The legal cannabis industry is large as of the start of 2019 – and, according to most experts, it’s on track to get even larger. Worldwide legal cannabis products represented a $55 billion market in 2018, and most analysts estimate that it will have nearly tripled to reach $147 billion by 2025. Here in the U.S., the domestic market for legal cannabis in 2018 was $9.1 billion. By 2025, estimates put it in the $15 billion range.
The legal, or “legalish,” purchase and sale of cannabis products gets a lot of attention and draws a lot of interest, largely because it generates a lot of complexity. Though marijuana has been made legal for recreational or medical use in 33 states and the District of Columbia, it remains listed as a Schedule I narcotic by the federal government, and is thus considered very illegal. That means otherwise straightforward and common small business duties, like banking, taxes and payroll, can be problematic for firms in the cannabis industry that are legally required to operate almost entirely in cash.
Those complexities are well-known and often covered. Somewhat less apparent, however, are the complexities that the “legalish” status of cannabis consumption creates for retailers that one might not immediately associate with legalized marijuana. That the legally grey status of cannabis creates challenges for dispensaries is to be expected; Neiman Marcus or Barney’s getting caught up in the mix, on the other hand, is a bit more surprising.
Neither Neiman’s nor Barney’s is selling retail pot – though Barney’s is more directly embracing the cannabis lifestyle with its concept shop, rather unsubtly called “The High End,” which will feature a wide variety of products including vaporizer pens and CBD edibles.
Neiman Marcus, on the other hand, is not making a push for the high-end stoner crowd – there will be no golden rolling papers of the type one can find at Barney’s. Instead, Neiman’s is moving in on the CBD product push with the introduction of a slew of health and beauty products, such as lip glosses, hair serums and foot creams.
“Cannabis beauty brands are becoming increasingly popular, and CBD products are the next big thing in beauty,” Kim D’Angelo, Neiman Marcus’ beauty buyer, said in an email. “Our CBD assortment is an important part of our brand’s commitment to the health and well-being of our customers.”
CBD (also known as cannabidiol), unlike its chemical cousin THC, is not known to be psychoactive, thus there is very little chance that anyone will accidentally get stoned using their anti-wrinkle treatment. Instead, CBD is known for its reported pain-reducing properties and stress-relieving abilities.
Until about a year ago, CBD was as illegal as THC, but that changed with the passage of the last edition of the Farm Bill, which legalized hemp. CBD is found in both hemp plants and marijuana plants – and while extracting and selling CBD from marijuana plants remains very much illegal in most states, extracting CBD from hemp plants is not.
From there, the regulation of CBD gets a little more complicated. It is banned in some states, in other states it is banned in some forms and not others, in other states it is legal to possess but not to sell, and in other states it is entirely legal to sell in any form.
This means Neiman Marcus has had to wade slowly and carefully into the industry, and is not putting CBD products on the shelves of all its stores, as much as it might like to do so. Instead, the products are available in its Beverly Hills, Fashion Island, Boston, Denver and San Francisco shops – all locations where CBD (and recreational cannabis) are fully legal for retail sale.
The high-end shop is stocking seven CBD brands: Sagely Naturals, Cannuka, Cannabliss Organic, Code of Harmony, Ildi Pekar, Yuyo Botanics and Vertly. Those brands, according to D’Angelo, were selected by a 20-member team of beauty and wellness specialists that the store assembled to choose the first iteration of CBD products to be offered to consumers.
The move to add the new products, she noted, is really about meeting consumer demand. As these products have gained more stable, legal status, they have developed a following. But more importantly, perhaps, Neiman Marcus is also looking to expand its consumer base and find a way to tap into a younger generation of affluent, connected shoppers.
“Our trending beauty initiative is a way we are differentiating ourselves from competitors,” D’Angelo noted. “Through this beauty category, we offer an assortment of emerging modern and relevant brands, and product categories aimed to target a new customer demographic, while also offering our tried-and-true heritage brands.”