The coronavirus pandemic and resulting stay-at-home orders impacted all types of businesses worldwide. The situation was particularly tricky for the CBD industry, which was already grappling with legal inconsistencies and rampant misinformation in the marketplace, then suddenly had a flood of would-be consumers looking for options that might keep them healthy.
While licensed medical and recreational marijuana dispensaries were classified as essential in Colorado and allowed to operate through the stay-at-home order (while observing certain safety measures), smoke shops and vape shops were not. According to the Colorado Department of Public Health and Environment, a CBD retailer could only be classified as critical if CBD was its primary business; carrying some CBD products in a store wasn't enough. As a result, many shops focused on e-commerce as the safest way to continue sales, even if that meant shipping to people who were only blocks away.
In late April, as Colorado replaced its stay-at-home order with safer-at-home guidelines, retail stores including smoke and vape shops were allowed to operate with curbside pick-up and delivery services. Many CBD stores had already implemented curbside pick-up while the stay-at-home order was in place, but those businesses were technically in violation of the order and risked being fined or shut down. Under the safer-at-home program, though, retail businesses and personal services (which include CBD stores) are allowed to be open if they limit customers to 50 percent capacity and adhere to strict social-distancing procedures. In Denver, masks are also required for both workers and customers.
So the CBD industry is back in business, but how has it changed?
When the stay-at-home order was initially announced, people scrambled to stockpile all of their everyday essentials, including CBD and other marijuana products. "We suspect that consumers were worried about access, since many consumers rely on CBD for their daily wellness routines," says Kim Rael, president and CEO of the CBD company Azuca. But the early run on CBD was short-lived, and like most other businesses during the pandemic, CBD enterprises took a hit.
"It has certainly slowed things down," notes Dave O'Connor, one of the co-owners of online CBD marketplace Canna World Market. "But what we found is that CBD is beneficial to a lot of folks, and they continue to purchase regardless. It is an essential item for them, and our customers were happy that we were able to meet their needs."
"We'd been rolling along pretty well," says Chris Bedrosian, owner of Lakewood-based Flora's Mercantile & Hemp Emporium, "and then COVID-19 hit, and we lost almost 60 percent of our sales. All of our wholesale sales dried up except two, and those are dispensaries, one in Lafayette and one here in Denver."
And what those two remaining wholesale clients were buying from Bedrosian during the stay-at-home order were products priced to break even, such as CBD-infused dog treats, rather than pricier, more artisan items like tinctures.
Across the country, as large wholesale clients shuttered their storefronts, smaller CBD businesses lost their hard-won streams of revenue. But unprecedented times have also given CBD businesses like Flora's Mercantile an unprecedented opportunity to promote their wares. "We finally got approval to do a Comcast ad," she says. "I had to build a completely separate website that has body products only, made only with isolate. But we finally got approved."
Meanwhile, hemp and CBD production was classified as critical infrastructure by the federal government, so both products continued to be processed even as retail businesses stalled. That was a boon for CBD merchants. "So far the only light, and it's a beautiful one, by the way," Bedrosian explains, "because I've been waiting for five and a half years for the magic to happen: The cost of the raw ingredient is coming down."
As a result of the lower cost of hemp and CBD, many CBD companies, including Flora's Mercantile, were able to offer discounted or free CBD products to medical professionals and other front-line workers.
Of course, CBD brands have to be careful when it comes to overselling the potential of CBD, especially in relation to the novel coronavirus. Over the last few months, several CBD brands, as well as other natural-remedy and alternative-medicine businesses, found themselves in hot water with the Food and Drug Administration for trying to cash in on the COVID-19 pandemic, by making unethical and illegal claims that CBD use can help prevent, treat or cure the virus. Because the FDA has yet to evaluate CBD, CBD companies and their representatives are not allowed to make anything close to a medical claim regarding their products; that's one of the factors that limits advertising possibilities.
Additionally, because the FDA and the U.S. Department of Agriculture have focused resources on coronavirus studies, the progress that had been made in recent years toward the FDA's regulation of CBD has slowed considerably. Most of the manpower and funding that had been going toward CBD is now earmarked for coronavirus research.
The CBD market was already saturated at the start of the year, and as business after business fell victim to the pandemic, CBD-oriented outfits were among them. According to market-research firm Brightfield Group, there were more than 3,500 CBD brands in existence at the beginning of 2020; the economic climate created by the pandemic will whittle that number down significantly.
The legal gray area surrounding CBD makes it difficult for CBD businesses to qualify for loans and other aid; meanwhile, they're suffering from canceled trade shows and sales events.
The heated debate over whether CBD businesses should have been given essential status may be on the back burner for now, but it raised other questions about where CBD businesses fit among marijuana and liquor companies. Those against the essential designation argued that, unlike other medical marijuana products, CBD products can be sold and shipped online, as well as found in essential businesses like grocery stores, liquor stores and pharmacies, so there was no need for CBD stores to stay open and risk exposing employees and customers. But those in favor of CBD businesses staying open argued that this was precisely why CBD stores should be considered essential: If hemp and CBD products can be sold in other businesses classified as critical, the government must recognize on some level that access to CBD is essential. Still others pointed to the inconsistencies between how marijuana and alcohol have been treated under quarantine in comparison to CBD. If liquor and marijuana are considered essential, why isn't CBD?
"Consumers rely on CBD for everyday wellness," notes Rael, "and I have heard dozens of stories from CBD consumers whose health and well-being deteriorate markedly when they do not have access to their daily CBD regimen."
"We do believe that CBD is essential" adds O'Connor, "as it offers relief to those customers suffering from pain/inflammation and anxiety."
"Medical marijuana is a cannabinoid," Bedrosian points out. "CBD is a cannabinoid. If medical marijuana is considered an essential business, CBD should also be considered an essential business, because it is."