America’s stores taking leap into cannabis products

Retailers are racing to grab a piece of the booming CBD market.

Stores like DSW, Neiman Marcus, and Barney’s all recently began selling beauty products that feature the chemical found in cannabis plants, hemp and marijuana.

Barney’s upped the stakes on Monday when it revealed plans for a small, cannabis-themed shop at its Beverly Hills store that showcases CBD beauty products, along with glass pipes, gold rolling papers, and grinder necklaces.

“There is a demand for high-end CBD products,” Kim D’Angelo, Neiman Marcus’ beauty buyer, told CNN Business. “CBD products are the next big thing in beauty.”

The moves by these companies are a clear signal that CBD, the non-psychoactive cousin of THC, is hitting retail’s mainstream. The industry is expected to grow to $22 billion over the next three years, according to cannabis research firm Brightfield Group.

Quasi-legal status

Although the products are for sale at major retailers, the regulatory environment for CBD and cannabis remains in flux.

Late last year, when Congress passed the farm bill, it legalized hemp production in the United States. That gave proponents of hemp-derived CBD hope that the drug would be rescheduled by the DEA and become legal in the country.

Hemp and marijuana come from the same species of cannabis, but there are big differences between them.

Hemp is high in cannabidiol, a non-psychoactive compound that some say helps reduce anxiety and stress. It’s low in THC, the component of marijuana that gets you high.

CBD has some proven benefits. In 2018, the FDA approved a drug, Epidolex, which contains CBD for treatment of seizures associated with epilepsy. To date, Epilodiex is the only drug that’s been rescheduled by the DEA, and CBD remains federally prohibited. But some state laws allow for recreational marijuana and for CBD.

That doesn’t necessarily mean it’s the miracle substance some people present it as, though.

“There is still a lot of research that’s needed to provide definitive answers” to inform doctors and patients about CBD, said Dr. Yasmin Hurd, a neuroscientist who directs the Addiction Institute at the Mount Sinai School of Medicine. Hurd said the benefits of using CBD to help treat anxiety, pain, and substance abuse have been “promising” so far.

But the quasi-legal status isn’t stopping retailers from diving in.

DSW and Neiman Marcus

CBD is still in its infancy. The market for hemp-based CBD products reached $619 million in the United States last year, Brightfield estimated.

But changing consumer attitudes will drive up sales in the coming years, analysts say.

DSW, which had been running a small test in stores, recently announced plans to expand CBD products to close to 100 stores.

DSW will sell Seventh Sense body lotions and washes, foot creams, and muscle balms. (Seventh Sense’s parent company announced a deal to open mall stores on Monday.) For DSW, CBD fits into its strategy to expand beyond selling shoes and move to beauty and accessories.

Neiman Marcus is barreling ahead with CBD sales at five stores and online. If the initiative continues to perform well, Neiman Marcus plans to expand the number of CBD products it’s currently selling, and will expand to more stores.

Neither Neiman Marcus or DSW disclosed CBD sales figures from their tests. But DSW said that during its 10-week test period, 74% of CBD products it put on the shelves sold, exceeding the company’s expectations.

Federal regulation

CBD isn’t a guaranteed success for these retailers, however. Regulators have grown more watchful since the farm bill passed.

“We’ll also continue to closely scrutinize products that could pose risks to consumers,” FDA Commissioner Scott Gottlieb said in December about CBD products after the farm bill passed. “Where we believe consumers are being put at risk, the FDA will warn consumers and take enforcement actions.”

Regulators began cracking down this month on food products that contain CBD. New York City health inspectors banned CBD in food and drinks last week. In Maine, where cannabis is legal, state officials have ordered stores to remove edibles with CBD.

Consumers should approach some therapeutic benefits of CBD with caution, according to the Food and Drug Administration.

The agency, which regulates the cosmetics and beauty industry, says it is “concerned” about the growing number of CBD products that make unproven health claims in their marketing.

Not all cosmetic products need the FDA’s approval before they hit the market, but the FDA can take action against companies that claim unsubstantiated health treatments in their products. For example, the FDA has issued warning letters to CBD manufacturers that claim their products help limit or treat cancer and other serious diseases.

The uncertain regulatory market is enough to scare off some businesses, including Target and GNC.

Target briefly sold Charlotte’s Web dietary supplements on its website last year, but quickly pulled them. Charlotte’s Web, which makes a CBD product that was featured in CNN correspondent Sanjay Gupta’s 2014 documentary “Weed,” received a warning letter from the FDA in 2018.

Target declined to say why it pulled the products, but says it does not sell products with CBD at stores.

GNC is also holding back on CBD for now, citing the FDA’s position. The company said it was “monitoring” CBD’s regulatory status in supplements.

“Early on, there’s a huge brand risk,” said Phil Kafarakis, president of the Specialty Food Association, an organization representing more than 3,700 independent companies. He doesn’t expect any backlash for DSW and others, but warned that they have to be transparent with customers in advertising about the CBD products they’re selling and disclose any warnings.

“You better be prepared to have somebody talking about the product and educating people on the effects,” he said.