Have you heard of independent pharmacy’s latest cash cow? Or more appropriately, cash crop?
Cannabidiol (CBD), a non-psychoactive compound of cannabis, is growing profits at a prolific pace among retailers across the country. The natural product purports a bevy of therapeutic benefits without the requirement of a prescription or the risk of addiction. And consumers are all in.
This year, the CBD market reached $500 million, according to Statistica. An optimistic estimate by the Brightfield Group a cannabis industry analyst, places the market at $22 billion by 2022—presuming legalization of hemp from a pending farm bill.
A more conservative estimate predicts the market to reach nearly $2 billion, still an enormous number considering it was just over $100 million in 2014.
Right now the market is populated by shops of every sort—head shops, nutrition stores, local grocers, dispensaries, farmers’ markets, online stores. None of those retailers carry the clout of a Doctor of Pharmacy. Pharmacies are perfectly positioned to dominate sales of this novel natural product that comes with so many question marks.
“Pharmacies have a distinct advantage over other retail or online sites selling CBD,” said Danny Bannister, co-owner of Natural Native, a supplier of CBD products. “People have learned to trust in their pharmacist. They expect him or her to have vetted and researched the products they carry and recommend.”
This is true for Jesica Mills, who’s been selling CBD at her community pharmacy for just over a year. “People want to get it from a pharmacy and from a pharmacist,” said Mills, PharmD, MBA, RPh, CNHP, owner of Owensboro Family Pharmacy in Kentucky. “Because everyone takes some sort of prescription medicine, they want to know what the side effects are going to be, how to take it, how to dose it.”
Even more, independents have the CBD pharmacy market cornered for the time being. National chains are unlikely to take the plunge until the legality is crystal clear at the federal and state level and they’re able to sell the products nationally.
Current CBD revenue reports from independent pharmacies are off the charts, even for those who’ve just begun selling the products. Mike Bellesine, owner of TrueCare Pharmacy in El Dorado, Kansas, collected $10,000 in six days selling the plant product. He anticipates $10K-$15K per month at a minimum. Mills’s pharmacy makes $15K per month in sales. Natural Native and Ananda Professional, two major CBD suppliers, have had clients earn up to $30K in a single month.
“The most compelling reason for getting on board with CBD comes from pharmacy owners who have been in the business a long time,” said Chuck Schneider, chief revenue officer of Ananda Professional. “These owners state they have never seen a better front-end profit generator for independent pharmacies than CBD.”
These products come with a 40–50 percent margin on average, all cash. And unlike the cents-to-dollars profit your pharmacy makes on most OTC products like acetaminophen, CBD brings hefty profit with products ranging from $50 to $300, Bellesine said.
More than that, many of the patients purchasing CBD are high-needs patients managing chronic conditions such as cancer and autoimmune disease. Offering CBD can attract those patients to your pharmacy, potentially earning their prescriptions as well.
After a marketing push in the first few weeks of selling CBD, Bellesine earned around 70 prescription transfers in a matter of days. And he’s been rolling out the products slowly to ensure he’s doing it right.
PHARMACIES HAVE A DISTINCT ADVANTAGE OVER OTHER RETAIL OR ONLINE SITES SELLING CBD. PEOPLE HAVE LEARNED TO TRUST IN THEIR PHARMACIST.
Although CBD draws in high-needs patients, the people buying CBD come from every corner and with every condition, even from those you’d least expect. “There are people who have Medicaid, who have issues with one or two dollars on their copays, and they will spend 70 dollars on CBD oil without blinking an eye,” Mills said.
More and more, patients are looking to get away from traditional medication and get into natural remedies like CBD. “There’s such an increase of people wanting natural products over prescriptions now,” said Mills, who also has a doctorate in natural medicine. “We’re able to counsel on natural products, and that’s attracted quite a few new natural-minded patients. It’s opened the door for a whole different set of clients to come in, and leads to more fulfillment as a pharmacist.”
Bellesine, who’s owned TrueCare Pharmacy for 36 years, has never seen more promise from a product. “If your state allows it, I recommend getting this product on your shelf,” he said. “It is a high-dollar, high-margin product and it really works.”
