Q&A: Kismet Consumer zeroes in on cannabis wellness opportunity
SAN DIEGO — Always on the lookout for new categories, Drug Store News happened across the Kismet Consumer Product Group, which made its NACDS conference debut this year at the Total Store Expo in San Diego with a line of hemp and CBD wellness products.
Interesting, because more and more states are entertaining legislation that would legalize marijuana, either for medical use or personal use, suggesting consumers may soon no longer associate a negative stigma with marijuana and cannabis products. According to the National Conference of State Legislatures, a total of 29 states, the District of Columbia, Guam and Puerto Rico now allow for comprehensive public medical marijuana and cannabis programs. And recently approved efforts in 18 states allow use of "low THC, high cannabidiol (CBD)" products for medical reasons.
So DSN recently caught up with Kelly Coughlin, president Annex Communication and the executive who represented Kismet at TSE, to get the skinny around the legality of CBD products, the stigma attached to those products and the market potential for those retailers who see past the stigma and embrace what could become a booming new OTC category.
Drug Store News: What was the feedback coming out of your participation at NACDS TSE?
Kelly Coughlin: The feedback from TSE was that there is a huge amount of education that still needs to take place in understanding the cannabis category, the differentiations between hemp, CBD and THC, and their legality on a state-by-state basis. Our company happens to represent a number of products that are non-psychoactive and more wellness driven, and those products, like in the analgesics category, were of particular interest to buyers. Many attendees were fascinated by the range of the product category – from optical to HBA to edibles.
DSN: Where is the de facto market? Is it limited to those states with legalization laws because there is greater acceptance?
Coughlin: We believe that the wellness products are going to transform the way that cannabis products are sold. Currently, in recreational states, patients are receiving their medical advice and products from an 18-year old “budtender” with a high school education, which is ludicrous. There is an absolute demand for these products, both recreationally and medicinally, but the demand also does not have a baseline of sales at retail level.
We are currently having two of our brands tested at national retail locations in the state of California, which has now been dealing with cannabis products for over a decade, and so there is certainly more tolerance in certain states than in others. With the hemp products, there is far more leeway to sell in an intrastate capacity than that of CBD and THC products. Canada is readying itself as a country for recreational cannabis rollout in July 2018, so we will be watching that carefully and have already begun extending our business initiatives to the country. The education and legality of the category will be an ongoing challenge for the retail industry to understand.
DSN: What is the feedback from drug stores in states without legalization laws? Even though hemp products are legal, is there a stigma attached?
Coughlin: Some distributors had a better understanding of the category than others. Those in recreational states certainly had a different perspective, in that the residents of those states have accepted the cannabis category as more of a lifestyle. When our country repealed Prohibition, it took only two years for every state to have liquor laws in place, which also set the stage for President Roosevelt to enact the first federal libations tax on 3.2% beer under the Volstead Act. Since the states have been slower to react to cannabis and hemp than the federal government anticipated, it’s been a slower process, but still a moving one. The stigma has begun to change, and its time for the retail industry to start applying some traditional business acumen to this category.
DSN: How do you overcome the stigma?
Coughlin: Education, education and more education.
DSN: What is the potential for this market?
Coughlin: We believe that it’s medicine meets liquor. The Los Angeles Times estimates that cannabis will bring over $5 billion a year to the state of California, and according to The Cannabist’s analysis of the state’s marijuana tax data, Colorado sold over $127.7 million worth of cannabis flower, edible products and concentrates in May 2017; more than $35.7 million of sales stemmed from medical marijuana purchases, and recreational-use items generated $90.1 million in sales.
So, there is enormous opportunity on the table. The problem in this category is that we do not have a baseline on sales, other than in recreational states like California and Colorado, and we are not accounting for what has operated in a black market capacity. This has been a largely all cash business, and so the substantiating of monetary expectations is still a new process, but looking at the existing sales in recreational states is incredibly encouraging. We believe that the category as a whole is $100 billion plus.
DSN: How should they be merchandised? In line with the appropriate category? Or as a destination center with hemp-based products as the theme? How does the consumer shop this category?
Coughlin: We have had conversations with several retailers, and there are varying answers. With some, they are looking at store-within-a-store concepts that can be themed as “holistic” or “herbal wellness.” With others, they have been adding the products to existing categories as a new product. The packaging and identification is obviously very important. We did have conversations with pharmacy operations, who did recognize that this category had the potential to require more of the pharmacist’s time, so the packaging and education behind the products is extremely important to be clear to the customer as to what they are consuming.
DSN: What was the biggest takeaway you took away from your participation at NACDS TSE?
Coughlin: We participated in TSE in an attempt to set a baseline for the cannabis industry with mainstream retail, and I feel like we achieved that. The feedback was overwhelmingly positive and encouraging, but there is clearly a lot of work to be done before these kinds of products can enter the marketplace on a national and international level. We are looking forward to utilizing the industry resources for collaboration and helping to solidify standards for education, legality and compliance in this category.
DSN: What’s the bottom line? What do retailers need to know about this opportunity?
Coughlin: We feel like retailers and pharmacists have not only an opportunity, but also a responsibility to understand this category. Over half of the states in our country have voted for “Medical Marijuana,” and yet we are treating the category as anything but. The majority of those that are using cannabis to medicate would prefer to acquire the product at their local retailer or drug store rather than a marijuana dispensary. The fact that there is a demand, and people are using cannabis for wellness, should trigger an immediate reaction from our wellness providers.
