CBD Products are Coming to Gas Stations and Stores
Legal marijuana is such a hot topic these days and has created quite a frenzy in the media. Almost everyone is talking about it. Even though there have been some recent hurdles with the cannabis stocks, the industry still performed better than the general market.
Now, what could be the reason for this? It’s not further from the fact that there has been a lot of forecasts about the increase in global marijuana sales in the coming years. If these predictions were anything to go by, then the marijuana industry could be averaging an annual growth running into billions for well over a decade.
However, there are several fast-growing niches in the marijuana industry, and none is generating as much buzz right now than CBD (cannabidiol). Learn more about What is CBD in out tutorial.
Why everyone is talking about CBD
CBD (cannabidiol) is a non-psychoactive chemical compound in cannabis and best known for its believed medical benefits. This is what has been responsible for the increased buzz surrounding CBD as users who might not have used cannabis products in the first place may buy them just to try it out. And since there are various CBD-infused products such as capsules, oils, sprays, edibles, beverages, etc., users don’t have to smoke to use it.
Estimates from Brightfield Group has it that the sales of CBD in the United States alone are expected to hit as high as $22 billion by 2022, which is a huge jump from its mere $591 million in 2018. That’s a whopping 147% compound annual growth rate, making the potential global growth rate for the cannabis industry a joke.
Know that CBD can only be extracted from hemp and cannabis. Hemp is less costly, so its traditionally easier to grow than cannabis. In addition, the passage of the 2018 Farm Bill now makes commercial production and hemp-derived CBD products legal around the country. So, you can say that the production and processing of hemp is an important part of the U.S. CBD market.
Up to now, some brand-name retailers have started the sale of CBD-infused products, CBD Gummies, CBD Juice and CBD Cream mostly in topical forms. Such retailers include pharmacies like Rite Aid, CVS Health, Walgreens Boot Alliance, and a designer-shoe retailer, Designer Brands, formerly known as DSW.
Nevertheless, a new entrant into the market is about to change everything by making it possible for consumers to get their CBD products from their local gas-station and convenience store.
CBD-infused products may be headed to your local gas station convenience store
Weeks back, Harvest Health & Recreation, a U.S. multistate dispensary operator announced a signed agreement with American Trade Associations Council (AATAC) to distribute its CBx Essentials, Colors and their branded CBD products to more than 10,000 gas stations and convenience stores in the country.
According to the press release, AATAC is a big trade association for independent gas stations and convenient stores with up to 50,000 members, which represents almost 90,000 locations across the country. This is approximately 60% of the U.S. market. Most of these stores are operated by independent owners even though they may be branded Shell, BP, Sunoco, Chevron, and others. There is the likelihood that Harvest Health will hit more than 10,000 of these location with its CBD products before summer, and 30,000 others by year end.
This is certainly a big opportunity. Brightfield had predicted $22 billion CBD sales in the U.S. by 2022. Now, AATAC foresees convenience stores and gas stations to account for $8 - $10 billion of these sales. Store clerks will be expected to receive training on CBD products as more in-store shelf space will be specially created for the products. The margin of traditional gas stations is normally low. So, a product with a high margin like the CBD, which will also boost customer traffic to the stores is surely a big deal.
According to the chairman of Harvest Health, Jason Vedadi, “This exclusive partnership enables a massive advance in distribution for Harvest-owned CBD brands and follows our strategic path of expanding the scale of our wholesale and retail distribution nationally. Demand for CBD is unprecedented and by delivering leading products in 10,000 accessible locations gives us an unparalleled reach to consumers”.
Harvest Heath to be the leading brand name in the U.S. cannabis market
Harvest Health has been on the forefront of some major deals, so the CBD deal isn’t its first. Currently, they also look to be the leading company in the distribution of vertically integrated dispensary stocks in the U.S., if everything works out fine with the licenses.
Know that Harvest Health was having only 13 stores in five states as at end of March 2019. However, these are being operated on a pro forma basis. Now if all of Harvest’s pending acquisitions work out fine, they will have rights to up to 230 facilities, and 142 of these will be retails stores in about 17 states. No other operator even remotely comes close to Harvest Health when it comes to the number of licenses held for various retail locations.
Most of other publicly traded dispensaries hold between 50 and 85 licenses from retail stores. These makes Harvest Health a leading dispensary in the quest for CBD products distribution. This is of course if they have the capital and every other thing required to make the grow farms and processing centers operational.
Besides, the expansion of it’s consumer reach is going to cost them a lot of money. Harvest Health has always been profitable, but they reported almost $17 million loss in the close of first quarter this year. This has been attributed to the increasing administrative and general expenses and is expected to increase further as Harvest health expands its nationwide reach.
Still, despite these increasing costs for Harvest Health, they have made it known that they are a major leader in the distribution of cannabis in the U.S. So, don’t be surprised if in a few months’ time, you see CBD Harvest branded products ‘appearing’ on the shelfs of several convenience stores and gas stations around you.