CBD Brands See High Potential in Half-Baked Category

Made by hand, the dark chocolate espresso chews from Lord Jones are designed to attract the most discerning of foodies. They’re sourced, the company says, with the finest Ecuadorian dark chocolate and packaged in a colorful cardboard box emblazoned with the brand’s royal crest. But these aren’t your grandmother’s chocolate chews. The confections contain CBD, an extract derived from hemp plants that’s quickly becoming a panacea for the aches and pains associated with everything from menstrual cramps to cancer.

“The whole idea behind the brand was to normalize the use of these compounds for wellness and to destigmatize it,” says Robert Rosenheck, a former ad exec who founded Lord Jones five years ago.
Priced at $30 a box, Lord Jones chocolates epitomize the upscale possibilities associated with hemp-derived CBD products. The brand, which began wholesaling in January and now sells at 100 boutiques nationwide, is collaborating with the Standard Hotel to stock its minibars, and has partnered with Icelandic band Sigur Rós on medicated sound baths. (For the uninitiated, that’s a sort of music-meditation blend that does not include water.) Gone are the grungy stoner tropes popularized in pothead flicks like “Up in Smoke” and “Harold and Kumar Go to White Castle”; this new breed of retailers and brands is promoting a more aspirational lifestyle associated with wellness and health.

Unlike their THC cousins, CBD products specifically promise relief from a variety of ailments, including nausea, inflammation, anxiety, arthritis, psoriasis and migraines. Some oils offer different mood treatments. And it helps from a retail perspective that these products don’t get you high. Unlike marijuana-derived extracts, CBD (cannabidiol) has a negligible amount of THC, the compound that provides psychoactive effects, and is primarily associated with medical benefits, which is why a host of new companies are popping up offering their tokes—er, takes—on the trend.

Roughly 300 brands now offer CBD products—up from some 200 a year ago, according to Brightfield Group, a three-year-old Chicago-based market research firm focused on the cannabis and CBD industry. In 2017, total sales of hemp CBD were nearly $287.3 million, and the market is expected to hit $1 billion by 2020, according to Brightfield. Trend forecasters are calling out the growing field and its homeopathic implications as an alternative to pharmaceuticals.

“The anxiety epidemic is so high … there’s huge interest in natural or organic pain relief,” says Faith Popcorn, futurist and founder of BrainReserve. “Millennials and Gen Z in particular tell us that they love natural, and of course, boomers love all things weed. There’s a lot of wide opportunity.”

If you can eat it or put it on your skin, it can be infused with CBD. In addition to chocolate chews, Lord Jones also sells CBD gumdrops, while some companies dabble in lollipops and others offer a shot of CBD oil in coffee, smoothies and plain old lemonade. Of course, many simply sell tinctures in dropper bottles. In Los Angeles, there’s a growing movement toward the CBD “power lunch,” which, even for L.A., seems extreme. At downtown restaurant Spring, three CBD-infused courses will cost you $37.

The CBD trend is “getting more glamorous, more designed, more stylish,” says Popcorn.

Along with edible brands, beauty companies are infusing lotions and balms with the product. Popular brand Milk Makeup, which sells at Sephora, recently began offering a high-volume mascara “infused with conditioning CBD cannabis oil” that pledges to fuse “heart-shaped fibers to lashes for thickness without the fallout.”

As more brands enter the category, there’s a growing number of expos and events. The CBD Expo West, hosted by CBD Health and Wellness Magazine, takes place this September in Anaheim, California; more than 60 exhibitors are expected to attend. (A website promoting the event touts free samples.)

However, while opportunities abound in both sales and interest, experts say the current CBD field is primarily comprised of new-to-market and small brands just starting out. Larger companies have yet to enter the industry because of the nebulous nature of the legality of CBDs. Public companies, in particular, will also have a tough time convincing shareholders that they aren’t trying to get kids high.

“The legal aspect of CBD is very confusing. There’s a lot of gray area,” says Bethany Gomez, director of research at Brightfield Group, noting that it’s early days in terms of both legality and education. “More states are adopting CBD laws and people are able to start having a more educated discussion about products. There’s much more medical research starting to go into CBD as well.”

When Target, for instance, waded into the waters with an assortment of hemp and CBD-oil items last fall, it was only “for a brief time,” according to a spokeswoman. The Minneapolis-based retailer no longer offers any CBD products. The spokeswoman declined to specify why Target pulled back on such items, though experts theorize it was because of CBD’s edginess and lingering association with weed.

Because of the uncertainties, most brands and retailers market their wares through word of mouth. But even that is challenging, because they’re not FDA-approved and so specific health claims cannot be made. L.A.-based Lord Jones, which works with internal and external branding experts, has never advertised. It relies on earned media through social outlets, as well as unpaid celebrity endorsements from Busy Philipps, Amy Schumer and others.

“There’s a very real challenge—it’s a regulated industry,” says Marshall Rutman, VP of marketing at Resolve Digital Health, a Toronto-based medical cannabis company, noting the particular difficulties of advertising on Facebook, for example. “There’s a lot of places where you can’t advertise and your marketing efforts are hampered, so you have to figure out a new way to connect with consumers.”

Rutman, a former marketer at Lululemon, advises that brands use digital platforms to more subtly tell their stories, or the stories of their patients, rather than advertise outright. While Resolve Digital, which launches in the U.S. in September, does not have any CBD-only products on its current roster, it plans to offer it in future products for cancer patients.

Some brands say the best way to attract more consumers is by normalizing the product, a strategy that’s proven effective for Clover Grocery, a one-year-old gourmet health food store in New York City’s West Village neighborhood. Clover’s founder, Kyle Hotchkiss Carone, says that brands packaging CBD in a way that’s easy to understand, like in candies or chocolates, has helped grow the number of people willing to explore the ingredient. Clover sells what Hotchkiss Carone describes as a curated assortment of CBD best-sellers—roughly a half-dozen products priced from $30 to $90, which generate around 15 percent of Clover’s sales. The store always has a staff member on-site who is able to explain the CBD category to curious customers.

At Bubby’s, a 28-year-old restaurant with two New York City and six Japan locations, the recent addition of CBD-infused drinks has been remarkably popular, according to owner and founder Ron Silver. Each week, the eatery sells, he says, around 700 lemonades, coffees and cocktails infused with a 25-milligram shot each of CBD. Separately, in Massachusetts later this summer, Silver plans to launch Azuca, a line of sugars and sweeteners infused with CBD and THC. For all interested customers, Bubby’s hands out an educational guide with a printed article from Bon Appétit magazine to help them better understand CBD. The article explains what it is, how it’s made, its benefits, applications and “what you should know before buying.”

“It’s a big educational job because it’s a mystery,” says Silver. “In a certain way, it falls into similar trends like turmeric or coconut oil.”

As appeal and understanding grows, experts expect CBD to attract celebrity investment in new brands, helping to further the product’s mainstream potential. However, as the field expands, so will the competition. The winners will be those who get in early, build a loyal following and tell the best brand stories.

“Right now it’s a gold rush situation, where a lot of new products are coming on the market,” says Hotchkiss Carone. “Without differentiating themselves a little way besides some branding, it’s hard for consumers to understand what’s good and what’s not.”

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