Foothold
The arguments are too simplistic, according to Myles Harlow Kahn, a licensed attorney, former professional sports celebrity agent and founder and CEO of popular Washington-based Buddy’s, a cannabis dispensary.
“It (cannabis industry) has plenty of room for growth,” says Kahn. “That being said, we are past the point of achieving profit by merely opening our doors. In order to survive in today’s marketplace, you need to run a legitimate business, using best-in-class tactics.”
Is Delta-8 a threat to thriving dispensaries like Buddy’s?
“Not in the least,” says Kahn. “Synthetically altering CBD to introduce THC as an OTC (over-the-counter) product in the CBD space is a short-term solution to over-saturation of the CBD industry.
“States are becoming very savvy about capturing revenue from the cannabis industry – and want to see products like Delta-8 sold in licensed (cannabis) shops, which pay considerable excise taxes far above CBD brands.”
One way or another, more regulatory action is coming, according to Kahn.
‘Everyone’ Is Buying
Revenue is at the center of the argument and there’s big money at stake. In April, U.S. sales of products listing Delta-8 as an ingredient soared 144% from a year earlier, according to cannabis data and analytics provider Headset.
Brightfield Group recently described Delta-8 THC as “the hottest new cannabinoid of 2021,” based upon its second quarter survey released recently which reported that social media posts about Delta-8 increased 550% from October 2020 to February 2021.
The market research firm discovered that 19% of U.S.-based CBD consumers were aware of Delta-8 and 76% of those aware say they are “likely” or “very likely” to purchase it.
“We are seeing the popularity and meteoric rise of Delta-8 showcased across consumer and retailer data, demonstrating an immense appetite for legal, accessible cannabinoid products that Delta-8 is tapping into – primarily in markets where cannabis remains illicit or laws restrictive,” said Brightfield Group Senior Insights Manager Jamie Schau.
Brightfield’s Managing Director Bethany Gomez says she was not surprised to find CBD store owners reporting month-over-month triple-digit Delta-8 sales growth beginning in Q1 2021. Even Delta-8’s newest market entrants are experiencing success.
National CBD retail chain CBD American Shaman’s Delta-8 sales are up considerably, according to the company’s founder & CEO Vince Sanders, who predicts if regulatory guidelines allow for “some” legal sales through year’s end, the retailer’s Delta-8 product sales will continue to climb and, quite probably, make it the No. 1 seller among all its lines.
The 365-store national chain introduced Zen Master’s Delta-8 line to its product lineup in March this year. Although its franchise owners make the call on stocking the product, the “majority” have chosen to sell Delta-8 products.
“Although some CBD American Shaman owners have opted to sell the product by customer request only, others have been more visibly marketing availability with roadside signs and in-store signage,” said Joel Mackey, CBD American Shaman’s director of digital marketing, who reports that online search tools are driving significant increases in door swings.
Promotion or not, Delta-8 sales have been “outstanding,” noted Mackey.
Stressed-out Millennial Moms Drive Growth
What’s particularly interesting is who’s buying.
CBD sales among millennial moms – one of the industry’s most coveted segments – have more than doubled over a two-year period beginning June 2019, according to Mackey.
“We’re seeing steady increases in the number of millennial moms coming in, asking about and coming back for Delta-8 products,” said Mackey. “They are a very loyal customer segment.”
Mackey and his wife have witnessed rising interest in Delta-8 firsthand among members of their 6 year-old daughter’s 150-member home schooling support group.
“Almost half of the group expressed immediate curiosity about Delta-8,” Mackey said, who reports being surprised how quickly moms moved from conversational questions to interest in product use.
Mackey explained that an additional segment of moms, reluctant to engage in public conversation about Delta-8, similarly moved from curiosity to conversion fairly quickly following informal dialogue and more personal queries.
The move is no surprise to Sanders, who says CBD American Shaman has witnessed a meteoric rise in the stress levels of millennial moms, who bore the brunt of pandemic-related home schooling, home office, family health – and who now face the daunting task of navigating back to school, back to work and new worries about COVID variants and vaccinations.
“This (Delta-8) is a health and wellness product,” said Sanders, who notes that Millennial moms are among its most “loyal converts.”
Christopher Hudalla, the president and chief scientific officer at analytical testing firm ProVerde Laboratories, believes that Delta-8 has “a legitimate place in therapeutics and potentially adult use,” according to a published report in “Chemical & Engineering News.”
The problem, according to Hudalla, is that it’s not being done appropriately in a pharmaceutical environment.
If the Shoe Fits
According to a published post in “Digiday,” San Francisco-based research firm Lucky Analytics, whose clients include L’Oreal and Hewlett-Packard, found in a survey of 1,000 women in the U.S. that two in five now use cannabis-based products.
Cannabis use, once dominated by male consumers, is emerging as a mainstream product.
Brightfield Group reports cannabis use has been steadily rising among women, hitting 51% by the first quarter of 2021. In Michigan, nearly 60% of cannabis consumers are women who use it to treat mental or physical health conditions.
Often sleep deprived, eight in 10 female consumers report using cannabis right before bed, as a sleep or relaxation aid, according to Brightfield reports.
CBD American Shaman’s CEO Vince Sanders is not surprised by the Brightfield statistics, which revealed millennials are among the most likely to use marijuana, at 13%.
“Consumers, particularly women, feel more comfortable buying THC products in CBD stores,” said Sanders, who notes although moms are looking for an escape from everyday stressors, they are not as interested in broadcasting consumption.
A Fairy Godmother?
Does the trend reveal a natural pathway of reconciliation between battling CBD and cannabis advocates?
With more state’s restricting Delta-8 sales and increased calls for U.S. Food and Drug Administration (FDA) and DEA regulatory action, the battle, however short-lived, may come with a few benefits.
“CBD’s Delta-8 sellers have accelerated market conversions among an increasingly important market segment – millennial moms,” said Buddy’s dispensary founder Kahn, who concedes that despite concerns, the Delta-8 craze has elevated interest in THC products for both CBD and cannabis brands.
Notwithstanding: “Consumers are confused,” added Kahn. “There is not enough regulation or education regarding Delta-8 products and the product’s synthetic manufacturing process. Too many CBD shops are trying to fly under the radar screen with this product.”
Delta-8 is no wicked witch, according to the majority of CBD brands that experienced double-digit growth at a time it was desperately needed due to its introduction. Its largest players, like CBD American Shaman, comply with rigorous GMP standards and provide third-party laboratory validation of their product formulations – an industry standard of top performing brands.
The nation’s largest industry advocate, the U.S. Hemp Roundtable, an umbrella organization of the U.S. Hemp Authority, declined to certify Delta-8 – but will not ban it, either.
Ultimately, Delta-8 may be known as the fairy godmother responsible for accelerating the conversion of what may be cannabis’ highest growth segment yet. Bottom line, THC products are taking up more shelf space at brick-and-mortar locations and online retailers alike –and that’s good news for two sectors that worked hard to gain legitimacy.
C.L Price is a Detroit-based writer covering national, state and city health and development news whose work has appeared in TheHUB, and other outlets.