This Bud’s for You!

Opportunities arise with growing popularity and legalization of marijuana.
October 11, 2018

LAS VEGAS – Producing, selling and consuming marijuana, or any product containing or derived from marijuana, is illegal under U.S. federal law. However, local legislation is on the rise with nine states—including Nevada, Washington and Colorado—and the District of Columbia having passed laws decriminalizing both recreational and medical marijuana. Another 21 states permit the use of medical marijuana.

This statutory shift aims to meet the cultural demand, with a 2017 Gallup poll revealing that 64% of Americans support the legalization of marijuana. Total sales (recreational and medicinal) in 2017 topped $9.7 billion—a 33% surge from 2016—according to a report from Arcview Market Research and BDS Analytics.

At the session “Marijuana: Capitalizing on a Budding Opportunity” this week at the NACS Show, a panel of speakers discussed the details of current cannabis regulations, as well as possibilities for the convenience industry to profit from sales of accessories and legal cannabis-adjacent products.

One example is cannabidiol (CBD). This cannabis compound is free of delta-9 tetrahydrocannabinol (THC), the main ingredient in marijuana. In some states, such as Washington, there are no current regulations on the sales of CBD products, said session speaker Ryan Sevigny, owner/operator of High Tide Ranch and general manager of Landrace Farms. This allows convenience stores to responsibly market CBD-infused products, such as topicals, capsules and beverages. Meanwhile, large drug store and retail businesses may not have the same selling option at this time, which creates a window of opportunity for c-stores.

“For many store owners, selling CBD products might be pushing the envelope,” Sevigny said. “Yes, early adopters will have a big head start, but this category is not a flash in the pan. It’s here to stay as a multi-billion-dollar industry.”

Other items in secondary and tertiary categories include smoking pipes, smoking accessories (grinders, injectors and rolling trays), butane and kratom. These products can have a 50% to 70% margin with high turns, said session speaker Keelan Gallagher, director of trade marketing and brands, Smoker Friendly International. “C-stores need to recognize that the growth of the cannabis industry is part of a larger trend of growing consumer behaviors best described as ‘mood control.’ As more consumers seek natural products to achieve a desired state of mind and body, the opportunity to capitalize on herbal remedies becomes more robust,” Gallagher said. “These items are often overlooked by the c-store channel and require minimal investment.”

For retailers interested in capitalizing on legal products within the cannabis realm either now or down the road, Gallagher advised being proactive during the legislative process, meeting with local representatives and utilizing industry resources.