From Out-of-business Beauty Brands to Emerging Wellness Companies: What Role Does Cannabis Play Now?
Five years ago, every beauty brand wanted to tap into cannabis, now, not so much. What happened?
In 2018, following the Farm Bill, hemp was legalized, allowing brands to create products with CBD and create they did. At the time, a slew of brands and retailers popped up with missions focused entirely around the ingredient. However, with brands now dissolving or pivoting, hesitant retailers and customer confusion, CBD has lost its luster, but experts say it could have a reawakening.
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In 2019, the CBD beauty craze really kicked off with several brands gaining traction including Saint Jane and Lord Jones, while existing brands, like Milk Makeup, also tapped into versions of the ingredient for its purported anti-inflammatory benefits.
“CBD as an ingredient is one of the greatest because it attacks inflammation at its core, both inside and outside,” said Nicole Ostoya, beauty industry veteran and founder of mushroom-infused skin care brand Neon Hippie. “Topically, inflammation in the skin makes it age faster, makes it irritated, creates rosacea, and CBD is one of the few ingredients that really gets rid of [it].”
Retailers were also bullish on the category at the time.
“A lot of the retailers were very fascinated with it, wanted to get it on shelves as soon as possible,” said Casey Georgeson, founder and chief executive officer of now active floral-focused skin care brand Saint Jane. “Sephora launched us and Lord Jones and Prima, and it felt like CBD was the pretty girl at the dance.”
Additionally, there were retailers like Standard Dose (which seemed to quietly close last year) that were curating assortments around the ingredient alone.
The hype seemed promising, especially for CBD topical and ingestible brand Lord Jones, which was quickly snatched up by Cronos Group for $300 million in 2020. Since then, the brand has dissolved its product line and is going all in 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 steam.
“We started seeing CBD being used in gas stations and yoga pants and turkey gravy and things that just didn’t make sense,” Georgeson said. “The education required for the majority of consumers and clients was more than most brands could support… The market was saturated [and] the sales were not there to support the number of brands.”
Ostoya added: “When the Farm Bill happened, there were a million [products] and it was in the grocery store and the formulas were crap and you could buy it on Amazon. It wasn’t quality, [such] that the rush to market was going to destroy the ingredient. People didn’t understand it. There was so much information [and] misinformation about it. People couldn’t get past that it is not going to make you high.”
Alongside increasing competition and consumer confusion, CBD products were also incredibly hard to sell. Every state had its own regulations, and major payment processing platforms could not process payments.
“The regulatory is the hardest part” said Georgeson, adding that Saint Jane still has some CBD-infused stock keeping units. Due to the regulations that are still evolving today, there are several states that the brand has stopped selling its CBD products in completely.
With the COVID-19 pandemic and the overall confusion in the category, the wellness ingredient couldn’t hold its own in 2020 and the landscape started to shift quickly, leaving brands with nothing or needing new strategies. For Saint Jane, which was bullish on CBD to start, a pivot was key to survive.
“We intentionally made the decision to pivot from CBD to more of our active flowers,” Georgeson said.
This strategy has also been helpful for the brand, as retailers have grown hesitant on the category again. Some, like Goop, have rejected the ingredient altogether, sources said.
However, CBD hasn’t completely gone away. Some companies, like Uncle Bud’s, which is available in more than 15,000 retail doors, have found success. Concurrently, beauty brands are still tapping into its benefits, though not building their entire mission around it. For example, Dieux’s fan-favorite Deliverance, $69, available at Sephora, employs a cannabinoid complex to soothe the skin. Experts suggest that in the future, as stigma continues to die down around the ingredient, more clinical data comes out and regulations change, brands will formulate with it like they would any other ingredient.
“Formulators are going to turn to CBD when they want a super calming ingredient story to the product but you’re not going to see CBD brands,” said Georgeson, adding that more clinical evidence on the ingredient’s efficacy will aid in bringing it back.
In addition, industry sources said they have seen a high level of interest in the ingredient from the spa channel. For example, locations like Chillhouse and Westin’s Heavenly Spa offer hemp and CBD experiences and add-ons.
“They are a captive audience. The aesthetician or service provider says, ‘Would you like a CBD add on? It’s extra relaxing. It’s going to help with inflammation’ and they are like, ‘Sure, OK,’” said Georgeson, noting that people are willing to pay top dollar in these service settings. “That’s where CBD could have its renaissance.”
In addition, there might be an opportunity for wellness, particularly when CBD is combined with hemp-derived THC, which can be sold when the concentration is at or below .03 percent dry weight/volume. This movement has manifested through microdosable formats, like Cann’s THC-infused beverages or Sweedies’ snackable Mood Ring gummy packs. Both brands employ low levels of THC and CBD to achieve a light buzz during a cultural moment where many people are seeking alcohol replacements.
In addition, brands like Sweedies, founded by industry veterans Olivia Sheehan and Rachel Richman, are actually opting for a beauty-centric strategy.
“Our product to me feels like a direct delivery on a beauty promise,” said Sheehan. “It’s an overt way that you can wake up looking hotter. You can reduce alcohol consumption or completely replace alcohol consumption. You can improve your sleep. Those are overt ways that it can be part of the beauty routine.”
While CBD has surely faced challenges, experts agree that the ingredient is powerful and still has potential across beauty and wellness, though in different forms: spas, singular products or THC-centric alcohol replacement brands. In addition, clinical evidence over anecdotal could help the category come back. “It’s definitely not over,” Georgeson said.
