Can CBD Save the Shopping Mall?

by: Alexa Peters | on March 26, 2019 | No Comments

Take it as another sign of the mainstreaming of CBD: Last month Green Growth Brands (GGB), a company that focuses on CBD-infused personal care products, struck a deal with the Simon Property Group, America’s largest operator of shopping malls, that will bring Seventh Sense CBD (cannabidiol) products into dozens of the nation’s premiere malls.

Starting later this year, you may see Seventh Sense Botanical Therapy kiosks popping up in Simon-owned malls across America.

This is the first time a CBD retail chain has entered shopping malls on a national scale.

A Wave of Consumers Coming

Though this is a groundbreaking deal, it was born in a relatively traditional way, highlighting how normalized CBD/hemp is becoming, and how some retailers see it as a market strategy worth gambling on.

“There’s a lot of legacy sentiment around cannabis use [that is negative], but we’ve seen a lot of great research that says over the next five years to a decade there’s going to be a huge wave of consumers to cannabis that haven’t traditionally been legacy consumers or purchased it illegally,” said Julia Fulton, who’s in charge of public and investor relations at GGB. “They will start to buy it, we believe, so our idea is how do we make them [see] these products are quality and safe?”

Trusted Retail Leaders Were Key

GGB executives had been in discussion with Simon officials for some time due to preexisting relationships between the two companies. GGB is led by longtime retailer Peter Horvath, a former executive at American Eagle, Victoria’s Secret, Designer Shoe Warehouse (DSW), and Limited Brands.

‘Typically, this is not something that a new brand could pull off.’

Julia Fulton, Green Growth Brands

The CBD retailer is majority-owned by the Ohio-based Schottenstein family, whose retail empire includes American Eagle, DSW, and Value City Furniture.

“Typically, [this is] not something that a new brand could pull off,” said Fulton, but Simon executives know and trust the mainstream retail experience of the GGB leaders. As a result, GGB expects to see its Seventh Sense kiosks in premium locations—not shunted off to a back corner of the mall. “You’ll find our shops outside of stores that are really high traffic and attract some of the most desirable consumers—like Michael Kors or Victoria’s Secret,” Fulton said.

Those preexisting relationships also gave Simon the confidence to sign an unprecedentedly large lease for a new brand. GGB will have more than 100 shops in malls in some of the most high-traffic locations in each marketplace.

The Farm Bill Made It Happen

Although GGB and Simon officials had been discussing an agreement months earlier, Congress’ Dec. 2018 passage of the farm bill—which legalized hemp—brought the deal to fruition. Following passage of that bill, the US Food & Drug Administration (FDA) , in an unusually detailed press announcement, said the farm bill removed hemp from the Controlled Substances Act, “which means that it will no longer be an illegal substance under federal law.” (Most CBD sold outside of state-licensed cannabis dispensaries is derived from hemp, which is legally defined as cannabis containing less than 0.3% THC.) But the FDA cautioned that CBD product manufacturers cannot make health claims for CBD, or add it to food or dietary supplements, without passing FDA approval.

Last week CVS, America’s biggest drug store chain, confirmed that it’s already selling FDA-compliant CBD products in its stores in eight states. Those products are non-medical topical products, not ingestibles like food or beverages, so they don’t need FDA approval.

Legal? Depends on Who You Ask

Meanwhile, the US Drug Enforcement Administration (DEA) continues to cling to its own interpretation of the Controlled Substances Act. The DEA considers CBD to be an illegal Schedule I drug because it is derived from the cannabis plant. DEA officials consider CBD to be an extremely low enforcement priority, however, so the agency has taken no action against cannabidiol manufacturers or retailers.

In some states, however, CBD remains illegal. Earlier this month, two independent stores in Texas were raided by local police, who confiscated all the CBD products for sale. That raid came about because of state law, not federal law.

Meanwhile, other national companies continue to push into the CBD space—and vice-versa. Earlier today, SOL Global announced it had become the largest shareholder in Jones Soda. SOL Global is a hemp, CBD, and medical marijuana concern based in Florida. SOL is the parent company of 3 Boys Farm, which plans to open two state-licensed medical cannabis dispensaries in Florida later this year.

108 Locations

As public acceptance of cannabis-related products continues to climb, the institution of the shopping mall—notoriously in decline due to the growth of e-commerce and other changes to the zeitgeist—may be impacted positively by the growth of the cannabis space.

Even Simon, one of the more profitable chain of malls in the country, is hopping onboard the cannabis train as a way to reinvent their presence in the lives of consumers. “CBD-infused products are an emerging, growth category and we’re constantly on the lookout for new products that resonate with our shoppers,” said Les Morris, director of public relations for Simon. “As such, we’re excited to welcome Green Growth Brands to 108 Simon locations.”

These small shops or kiosks in Simon Malls will initially feature CBD-infused personal care and beauty products like bath salts, lotions, face creams and eye creams from GGB’s brand, Seventh Sense Botanical Therapy.

“We have a huge variety of beauty and personal care products that we haven’t seen in the market, nor have we seen another CBD company that has the same breadth of product. We’ve got about sixty SKUs right now, and we’ll have over one hundred in the next month or so,” Fulton said.

Good Sign for Other CBD Brands

Some competitors of Green Growth Brands expressed positivity about the deal. They said it may open the door for more growth in the cannabis industry and bring attention to their own brands and products.

“It really shows that this space is no longer simply about a bunch of hippies smoking joints, it’s becoming mainstream,” said food and wellness expert Preet Marwaha, whose brand, Blue Sky Biologicals, specializes in spreading the gospel about lesser-known cannabinoids that offer profound health and wellness benefits.

Similarly, Dr. Bill Rawls, a medical doctor who studies herbal medicine—including CBD—for treating chronic illness, says the deal brings visibility to CBD and hemp and adds further validity to herbal medicine. “CBD is an herb, and there are a lot of herbs out there that are just as good as CBD,” he said. “What’s important about [CBD] is that it is the first encounter with herbal medicine that many people will have. I view it as a stepping stone for introducing people to herbal medicine.”

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