Marijuana Business Magazine November-December 2019

Partnership PIONEERS L anding a deal with mainstream retailers is every cannabis company’s dream because of the expanded reach to consumers and sheer volume of sales potential. The passage of the 2018 Farm Bill that made hemp a federally legal crop also finally made it possible for cannabis-derived products to be more accessible to the public through sales beyond marijuana dispensaries. CV Sciences, a hemp extract company with headquarters in San Diego, has secured distribution partnerships with two of the largest retail chains in the food, drug and mass- merchandising retail category: Rhode Island-based CVS Pharmacy and Cincinnati-based grocery giant Kroger Co. But like most partnerships, the company’s alliances with mainstream retailers weren’t overnight successes, according to CV Sciences CEO Joseph Dowling. They took time, trust and transparency to cultivate. “It takes patience and diligence and the usual sort of adjectives that you would apply to building a successful business,” Dowling said. HOW IT CAME TO BE Established in 2012 as CannaVest, CV Sciences invested significant research and development into its first product, PlusCBD Oil. The brand launched in independent and midsized chain health stores in the natural-products channel in 2014. From 2015 to 2017, CV Sciences focused on nationwide expansion of its PlusCBD Oil brand, which quickly became a top seller in the hemp- derived CBD category and a top-10 brand in overall food supplements, based on scan data from Chicago-based retail analytics firm Spins. Mass merchandisers rely on data from retail analytics firms such as Spins to identify trends in specialty wellness retail and learn which products are performing on store shelves. Dowling said independent health-food stores have long been a proving ground for new products, especially in the wellness segment, pointing to products such as coconut water and cosmetics as examples. Spins provides “raw data at the screener level, aggregated by company, by (product), by region, by store,” Dowling said. “So you can’t hide if you’re not on there, and you can’t hide if you are on there.” As one of the first hemp companies to make significant headway in brick-and-mortar retail stores, CV Sciences’ products established credibility and presence in the marketplace, which attracted the attention of mainstream retailers, Dowling said. “When it came time in 2017 to branch out from where we started with natural-products retailers, we had a couple thousand retailers already,” Dowling said. “If you’re a retailer, it gives you comfort that the products you’re considering putting on the shelf are already being sold at other retail locations, so it made our business- development efforts easier.” DEALINGWITH CHALLENGES While lawmakers were contemplating hemp legalization via the 2018 Farm Bill, mainstream retailers and hemp brands were forming CV Sciences and CVS Pharmacy CV Sciences and Kroger CASE STUDY Top How CV Sciences locked in distributor deals with retailers CVS Pharmacy and Kroger By Laura Drotleff Shelf 72 Marijuana Business Magazine | November-December 2019