is one of the latest retailers to introduce CBD in its stores. The Cincinnati-based grocery store chain said that, starting this week, it will begin carrying topical products containing cannabidiol in its stores in 17 states. Brand names were not reported, but the product prices will range in price from $3.99 to $59.99. Kroger joins other major retailers participating in the CBD trend, including national pharmacy chains CVS, Rite Aid and Walgreens, all of which came online with CBD products this spring but have limited their selection to topical products. Sheetz, an Altoona, Pennsylvania-based convenience store chain, announced in May it would offer CBD products that include topicals, vape pens, oral pouches, capsules and pet products in 140 of its 500 locations throughout six states.
Last week, an Arizona cannabis company said it has signed a landmark agreement to bring its CBD products to more than 10,000 gas stations, convenience stores and other retail locations in the United States. The Vitamin Shoppe was one of the first national retailers to begin carrying edible CBD softgels and liquid drops. That move went against repeated warnings from the U.S. Food and Drug Administration (FDA) that CBD in food, cosmetics and dietary supplements remains illegal. The FDA held its first public hearing on the use of CBD and other cannabis-derived products at the end of May. Several traditional retailers also stock hemp-derived products, including Barneys, DSW, Neiman Marcus, Sephora, Ulta Beauty and Urban Outfitters. Kroger trades its stock on the New York Stock Exchange as KR. Last summer, Kroger began selling cannabidiol products at over 1,000 of its stores across the country. The country’s largest national grocery chain joined the CBD boom in stocking topical CBD products like oils, balms and creams. Kroger, along with Rite Aid, Walgreens and CVS, has been on a mission to introduce CBD use to mainstream shoppers since the hemp-derived compound was decriminalized in 2018.
With hundreds of stores, largely located in the Midwest and the South, Kroger has quickly become one of the biggest brick and mortar CBD sellers by footprint, with plans to become the go-to hub for large CBD producers. The cannabidiol market is expected to reach $20 billion by 2024, so it’s no surprise that large retailers like Kroger find it lucrative to go all in on CBD. Since announcing the decision last July, Kroger has added Charlotte’s Web, The Yield Growth Corp., CV Sciences Inc. and Aurora Cannabis, among other big players in the space to its growing list of CBD brand offerings. The strategy is presented as part of Kroger’s multi-year plan, Restock Kroger, to compete with Walmart and Amazon and cater to today’s shopper habits. The investment costs, which include building out in-store pickup and delivery options, along with on-trend product additions like CBD, have been reflected in its missed earnings. For example, in December, the company’s bullish efforts to modernize its stores saw it miss quarterly revenue estimates by 0.33%. However, the early success seen by some of the most popular CBD brands around shows promise for Kroger’s long term business strategy. Last July, CBD producer Charlotte’s Web began product distribution through 1,350 Kroger store locations across 22 states, which has since expanded to 1,497 locations. The partnership has been credited in helping the Colorado-based company post strong retail sales, which increased by 66.4% during the third quarter of 2019. Shortly after the launch, Charlotte’s Web CEO Deanie Elsner noted that 53% of the company’s revenue came from retail outlets, including deals with national chains like CVS and Kroger. Tony True, chief customer officer at Charlotte’s Web, confirmed “Kroger has continued to be a strong partner in the development of the rapidly emerging CBD category,” going on to say that Charlotte’s Web has since experienced “significant distribution gains across the Kroger network.” The Kroger partnership has further raised customer awareness of what CBD is and how it’s used in newer markets, which True said will continue being a big focus moving forward. On this front, Charlotte’s Web and the retail chain plan to continue offering Kroger’s various shoppers “the right products.” Similarly, last summer CV Sciences also became one of Kroger’s first CBD vendors when it started selling its PlusCBD’s Oil Roll-On at 945 Kroger stores. The company said that its total quarterly retail distribution increased by 18% from June to September 2019, thanks to stocking PlusCBD products at 1,350 Kroger-owned stores. The company’s national retail presence has been a major source of sales for CV Sciences , which posted a $12.6 million revenue last quarter. CBD industry’s push for FDA’s approval The lack of regulation is currently a major hindrance for the hemp category as it seeks further growth. With both Charlotte’s Web and CV Sciences having independently advocated for it, it’s confirmed the need for large grocers like Kroger to help push legislation through. Kroger now wants to have a say in the government’s anticipated regulatory. According to a public disclosure this week, first reported by Cannabis Wired, Kroger Co. plans to spend nearly $200,000 on government lobbying in 2020, an effort it first began last year. The funds will go to “issues related to the regulation of topical products containing CBD oils and hemp-derived products following the implementation of the 2018 Farm Bill,” according to the filing . Congress members, the Department of Agriculture, the Environmental Protection Agency and the Food and Drug Administration, which still hasn’t approved of wellness claims made by CBD brands. “As more big box and regional chains get involved in selling CBD, policy lobbying is expected to increase,” said Colby McKenzie, principal at Enlighten Wellness, a retail tech startup that creates educational CBD merchandising displays for store chains, including Ray Food Place. “Retailers like Kroger want CBD to be categorized like other nutraceutical or ‘ bioceutical’ products,” which are considered non-medical pharmaceutical alternatives , which McKenzie explained would keep CBD from becoming exclusive to pharmacies.
This is because as long as CBD remains a dietary supplement, retailers are only required to stay away from labels making false claims, like cancer curing, to be able to sell it legally.
Currently the majority of Charlotte’s Web’s channel partners only sell CBD topicals “while awaiting legal and regulatory clarity from the U.S.