CVS and Walgreens Plan to Carry CBD Products: What’s Next for the Rapidly Growing Market?

CVS Pharmacy and Walgreens announced plans last month to carry CBD-infused products in select stores, bringing to life Brightfield Group’s prediction last fall that chain retailers would support the rapid growth of the hemp-derived CBD market as soon as this year.

With big business cashing in on the CBD craze, where is the rapidly growing market headed next?

CVS will sell topical hemp-derived CBD products such as creams, sprays and roll-ons in more than 100 stores in eight states, marketing them as over-the-counter medicinal products and “an alternative source of relief,” according to an NBC News report. The company has partnered with Eurofins, a third-party laboratory, to test and verify the quality of the products sold, NBC said. CVS will sell the items in Alabama, California, Colorado, Illinois, Indiana, Kentucky, Maryland and Tennessee.

Shortly after CVS announced its foray into the CBD space, Walgreens also divulged that it will sell CBD creams, patches and sprays in nearly 1,500 stores in Oregon, Colorado, New Mexico, Kentucky, Tennessee, Vermont, South Carolina, Illinois and Indiana, according to CNBC.

“It’s interesting because I think they’re sort of putting their toe in the water,” Brian Baum, CEO of CBD product manufacturer Cannovia, tells Cannabis Dispensary. “CBD is probably one of the biggest innovations in health and wellness in quite some time. So, if your brand is pushing health and wellness—which all of the pharmacies are—then you can’t not engage in this space. But at the same time, they’re all national or global companies, so you have to deal with, what are the regulations at the federal level, and also at the state level?”

The companies are not carrying CBD-infused foods or dietary supplements, Baum notes; the FDA is expected to hold hearings next month on developing regulations for CBD in food and beverages.

“I think they just want to begin to assess, what’s the consumer reaction?” Baum says. “Their consumers, are they engaging with CBD products? What are the buying patterns? I think they’re in the market now to assess that for longer-range plans.”

Bix box retailers like CVS and Walgreens will likely be interested in CBD products that fit a certain niche, adds Celeste Miranda, founder and CEO of the CBD Expo Tour. “I think they’re really looking at a lot of additional things that the products can do,” she says. “For example, if they want to put it in their sleep section, in the sleeping aids, I think they’d be very interested in a product that has CBD plus melatonin. … Or [for] their immunity [section, products with] CBD plus elderberry [and] that sort of thing.”

While big box stores entering the CBD market may be troubling for smaller businesses looking to compete in the space, Baum says CBD is still very much a niche product, and education is key.

“There is so much education that needs to occur in the market,” he says. “For companies just coming into this space, [if] they can help educate consumers on making intelligent, educated choices in what products to buy, I think that’s a great way to distinguish yourself in this early market.”

Finding a specific niche will be a way for smaller companies to compete, Miranda adds. “For smaller companies, I think it’ll always be a challenge to get into any retailer or bigger box store. I think you’re really going to have to … niche down. And after you niche, niche again, and then niche one more time. That’s what you’re going to have to do to stand out because there is a lot of competition in the CBD industry.”

And although CBD is getting a tremendous amount of attention post-Farm Bill, confusion abounds, Baum says. For example, Amazon prohibits CBD products from being sold in its marketplace, but allows the sale of hemp seed oil products, which can be confusing to consumers who may not know the difference between the two.

“A consumer … looking for CBD products [may] go to Amazon, search on CBD oil, and they’re going to see a long list of products, but all of those products have no CBD in them—they’re hemp seed oil products,” Baum says. “It is really a disservice that Amazon is doing to their customers by making these products available because then somebody tries it and they say, ‘Well, it didn’t do anything for me.’ Well, hemp seed oil does have value, but it doesn’t have the therapeutic value of CBD. … I think Amazon could single-handedly set the industry back … by trying to do good. They’re really just confusing their customers.”

Instead, Baum says, e-commerce platforms should consider outlining specific guidelines for listing CBD-infused products in their marketplace and hold the manufacturers responsible for clearly labeling and describing their products to help educate consumers.

And eventually, the FDA will step in to hopefully outline clear regulations for the market, Baum adds. “I’m encouraged that they’re taking this approach of having open hearings and getting input from the market so that they can come forward with a reasoned regulatory policy that will protect consumers but won’t stifle the industry.”

The FDA will probably be very strict on health claims, Miranda adds, and says the CBD market will likely divide into two segments—a pharmaceutical grade of CBD products that Big Pharma will control, and the type of CBD-infused wellness items that CVS and Walgreens are rolling out in their stores.

In the meantime, the industry is likely to experience some growing pains, Baum says, particularly when it comes to creating and marketing products that customers can relate to.

“I think one of the challenges that CBD has is it comes across as it will solve every problem you have,” he says. “You think if you use a tincture and you squirt a few drops under your tongue, whether you’ve got aches and pains or you’ve got depression, it’ll take care of it. … The same product might have benefits across different categories, but from a consumer point of view, that’s not the way people buy. … I think one of the things that the industry is going to have to do is package products [with] messaging that targets very specific applications, so we make it easier for the consumer to say, ‘I’m trying to solve this problem, and here’s the product that appeals to me.’”

Product formats may also need adjusted to meet consumer expectations, he adds. “Everybody is used to popping a couple [ibuprofen] and that takes care of the problem temporarily. Well, that compared to squirting drops [of a CBD tincture] under your tongue is a pretty foreign interaction. That’s where I think we need to be sensitive to that—what are people used to? And then create products that don’t make it a huge leap from doing what they’re used to.”

Overall, though, the industry is progressing in a positive way, Miranda says. “I think most actions that have been taken so far have been positive for our industry. It’s slow-going, but it’s getting there."