While the Food and Drug Administration (FDA) continues to evaluate cannabidiol (CBD) to determine a new regulatory pathway for CBD in foods and supplements, customers are nonetheless still purchasing CBD-containing products.
Ready-to-drink tea and coffee that contain CBD saw a 3.3% increase in dollar sales at convenience stores for the 52 weeks ending April 23, 2023, while bottled juices containing CBD saw a 17.8% increase in dollar sales for that same period, according to Circana Total U.S. Convenience data.
“Since 2018, CBD has been a high-growth channel for convenience stores and gas stations, as well as CBD stores, and remains a growing category,” said Leah Heise, constellation advisor to global strategy and management consultancy firm Kearney. “Between 2018 and 2020, stores saw greater than a 39% increase in the sales of CBD. In the past few years, that growth has slowed to 2.2%, but consumers continue to demand it.”
Other CBD products that have been trending upward include gummies, vapes and tinctures, noted Heise.
“Delta 8, 9 and 10 products have also seen an increase in consumption as consumers seek products with easier access and lower costs than tetrahydrocannabinol (THC) products,” said Heise. “Beverages, in particular, are seeing a spike in consumption because this form of consumption is familiar, and with California Sobriety (abstinence from all alcohol and drugs except cannabis) and Sober January (avoiding alcohol in the month of January) trending, consumers are looking for alternatives to alcohol.”
CBD at C-Stores
As CBD continues to become more popular among consumers, more c-stores have started or are considering selling CBD products.
Alimentation Couche-Tard, which operates more than 14,300 stores in 24 countries, has taken a unique approach to attracting cannabis customers to shop its c-stores.
Through its partnership with cannabis retailer Fire & Flower, it is positioning cannabis stores adjacent to Circle K c-stores in Canada. In April, Couche-Tard expanded its partnership with Fire & Flower, which operates 92 Canadian cannabis retail stores. Under the agreement, five Fire & Flower-branded retail cannabis stores will be located adjacent to Circle K c-stores in the Greater Toronto area. These locations are currently operating as MC Cannabis Inc. and will be rebranded to Fire & Flower.
“The current co-located cannabis stores adjacent to Circle K locations and anchored by convenience stores, fuel and car wash offerings are showing growth. ..” said Steve Pitts, vice president of operations, central Canada, Couche-Tard, in a statement.
Most c-store chains, however, are entering the category by offering a handful of CBD products to see if they gain traction with customers. Retailers have reported mixed results when it comes to sales.
“| pretty much only sell 15- and 30-milligram gummies,” said Anita Lang, co-owner of Lang’s One Stop Market in Edina, Minn. “However, the sales haven’t taken off as well as I hoped.”
Heise suggested that tweaks to the presentation and positioning of CBD items could help c-stores boost sales of the products.
“Placing CBD inside of kiosks, lockers or vending machines will make the products stand out and be more attractive to millennials and Gen Z, who are the largest demographic of (BD consumers at this time,” said Heise. “Positioning (CBD) with non-alcoholic beverages may be a way to merchandise the product without making health statements, but still aligning with a health and wellness brand message.”
Cannabis Trends to Watch
Cannabis data company BDSA’s latest “Fall 2022 Consumer Insights Report” found 75% of inhalable categories including flower, vape and pre-rolls — saw their usage increase, while gummies were the only non-inhalable cannabis category to see usage grow. Inhalables lead in both preference and usage among cannabis consumers, while topicals saw double-digit declines compared to the spring of 2022.
C-stores saw similar declines in CBD topicals, with external analgesic rubs down 27.8% in unit sales, per Circana Total U.S. Convenience data for the 52 weeks ending April 23, 2023.
BDSA’s report also noted nearly 90% of cannabis consumers in states where cannabis is legal expect to continue consuming cannabis in the next six months. In the 22 states where cannabis is legal, three out of four adults have bought into the idea of consuming cannabis and are either consumers or accepters.
As retailers continue to sell CBD products and wait for decisions from the FDA on CBD regulation, they should also keep an eye on local and state regulations.
“Lean into the category, but hire a team that knows the CBD landscape. This team should be both legal and operational in nature,” said Heise. “Any team hired (either in-house or outsourced) must understand restrictions on marketing, white space opportunities in this space, how to build and manage a responsible vendor program, how to merchandise the product successfully, how to choose strong brand partners and how to navigate the federal, state and local regulations.”