CBD is booming—there’s no doubt about it. The tinctures, oils and creams that promise to cure many ills sold an estimated $620 million worth in 2018. And growth is expected to continue at a skyrocketing rate. An analysis released earlier this year by BDS Analytics and Arcview Market Research predicts that the U.S. market for CBD sales will surpass $20 billion by 2024.
Is CBD right for your business? Home medical equipment (HME) providers may have questions before deciding whether to jump on the opportunity. HomeCare talked with three major CBD vendors—all active in the HME market and optimistic about future growth, especially the prospects of selling to seniors—to find out what to ask.
1. What is CBD anyway?
Cannabidiol, better known as CBD, is derived from the hemp plant, a cousin of the marijuana plant. It’s one of hundreds of cannabinoids found in both plants; however, CBD doesn’t create a “high” the way tetrahydrocannabinol (THC), the active ingredient in marijuana, does. And while industrial hemp does have a small amount of THC in it, most CBD products either eliminate it or carry trace amounts too small to affect most people.
“Sometimes you get confused when you hear the word hemp, and education plays a major role,” said Danny Perdeck, senior vice president of business development for Florida-based Green Roads, a pharmacist-founded CBD company. There are large differences, he points out, between hemp plants and marijuana plants, how they are grown, and the chemical components of each.
Manufacturers extract the CBD from the hemp flowers. It can be used as an oil that can be ingested or applied topically, and also appears in capsules, tablets, creams, gummies, suppositories and more—including lines for pets. And these days, it’s sold anywhere from pharmacies and big box retail stores to convenience stores to yoga studios; smoothie and coffee shops are even marketing CBD-infused drinks.
“As people get more educated on it and more people begin to understand the health effects of it, it’s only a matter of time before a lot of the pharmaceutical industries and a lot of retailers are carrying it,” said Victor Velazco, CEO of Oliver’s Harvest by Coast to Coast Natural, a Florida-based company that grows its own hemp. “We’re definitely very excited about where CBD is headed.”
2. What does CBD do?
CBD has been said to help with everything from joint and other pain to anxiety to insomnia to depression. The clearest-cut clinical evidence applies to childhood epilepsy; a number of studies have shown those patients getting relief from CBD, and the Food and Drug Administration (FDA) has approved Epidiolex, which contains CBD and is the first cannbis-derived medication, for use in those cases.
The lack of evidence for broader claims has the FDA on alert. The agency has issued an opinion saying CBD can’t be marketed as dietary supplements because it’s under investigation as a possible medicine. And it has recently sent warning letters to a few CBD manufacturers telling them to cease making “unsubstantiated claims” about their products’ curative properties.
3. Who is using it?
Not just millennials—although they may be the ones drinking CBD lattes. A 2018 study in the Journal of Cannabis and Cannabinoid Research found that, of about 2,400 people taking CBD, most were between the ages of 55 and 74 years.
“Basically everybody takes CBD and it’s a product that can be beneficial for a person of any age,” said Velazco. “… You could have a 20-year-old who takes it for anxiety, but you also have a lot of elderly [people] who take it as well for aches and pains. We have plenty of people who are in the 50- or 60-plus age bracket that purchase our products and they love it.”
In fact, he said, some seniors are less reticent about using a full-spectrum CBD product—that is, one with more than a trace amount of THC—because they’re retired and no longer concerned with it showing up on a drug test.
Others agreed that seniors are a potentially huge market. Perdeck’s own grandmother uses it for her arthritis, he said.
And Jonathan Fedele, CEO of PūrWell—a spinoff of VirtuOx that’s focused solely on the HME market—said that while the largest market segment is currently women aged 35 to 55, the fastest-growing group of CBD users is those over age 65.
“They have aches and pains, and they’re willing to try something new but aren’t wanting another prescription,” he said. “I think as the younger generation ages, you’ll see even more acceptance.”
4. Why should I offer it?
CBD makers say their products give HME providers a direct line to cash sales.
“The margins are very good; it definitely provides a nice stream of revenue,” said Green Road’s Perdeck. “We’ve seen people’s businesses grow exponentially and even become a main source of profit, which is amazing.”
CBD is something to offer to existing customers already in your shop for something else. Perhaps they’re there to pick up a walker, or have a scooter serviced, and the display catches their eye. Alternatively, if you have a visible location, advertising CBD could bring in new foot traffic.
CBD is also a way to turn customers into repeat customers, Fedele said.
“It’s a great residual product,” he said. “I would guess that the typical brick and mortar retail HME might get 1.5 sales per year from a given customer. If they have a customer that is buying CBD and is satisfied, they’ll keep coming back for refills.”
5. Is it legal in my location?
The short answer is: most likely. The 2018 Farm Bill legalized hemp products nationwide. Hemp-derived CBD falls into that category, and CBD sellers and distributors can work throughout the United States, as long as their product has less than .3% THC. (There is a separate category of marijuana-derived CBD that some states allow people to use, sometimes only with a prescription, but for the purpose of this article, we’ll focus on the hemp-derived CBD.)
But many states—and even individual municipalities—have their own restrictions on how CBD products can be distributed or sold. For example, in Ohio, it could only be sold through medical marijuana dispensaries until a law passed this summer changing that. In Alabama, gas stations could sell CBD, but pharmacies were banned from doing so until recently.
“I think little by little, all of [the local restrictions] will roll away and it will be fully legalized in every county and city in the country,” Velazco said.
In the meantime, the laws change quickly, so be sure to consult with a lawyer with specialized knowledge, Fedele advised.
“Most HME providers probably have their own law firm, but we advise you to seek out an attorney that has a cannabis specialty,” he said.
With changing state and federal laws—and with the FDA expected to produce a new framework soon to crack down on some imported and fly-by-night products that include very little CBD or unwanted byproducts—it’s also important to choose a manufacturer you can trust, Fedele added.
“Obviously, a lot of it is going to be around doing your research, but one easily distinguishable trait is they should be transparent” in terms of sharing their certificate of analysis and that they conduct third-party testing on all their products to ensure quality control, he said.
6. How do I get started?
Fedele’s company sells only through HME providers, pharmacies and physicians, offering an affiliate program. HME providers can recommend PūrWell to their customers—and are stocked with samples, brochures, coupons, etc.—and get a percentage when customers make a purchase. Or they can stock the product on their shelves. He said there is great interest, and they’re signing up about four or five wholesale accounts per week.
Green Roads and Oliver’s Harvest operate on a more traditional retail model. But all three emphasize that a key for HME dealers is to choose a manufacturer that provides not just marketing materials and displays, but also extensive education for staff. Because, after all, your customers will want the same answers to the questions that you’ve asked.
“When we have a new customer, we make sure they have everything they need to succeed,” Velazco said. “Marketing materials, videos available for training; and we offer webinars so they know as much as we do on CBD so they know how to promote it or sell it to their patient base.”
Perdeck said his company offers a “Green Roads University” for retailers and will either have their sales representative conduct online training or fly out to do it in person.
“We take a lot of pride in that,” he said.
PūrWell, too, offers a training academy as well as regular webinars, live question-and-answer sessions, and physician videos explaining the endocannabinoid system.
“There is a definite thirst for information, everybody’s heard about CBD but there’s so much information to sift through and that’s the biggest opportunity for us but also for the HME provider that is educated themselves so they can in turn educate ther customers and their patients,” Fedele said. “When they have someone who comes in and needs a knee brace they have staff on site with three different knee braces and talks about why one is better than the other.
If they’re going to sell CBD they need to have an understanding of the product they sell.”