From out-of-business beauty brands to wellness startups: what role is cannabis playing now?

Five years ago, every beauty brand wanted to take advantage of cannabis, now, not so much. What happened?

In 2018, following the Farm Bill, hemp was legalized, allowing brands to create and create CBD products. At the time, a slew of brands and retailers popped up with missions centered entirely around the ingredient. However, with brands dissolving or pivoting, hesitant retailers and customer confusion, CBD has lost its luster, but experts say it could be in for a renaissance.

In 2019, the CBD beauty craze really took off with several brands gaining traction, such as Saint Jane and Lord Jones, while existing brands such as Milk Makeup also tapped versions of the ingredient for its purported benefits. anti-inflammatory

“CBD as an ingredient is one of the best because it attacks inflammation at its core, both inside and out,” said Nicole Ostoya, beauty industry veteran and founder of the skincare brand of Neon Hippie mushroom-infused skin. “In topical terms, inflammation in the skin makes it age faster, makes it irritated, creates rosacea, and CBD is one of the few ingredients that actually clears it. [it].”

Retailers were also bullish on the category at the time.

“A lot of the retailers were really fascinated with it, they wanted to get it on the shelves as soon as possible,” said Casey Georgeson, founder and CEO of flower-focused skincare brand Saint Jane. “Sephora pitched us and Lord Jones and Prima, and I thought CBD was the pretty girl at the ball.”

In addition, there were retailers such as Standard Dose (which appeared to be quietly closing down last year) that prepared assortments around the ingredient alone.

The hype looked promising, especially for topical and ingestible CBD brand Lord Jones, which was quickly snapped up by Cronos Group for $300 million in 2020. The brand has since dissolved its product line and is banking on THC with a Canada- only footprint for now. Experts say it was the bombardment of brands hitting the aisles and customer confusion that caused the category to lose traction.

“We started seeing CBD being used in gas stations and yoga pants and turkey gravy and things that didn’t make sense,” Georgeson said. “The education required for most consumers and customers was more than most brands could handle… The market was saturated [and] sales were not to support the number of brands.”

Ostoya added, “When the Farm Bill passed, there were a million of them [products] and it was in the grocery store and the formulas were crap and you could buy it on amazon. It was not of quality, [such] that the rush to market was going to destroy the ingredient. People didn’t understand. There was so much information [and] misinformation about it. People couldn’t get over that this won’t get you high.”

In addition to increased competition and consumer confusion, CBD products were also incredibly difficult to sell. Each state had its own regulations and the major payment processing platforms could not process payments.

“The regulations are the hardest part,” Georgeson said, adding that Saint Jane still has some CBD-infused stock holding units. Due to regulations that are still evolving today, there are several states where the brand has stopped selling its CBD products entirely.

With the COVID-19 pandemic and general confusion in the category, the wellness ingredient was unable to sustain itself in 2020 and the landscape began to change rapidly, leaving brands with nothing or needing new strategies. For Saint Jane, who was bullish on CBD to begin with, a pivot was key to survival.

“We intentionally made the decision to switch to CBD in addition to our active flowers,” Georgeson said.

This strategy has also been helpful for the brand as retailers have once again been hesitant about the category. Some, like Goop, have rejected the ingredient altogether, sources said.

However, CBD has not completely disappeared. Some companies, like Uncle Bud’s, which is available in more than 15,000 retail doors, have been successful. At the same time, beauty brands are still taking advantage of it, even if they’re not building their entire mission around it. For example, Dieux’s fan-favorite Deliverance, $69, available at Sephora, uses a cannabinoid complex to soothe skin. Experts suggest that in the future, as the stigma around the ingredient continues to diminish, more clinical data comes out and regulations change, brands will formulate with it as they would with any other ingredient.

“Formulators will turn to CBD when they want a super-sedating ingredient story for the product, but you won’t see CBD brands,” Georgeson said, adding that more clinical evidence on the ingredient’s effectiveness will help re- the

Also, industry sources said they have seen a high level of interest in the spa channel ingredient. For example, locations like Chillhouse and Westin’s Heavenly Spa offer hemp and CBD experiences and supplements.

“They are a captive audience. The esthetician or service provider says, ‘Do you want a CBD supplement? It’s more relaxing. It’s going to help with inflammation,’ and they say, ‘Yeah, okay,'” Georgeson said, noting that people are willing to pay top dollar in these service environments. “That’s where CBD could have its renaissance.”

Additionally, there may be an opportunity for well-being, especially when CBD is combined with hemp-derived THC, which can be sold when the concentration is at or below 0.03% dry weight/volume. This movement has manifested itself through microdosable formats, such as Cann’s THC-infused drinks or Sweedies’ Mood Ring gummy packs. Both brands use low levels of THC and CBD to get a slight buzz during a cultural moment where many people are looking for alcohol substitutes.

Plus, brands like Sweedies, founded by industry veterans Olivia Sheehan and Rachel Richman, really go for a beauty-focused strategy.

“Our product feels to me like a direct delivery of a promise of beauty,” Sheehan said. “It’s an open way that you can wake up warmer. You can reduce alcohol consumption or completely replace alcohol consumption. You can improve your sleep. These are open ways that can be part of the beauty routine.”

Although CBD has certainly faced challenges, experts agree that the ingredient is powerful and still has potential in beauty and wellness, albeit in different forms: spas, unique products or alcohol replacement brands focused on THC. Also, clinical evidence over anecdotal could help bring the category back. “It’s definitely not over,” Georgeson said.