Health coverage debate fuels affordability concerns over chronic disease care
LOS ANGELES — A new survey from the national non-profit Transamerica Center for Health Studies shows that 81% of Americans are aware of the healthcare debates in Washington, and of those, 92% are concerned about those changes and 59% are very or extremely concerned.
The three biggest fears among Americans include:
- Loss of coverage for those with pre-existing conditions (42%);
- Reduction in Medicare coverage for seniors (31%); and
- No employer mandate to offer healthcare coverage (30%).
The survey also found that more than two-thirds (67%) of Americans reported having at least one chronic health condition, and 19% cited managing a chronic illness/condition (e.g., heart disease, diabetes, high blood pressure) as one of their top two most important health-related priorities right now.
"With such high rates of chronic health conditions, it is not surprising that so many Americans are concerned about losing coverage due to their pre-existing conditions," stated Hector De La Torre, executive director of TCHS. "This concern is reflected by a substantial 56% of Americans who think health insurance should cover people with pre-existing conditions. This strong consensus is counter to the ongoing split over the Affordable Care Act, with 43% having a positive view and 32% having a negative view of the ACA (and 26% neutral on the ACA compared to 51% in 2016)."
When asked about the most important characteristics of the healthcare system, the most common response was "being able to pay for the care I need" (36%). Consistent with previous years, affordability remains a top concern, with nearly one in five (19%) saying they are currently not able to afford routine healthcare expenses (i.e., health insurance co-pays, deductibles, out-of-pocket expenses, etc.). Only about one in 10 Americans (13%) say their access to affordable healthcare coverage has increased in the past one to two years.
Interestingly, the survey found variations in increased access to affordable coverage among racial and generational segments, with Latino adults (19%) more likely than White/Caucasian (12%), Black/African American (11%), and Asian/Pacific Islander (10%) adults to say access to affordable coverage has increased. In addition, millennials (18%) are more likely than generation X (10%) and baby boomers (6%) to say access to affordable coverage has increased.
"Year after year, we have found that affordability is top of mind for Americans and yet few say they are currently saving for healthcare expenses, and a substantial proportion of employed adults are not sure they are taking advantage of the healthcare savings offered by their employer," De La Torre said. "As we approach open enrollment in the Exchanges, employer-based coverage and Medicare, it is crucial that individuals understand their healthcare options and comparison shop so they can make the most informed decisions for their situation."
The survey found that 12% of adults are uninsured, which is down from 15% in 2014. Most commonly, the uninsured say paying their health expenses and the penalty is less expensive than the health coverage options available to them (29%). About one in six (18%) uninsured adults still claim they are unaware of the ACA's insurance mandate for individuals.
Healthcare Consumers in a Time of Uncertainty is an online survey of more than 4,600 Americans, ages 18-64, that was conducted by Harris Poll on behalf of TCHS. The deck of survey findings contains more than 160 slides.
CHPA launches DXM age-restriction resource for retailers
WASHINGTON — The Consumer Healthcare Products Association on Wednesday announced a new initiative to support retailers in states that have adopted laws prohibiting the sale of over-the-counter medicines containing the cough suppressant dextromethorphan to minors. The announcement comes on the heels of Nevada’s enactment of a DXM age-restriction law last week.
While millions of Americans use products containing DXM to safely treat their symptoms, according to the 2016 National Institute on Drug Abuse annual Monitoring the Future survey, one in 30 teens abuses OTC cough medicine containing DXM to get high.
“The OTC industry supports these types of laws, and over the years we’ve learned that a combination of public policy and public education is effective at combating teen abuse of OTC cough medicine,” stated Scott Melville, CHPA president and CEO. “Committed state lawmakers such as Nevada State Senator Patricia Farley and retailers across the country have been crucial allies in our abuse prevention efforts.”
In 2012, California became the first state to prohibit sales of DXM-containing products to minors. Since then, governors from Alaska, Arizona, Delaware, Florida, Kentucky, Louisiana, New Jersey, New York, Tennessee, Virginia, Washington, Nevada and Oregon have all signed similar laws.
“Retailers are essential to the effective implementation of DXM age-restriction laws,” continued Melville. “We hope that our new suite of retailer educational materials will improve retail employees’ understanding of the new law, how to enforce it, and strengthen their sense of responsibility to uphold the age-restriction in their stores.”
As part of the initiative, a new Pharmacists & Retailers page has been added to CHPA’s existing StopMedicineAbuse.org website – a long established website and campaign aimed at engaging parents and community leaders about teen abuse of OTC cough medicine.
On the new page, retailers can download or order free materials, including:
- Fact Sheet with background on OTC cough medicine abuse, a check list to determine whether a product contains DXM and when to ask for customer identification, as well as a brief list of frequently asked questions;Informational Poster that can be used in employee break rooms;
- Register Reminder Stickers to provide employees with an easy checklist for reference during checkout; and
- State-Specific Consumer Handouts (Tear Pad) to share with consumers who purchase products containing DXM to educate them about the sales restriction. The small handouts come in the form of a tear pad for all 14 states where age-restriction legislation has passed (California, Alaska, Arizona, Delaware, Florida, Kentucky, Louisiana, New Jersey, New York, Tennessee, Virginia, Washington, Nevada and Oregon).
“The new law aims to decrease abuse of these medicines by minors, without limiting access for legitimate consumers,” said Nevada Sen. Patricia Farley, sponsor of S.B. 159. “Imposing an age requirement on the sale and purchase of DXM has proven to be effective in other states and I’m proud that Nevada has taken action to protect the health and safety of our youth.”