Marijuana and cannabis-related products are joining the
retail mainstream, fueled by accelerating legalization and changing consumer
attitudes: 56% of U.S. consumers say
they would try
cannabis if it were legal, according to A.T. Kearney. In recent weeks, the
nation’s three largest pharmacy chains — CVS, Walgreens and Rite Aid
— all announced they would start selling CBD-infused products in some areas,
even though marijuana itself remains illegal on the federal level.
Retailers seeking their share of the pot bonanza will have
their work cut out for them, however. The RTP
editors warn that they will need to deal with backend basics like banking,
insurance and business loans; to carefully build relationships between
dispensary “budtenders” and prospective customers; and perhaps most important,
to avoid being squeezed out by the retail industry’s biggest players.
Adam Blair, Editor: Marijuana
and related products are certainly integrating themselves into the U.S. retail scene, but the path is still twisty and full of
obstacles. At the front end, dispensary owners can read articles in the new High
Times section, titled: “Classing Up Cannabis,” showing them how to create sleek,
chic store designs that manage traffic flow to maximize sales. But I was
fascinated by a recent All Things Considered story about the CFO of
Canndescent, Tom DiGiovanni. Because most banks won’t provide even basic
services to cannabis companies, he’s literally moving some $2 million in
cash (much of it $20 bills) each month. When these companies can secure
business loans, interest rates can be triple
the rate other businesses pay. Because cannabis companies can’t buy crop
insurance, Canndescent had to eat a $600,000 loss when an infection
destroyed hydroponic seedling beds. Retailers need to be aware that scaling up
a pot business will remain both complicated and expensive until laws,
regulations and support structures catch up with legalization — and consumer
demand.
Alicia Esposito, Sr. Content
Strategist: I think Adam brings up some very valid points about the
challenges retailers may need to navigate if they decide to go into the
marijuana business. However, it’s worth noting that there has been a spike in
awareness and education around CBD and its benefits, ultimately making it more
mainstream in different markets — from beauty to fitness and even spa services.
As a result, I expect it to further penetrate different areas of the industry,
including DTC brands. Therefore, banks and insurance companies will feel the
pressure to keep pace. Even if retailers decide not to get into this market,
they can certainly take some lessons from dispensary experiences. Their core is
having an expert guide consumers through the journey, asking them questions
about their challenges, ailments and goals. The “budtenders” then match them to
a specific strain or product type (edibles, oils, etc.) that aligns with their
needs as well as their behaviors. These dispensaries are integral to consumers’
lives, and their staff have become thoughtful and valuable experts that make
their lives better. That’s huge! One-time transactions inevitably turn into
long-term relationships. Some of the dispensary store designs out there are
certainly beautiful, but it is that personalized service that really resonates
for retail, and is something that all brands can learn from and apply.
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Bryan Wassel,
Associate Editor: I think the early cannabis retail industry is going to be
a massive case of risk versus reward. Now is the chance for early adopters to
get a foothold and grow a brand in a market without major players, but in doing
so they risk betting the farm on regulations that may come to be, rather than
what currently exists. There’s also the possibility of more established players
jumping in later in the process, which could take the form of acquisitions
(lucrative for the early entrants that get picked up) or internal R&D
(which could blow the smaller players out of the water). The recent embrace of
CBD-infused topicals by Walgreens, CVS
and Rite Aid shows that modern
pharmacies know which way the wind is blowing, and they are ready to snag their
own share of this evolving market as attitudes and laws change. I suspect CBD,
and other cannabis products in the future, will become an area where a few top
brands eke out niches and find success, while dabblers or less well-run
retailers fail to get a proper foothold before the giants come to play.
