CBD Franchises are Booming, but How Long Can They Last with Federal Marijuana Legalization Looming?

CBD Franchises are Booming, but How Long Can They Last with Federal Marijuana Legalization Looming?

Will CBD franchises be left in the dust once THC is removed from the Controlled Substance Act

Posted by:
Joseph Billions on Tuesday Feb 9, 2021

CBD Franchises are Booming, But How Long Can They Last?

cbd franchise or thc franchise

The growth of CBD recently has been astonishing given how little was known about the beneficial compound a couple of years ago. Many patients who went through horrific events and suffered Post Traumatic Stress Disorder (PTSD) afterward have had to rely on CBD for help. PTSD is a major condition that is associated with other problems like depression, anxiety, and panic attacks. Thankfully, CBD is also useful against these symptoms which makes the uses of CBD for PTSD multifaceted. CBD is also used for a host of other medical conditions including pain, inflammation, insomnia, and so on. These extremely useful therapeutic applications of CBD coupled with the calm relaxing feeling it induces has been the major factors driving CBD to the very top. In the world today, CBD has become very popular not just in the medical world but in other sectors as well.

The popularity of CBD has resulted in the growth of the CBD industry as more people are looking to the cannabinoid for medical help. Though research on some medicinal benefits of CBD is still in its early stage, the personal experiences of a lot of patients are making many bank on CBD. This has been the basis for the growth of the CBD industry and has seen many entrepreneurs invest in CBD. Some are going into the industry to help others due to their personal experience with CBD while others are going in on CBD just for the economic benefits, and who are we to judge, CBD is a burgeoning industry that every smart entrepreneur should be looking to be a part of. A good example of an individual who got into CBD because of personal experiences is the story of Lauren Lerch, an entrepreneur who already has a CBD franchise with three stores.

A Detailed Look at The Growth of CBD Franchises

Franchising in CBD has surged rapidly with the growth of the CBD industry. The CBD industry is estimated to rack up sales as high as $20 billion by 2024. This projection is the major reason why many franchises are spreading their wings to establish themselves more in the industry. CBD American Shaman and Your CBD Store are the two biggest CBD franchises in the US. They both launched in 2018 and they grow up to 319 and 550-plus units respectively.

Your CBD Store initially started in the CBD industry with a licensed distribution model. Thereafter, a change was made to the franchising system it now operates. The year 2020 saw the introduction of 6 new franchises in the CBD industry. This shows that CBD franchising is steadily booming are more people are jumping on the bandwagon. However, the issue of how long these franchises can last remains a problem hanging over the heads of many. Read on to find out the answer to this million-dollar question.

Can these franchises last?

There are some peculiarities and factors around the CBD industry that makes the question 'how long can retail stores and franchises survive in the industry' a very interesting one. First on that list is the issue of trust in the CBD industry. Even though CBD is surging in popularity, many customers still don’t know much about CBD. A survey by Morning Consult shows just how much people know about CBD. One-third of the participants in the survey believe that CBD is similar to marijuana. 39% also believe that CBD is illegal in America. This survey shows that many people do not know what CBD is and this is a major issue.

Some unscrupulous sellers capitalize on the confusion of customers around cannabis to make explosive sales. They do this by making unfounded claims about the product and also selling substandard products that are not what they say they are. A recent study by the FDA showed that half of the CBD products they tested were labeled inaccurately. Some had less CBD than what was stipulated and others have a notable concentration of THC that can give a euphoric high.

Another issue hanging over the heads of CBD franchises is the issue of sustainability. Physical stores are no longer as sustainable as they once were. The growth of e-commerce activities is rapidly changing the landscape and entrepreneurs have to adapt accordingly. Retail purchases of CBD products can easily be done online as purchases of supplements are done. This reality is very evident as GNC in 2020 declared a $200 million loss despite being a giant of pills and potions. Inevitably, the group had to file for Chapter 11 bankruptcy protection by June. A survey prior to the development of COVID-19 was done to see consumer behavior and how they make purchases. 45% of CBD users make purchases through online stores while 48% made purchases physically in stores and dispensaries. This changed with the pandemic as another survey by the Brightfield Group shows more consumers are making purchases online. So to answer the question 'can these franchises last?' Sure they can, if they can adapt.

With Federal marijuana legalizaiton looming, you may see consumer looking to "step-up" to higher THC levels, which only state-licensed dispensaries can offer, leaving CBD stores in a lurch.  Why go to a CBD store when you can go to a full "THC and CBD store" called a dispensary?

How do franchises tend to cope?

CBD franchises saw some of these issues coming and some of them have put effective mechanisms in place to shield them from the negative impact and ensure they survive in the industry. CBD franchises offer vetting for their stores and employees to ensure the information they offer is more than what you find online. They also ensure that their products are tested by a third party to ensure the products are what they say they are. Attendants in franchises are well trained on how to guide customers through the product selection process. New stores are also tied to veteran store owners to help educate them.

It's not easy to start a business in the CBD industry as there are several loopholes around the industry that can put businesses in trouble. Though the 2018 Farm Bill legalized hemp-derived CBD, there are still some state-specific laws that can cause issues. CBD franchises have standard legal services that help protect their stores from legal issues that can easily affect independent retail stores. These legal services protect the franchise from liability and offer financial protection.

CBD franchises also have well augmented physical and online presence for their stores. Your CBD Store has a unique web page for their services likewise CBD American Shaman, CBD Authority, and many others. The goal of maintaining a strong online presence is not just to have heavy traffic in their stores but to have customers loyal to the brand. Once loyalty is established, customers can easily make purchases either physically at stores or virtually online.

Bottom line

By constantly educating customers and providing sufficient services, loyalty to franchises can easily be achieved. Once you have the loyalty of your customers the sky is the limit.  If CBD stores can distinguish themselves away from the dispensary marketing as the "you don't get high with us", you may see the older or more conservative crowd sticking with just CBD stores.  The "I don't want to get high" mantra is a strong one with some people.








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