Sorry for the inflammatory, click-baitish title and header graphic, but I needed to get your attention.
I’ve written this blog because there still appears to be a disconnect between retail landlords and their knowledge and perceptions of the CBD retail industry. If you are a retail landlord that has chosen deliberately not to rent to a CBD retailer due to any number of perceived stigmas that get attached to this industry, PLEASE READ THIS ENTIRE ARTICLE.
Whatever You Think You Know About CBD is Probably Wrong
- The Federal Farm Act of 2018 removed Hemp from Schedule 1 making “hemp” a regular retail product.
- The United States Treasury, Financial Crimes Enforcement Network, issued guidance to all financial institutions, via FIN-2020-G001, explaining that the Bill “removed hemp from the definition of marijuana in the Controlled Substances Act (CSA)”.
- Accordingly, financial institutions are no longer required to file a Suspicious Activity Report (SAR) on customers engaged in hemp distribution
- This also means that Hemp-based retail operations are “bankable”. We don’t have to be a cash-only business like many marijuana dispensaries.
Addressing The Perceived Stigma with Facts
Roughly 25% of the population say they don’t trust CBD/hemp-based products
These 25% are most likely unaware of 3 very important things which could drastically alter their perception:
-
- CBD is not derived from the same plant as marijuana
- The active ingredient for this product is Cannabidiol (CBD), not THC as with marijuana
- CBD products may have some THC, but it is less than 0.3%. Translation: You can’t get “high” from CBD
You wouldn’t restrict a prospective tenant that sells seafood, rice, certain cereals, mushrooms, poultry, fruit juices or health supplements from selling those products, would you? Of course not…. except…… All of the products mentioned in the previous sentence have arsenic in them – even some of your prescriptions from the pharmacy. Dietary supplements can often have too much arsenic in them.
Retail Landlords of Higher-End Luxury Class Properties Are Missing Out
Many CBD retailers are often forced to find tenancy in less-than-desirable locations, often near gas stations or vape stores, even though they are willing to pay top dollar for rent. While many CBD retailers are making due, arguably thriving, despite their physical retail locations. The other issue with this is that it can create roadblocks to differentiation.
You May Already Have Retail Tenants Selling CBD
& You Just Don’t Know It
The U.S. CBD market grew over 700% in 2019 and is on track to grow to $23.7 billion through 2023. The bulk of this growth is coming from large retailers like CVS, Walgreens, and Kroger entering the market and providing that availability to consumers. These retailers now comprise 57%+ of the CBD retail sales per year. That’s not including other retailers coming on board with CBD product sales like Gyms, and Heath Stores (GNC, Vitamin Shoppe, etc.) Pet Stores and other Big Box Retailers
Translation:
If your anchor tenants are demanding the exclusion of CBD retail from the shopping plaza, you should not make the assumption that they are doing so because of any negative perception of CBD Retail stores. They want in on the action!
________________________________________________
In Closing
If you have been against renting to CBD retailers, I would strongly encourage you to reverse your position. And, if you still choose to keep your position, then I encourage you to walk into the retail tenants that you have right now to see if they are selling it already anyway.
If you don’t lease to a CBD Retailer, someone else will. And right now, you’ll most likely get what you want from the deal. CBD retailers have money and are willing to spend top dollar for the right space. Once enough landlords get wise to this and it becomes mainstream, and it will, you may find yourself asking your South Florida commercial real estate advisor that handles your listing to directly seek out CBD retailers for vacant space. But, by then, you will have been too late and the CBD retailers, who have gone mainstream, will have the negotiating leverage, unlike now.
