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How Will the CBD and Cannabis Craze Impact Drugstore Businesses?

By
Perspectives | 09-05-2019
Rick Maturo

The cannabis and cannabidiol (CBD) craze presents both risk and opportunity to the U.S. drugstore channel. Striking the interest of curious consumers, the mainstreaming of CBD could be ushering in a new era of ailment treatment, where major pharmacy chains like CVS and Walgreens have begun to respond to consumer demand by announcing the sale of hemp-derived CBD products in topical forms such as creams, lotions, patches and sprays.

While it’s still too early to predict the future impact of legal cannabis on the mainstream U.S. retail market, we do know that demand and consumer interest is present and certainly growing. So, with this in mind, I ask you this: How much do you currently know about the legal cannabis market and the implication it may have on your business and your consumer share? Regardless of your answer, this piece should provide you with a baseline understanding of the legal cannabis consumer landscape in the U.S., with a specific focus on how consumers are viewing legal cannabis for the treatment of ailments.

Let’s start by breaking down the basics:

  • Tetrahydrocannabinol (THC): THC is a psychoactive compound found in cannabis (e.g., marijuana); when activated and consumed, many associate with feelings of euphoria, intoxication or a high. Currently, THC products are legal for recreational use in 10 states and Washington, D.C. but it’s still illegal at the federal level. It is not legally approved for sale in mainstream retail, and YHC products are only available to consumers within state-licensed dispensaries within states in the U.S. that have legalized the sale and consumption of cannabis products.
  • Cannabidiol (CBD): CBD is a naturally occurring cannabinoid compound found in marijuana and hemp plants. Hemp-based CBD products are currently making waves with traditional consumer packaged goods (CPG) companies and consumers. The major difference between THC products and CBD is that hemp-based CBD does not have any psychoactive effects. Many people, though, have found CBD to be helpful in providing relief for a wide range of symptoms, including chronic pain, anxiety and inflammation. Hemp-based CBD products are typically sold in mainstream retail outlets and are not available in cannabis dispensaries.

How did the rise of CBD come about? Beyond the growing consumer buzz around cannabis, this move was enabled by the passage of the Farm Bill in December 2018, where hemp (and hemp-derived CBD) was removed from the Schedule I controlled substances list, opening the door for major U.S. retailers to start selling some, non-consumable, hemp-based CBD products with no legal risk.

SO, WHO IS THE FUTURE CANNABIS CONSUMER?

According to the latest data from Nielsen and Headset, consumer interest in purchasing legal cannabis exists across gender and age groups in the U.S. Of adults 21+ surveyed, 34% of consumers indicated that they were interested in consuming cannabis legally, versus 66% who said they were not interested in consuming cannabis at all. When it comes to gender, 31% of women are likely to purchase legal cannabis, compared with 38% of men. Age wise, consumers who fall within the 21-34 age range are most likely to purchase legal cannabis (41%), followed by consumers who fall within the 35-44 age range and 55-74 range (both age brackets are tied at 39%). How do these demographics line up with your core target consumer?

TOP REASONS CONSUMERS WOULD USE CANNABIS, IF LEGALLY AVAILABLE

According to Nielsen, consumers report they will likely consume cannabis for a variety of reasons outside of recreation. For U.S. adults who report they would likely consume cannabis if it were legally available, the top reasons are all tied to ailment treatment. These include:

  • Treatment of chronic pain (85%)
  • Improvement of mental health (82%)
  • Treatment of minor injuries (81%)
  • To aid sleep (77%)
  • Relaxation (74%)

Nielsen data also shows that many of those consumers who are interested in legally consuming cannabis are ailment sufferers: 40% of all headache/migraine pain sufferers, 40% of all arthritic pain sufferers, and 41% of all back/neck pain sufferers, would all be open to consume cannabis if legally available.

WHAT CATEGORIES MAY SEE THE MOST DISRUPTION WITHIN THE DRUGSTORE CHANNEL?

Out of all of the adults that have an ailment listed, below are the top ailment states where consumers would consider using cannabis as a treatment, which may give a hint toward what categories may see the most disruption within the drugstore channel.

  • Inability to fall asleep: 42%
  • Smoking cessation: 41%
  • Cancer pains: 37%
  • Back/neck pain: 35%
  • Arthritis pain: 35%
  • Headaches/migraines: 33%
  • General aches and pains: 32%
  • Feminine pain: 30%
  • Motion sickness: 28%

With all of this data in-hand, it brings up the question around what this means for the future of today’s drugstore health and wellness, over-the-counter (OTC) and prescription offerings. There is no doubt that consumer interest in legal cannabis products puts the cannabis market in a strong position to disrupt the current drugstore channel. Some of that disruption can already be seen, with a few players proactively embracing the buzz behind cannabis. How will you respond? In today’s business landscape, knowledge and data is power. Through our alliance with Headset, Nielsen is enabling data-driven decision making by bringing visibility into a fast-growing market for key players in the drugstore channel and the U.S. CPG industry at large.

Now more than ever, it’s important to lean into trusted data sources to better understand how today's consumers are interacting with legal cannabis products and what that means for your business today and in the future.

Note: All information in this report is based upon measurement of sales of cannabis products in U.S. jurisdictions where such sales have been legalized; or consumer intentions with respect to future consumption of legal cannabis products.

This article was originally published on Chain Drug Review.

Tagged:  SHOPPER  |  CONSUMER  |  CANNABIS

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