Mainstream retailers across the United States are embracing the growing popularity of the nonpsychoactive cannabinoid, cannabidiol (CBD), making room for CBD products on their prominent shelves.
With the rise of these cannabis beauty products, major stores from luxury retailers Barney’s and Neiman Marcus down to Walgreens, Rite Aid and now Kroger are stocking products from a range of CBD SKU producers, including Green Growth Brands (CNSX:GGB.CN) (OTCQB:GGBXF) (Profile), Charlotte’s Web Holdings (TSX:CWEB.TO) (OTCQX:CWBHF), CannTrust Holdings Inc. (TSX:TRST.TO) (NYSE:CTST), OrganiGram Holdings Inc. (TSXV:OGI.VN) (NASDAQ:OGI) (Profile) and HEXO Corp. (TSX:HEXO.TO) (NYSE:HEXO).
— Bridge-building companies strengthening bonds between retailers and CBD producers.
— GGB has solidified several influential deals with top companies.
— Cannabis beauty products could make multibillion-dollar impact in the CBD sector.
To view an infographic of this editorial, click here.
Partnerships Key to CBD Growth
The bond between retailers and CBD producers seems to be growing stronger by the month, ushered forward by bridge builders such as Green Growth Brands (CNSX:GGB.CN) (OTCQB:GGBXF), whose management team’s CVs read like that of a mall directory, including executive-level experience with major brands such as American Eagle Outfitters, Abercrombie & Fitch, Bath & Body Works, Victoria’s Secret, DSW, Luxottica and Virgin Entertainment.
These relationships have already resulted in GGB inking a series of deals with major retailers, most recently with American Eagle Outfitters. Starting in October 2019, the clothing retailer will be carrying GGB’s hemp-derived, CBD-infused personal care products in almost 500 physical stores as well as on the company website. These products — which include lotions, muscle balms and aromatherapy items — were developed exclusively for American Eagle.
Two weeks prior to the American Eagle announcement, GGB expanded its partnership with Abercrombie & Fitch to offer its Seventh Sense Botanical Therapy CBD products through the iconic fashion brand. The growing popularity of CBD products such as Seventh Sense has led analysts to increase their targets on the cannabis industry as a whole.
Back in March, New York-based investment bank Cowen & Co. put out a study on the CBD market, citing a $16 billion target by 2025. BDS Analytics and Arcview Market Research gave a more optimistic assessment, projecting that the collective market for CBD sales in the US will exceed $20 billion by 2024.
Welcoming the CBD Retail Revolution
Perhaps the most impactful addition to the CBD sector is the rise of “cannabis beauty.” Analysts at Piper Jaffray believe the cannabis beauty wave could potentially boost the overall CBD market to between $50 billion to $100 billion.
In July, American Eagle agreed to stock the shelves of nearly 500 stores with Green Growth Brands’ tailor-made, CBD-infused personal care products. The new line of products will be available as early as October and will be available for purchase online as well.
In late June, fashionable brand Abercrombie & Fitch expanded its partnership with Green Growth Brands to sell Seventh Sense Botanical Therapy products in more than 160 A&F stores. After a retail trial in 10 stores, the increase in exposure is expected to be mutually beneficial as A&F carries Seventh Sense’s CBD-infused body lotions, muscle balms, lip balms and sugar scrubs.
The American Eagle and A&F placements supplemented the string of partnerships Green Growth Brands has secured so far in 2019, which began with a partnership with DSW Inc. to sell Seventh Sense in 96 U.S.-based DSW stores. GGB also signed a licensing agreement with Authentic Brands Group and the Greg Norman brand to develop CBD personal care products for active adult men and women.
With its management team’s impressive retail experience, much of which is centered around prominent space in malls, GGB has aggressively launched its own Seventh Sense stores and kiosks across the country. In just the first four months after launch, over 50 Seventh Sense stores had been opened by June.
GGB’s goal is to have approximately 70 stores opened by the end of 2019. Given the company’s seemingly advantageous deals with major mall chain owners such as Brookfield Properties, Simon Property Group, and a series of independent malls, it appears likely the company will hit this target.
In a recent interview with Jim Cramer, CNBC host of Mad Money, GGB CEO Peter Horvath confidently reiterated his company’s strategy that plays off its retail expertise, and in particular the potential of CBD, specifically topical products. Harvath noted that the partnerships in place mean that GGB stores are opening in prime locations in some of the country’s best malls.
Developments in the CBD Upswing
This potential isn’t being missed by other CBD innovators in the market.
Early pioneers in the CBD space, Charlotte’s Web Holdings (TSX:CWEB.TO) (OTCQX:CWBHF) now manufactures and markets CBD wellness products, including capsules, topicals and gels in more than 3,000 retail locations across the country. Named after a little girl named Charlotte who suffered from up to 300 grand mal seizures per week, the company is focused on what ended up being a cure for her malady — CBD. The brothers who manufactured the strain that helped Charlotte went on to found Charlotte’s Web in 2013. As recently as December 2018, CWEB products were available in 3,680 retail locations. That number has since exploded to 6,000.
CannTrust Holdings Inc. (TSX:TRST.TO) (NYSE:CTST) increased its portfolio by expanding its CBD product lines with the addition of three new products: high-dose CBD oil capsules and a low-dose and high-dose version of CBD drops. In addition, the company recently announced plans to enter the U.S. CBD market, starting with a hemp-production joint venture in California. As part of the deal, CannTrust plans to cultivate upwards of 3,000 acres of hemp for CBD in California. CannTrust continues to develop its lines of innovative products, including CBD beverages, pet-care products and confectionaries.
North of the border, East Coast Canadian company OrganiGram Holdings Inc. (TSX.V:OGI) (NASDAQ:OGI) is developing a nano-emulsion technique to help cannabinoids such as CBD to dissolve in water, which isn’t done naturally. OrganiGram has recently developed an emulsification system to turn cannabinoids into a dissolvable powder, making CBD more shelf stable, thermally stable, water compatible and palatable. Focusing outside of the United States and its home jurisdiction of Canada, OrganiGram Holdings Inc. is making a play to jump the pond into what’s being touted as a lucrative EU CBD market. Teaming with Alpha-cannabis, OrganiGram has its sights set on the German medical cannabis market, while also partnering with Eviana to obtain hemp-derived CBD to supply into key EU markets.
HEXO Corp. (TSX:HEXO.TO) (NYSE:HEXO) is also in the development of beverages through its partnership deal with Molson Coors. Aligned with the Canadian brewing giant, HEXO is gearing up for cannabinoid-infused beverages that could one day be sold in the refrigerated aisle of the local grocer. HEXO also recently outlined plans to enter eight U.S. states with CBD products — but not until 2020. The company wouldn’t say which states it is targeting, but expectations are that it will make the move through its joint venture with Molson Coors, which includes plans to co-launch a portfolio of cannabis-infused beverages called Truss.
Key relationships and a promising cannabis beauty space bode well for continued strong growth in the CBD sector. Companies such as Green Growth Brands appear well positioned to take advantage of these opportunities.
For a free research report on Green Growth Brands (CNSX:GGB.CN), visit potstocknews.com. For more information about Green Growth Brands, please visit Green Growth Brands (CNSX:GGB.CN) (OTCQB:GGBXF).
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