Schneider believes independent pharmacies could easily and drastically boost profits even if they want to move slowly. “With so many people that it can apply to, there’s no reason why they shouldn’t easily be able to start a patient a day on CBD,” he said. “If they start a patient a day, that pharmacy will improve their profitability by $60,000 per year.”
What is CBD?
CBD is a natural constituent of the cannabis plant, typically hemp. CBD sold commercially can’t contain more than .03 percent THC (tetrahydrocannabinol), the chemical responsible for the psychoactive effects induced by marijuana. Manufacturers distill CBD into an isolate or as the primary active ingredient among other cannabinoids. It’s formulated into several variations including oil, ointments, balms, water, edibles, and more.
There are more than 100 cannabinoids in cannabis. CBD and THC are the most prevalent. All the cannabinoids are said to contribute health benefits. Using them all together, referred to as “full spectrum,” creates what’s called an entourage effect, compounding the therapeutic effectiveness.
CBD doesn’t come with the same risks as its sibling cannabinoid THC. According to the World Health Organization, “In humans, CBD exhibits no effects indicative of any abuse or dependence potential. To date, there is no evidence of recreational use of CBD or any public health-related problems associated with the use of pure CBD.”
Health benefits of CBD
The science behind CBD’s therapeutic benefits revolves around the endocannabinoid system. This system in humans regulates all sorts of homeostatic activities.
The system contains receptors for cannabinoids throughout the body, including the brain, digestive system, and lymphatic system.
The reason CBD’s therapeutic properties remain controversial is a lack of conclusive clinical evidence. CBD is still in its early stages of study, although research is increasing rapidly. Many of the common health claims come from animal or preclinical studies, some of which have shown CBD’s promise to reduce pain and inflammation.
The strongest evidence, according to a comprehensive review of cannabinoid studies from the National Academies of Sciences, Engineering, and Medicine, shows that cannabinoids can be effective in improving two conditions: patient-reported multiple sclerosis spasticity symptoms and short-term sleep outcomes in individuals with sleep disturbance associated with obstructive sleep apnea syndrome, fibromyalgia, chronic pain, and multiple sclerosis.
The demand for CBD is driven mainly by anecdotal evidence. But the word-of-mouth success stories are plentiful. “Although I was skeptical at first about its benefits and possibly the psychological perception of our patients relating us to hemp sales, we kept hearing story after story of how our patients are able to reduce their pain meds, how much better they are sleeping, and how much less stress and anxiety they are feeling,” Bellesine said. “When you have patients on fixed income coming back and sometimes paying over $100 per bottle for CBD, you know it’s working.”
In a survey from the Brightfield Group and HelloMD, a digital healthcare platform for the cannabis industry, 82 percent of users claimed CBD was a “very effective” treatment. In another survey by Consumer Reports, 90 percent of people who took CBD claimed it helped treat their medical condition.
Many patients are even tapering off prescription and OTC pain medicine once they start taking CBD. In the HelloMD survey, nearly half of the CBD users said they had stopped using traditional medications after starting on CBD. One of Bellesine’s patients with crushing lumbar discs was able to cut his Percocet dose in half. One of Mills’s patients was able to switch from Oxycontin 30mg daily to Oxycodone 5mg daily. Another had been taking Clonazepam 2mg four times a day and has completely discontinued the medication.
“I’ve realized that pharmacists are dispensing pills to people that really don’t want to take any of them,” Mills said. “Every single person that I’ve talked to doesn’t want to take any pills. Patients are wanting to stop taking their narcotic medicines like Xanax and Percocet, actively looking for something healthier for them.”
Legality of CBD
If the Hemp Farming Act of 2018 becomes law, hemp-derived CBD will effectively be legal federally. The bill removes hemp from the controlled substances list and legalizes cultivation of the crop nationally. Hemp products would be considered agricultural commodities, and regulatory authority would fall to the USDA and state departments of agriculture.
Until then, the 2014 Farm Bill, per section 7606, allows hemp with less than .03 percent THC to be legally grown and sold under specific circumstances in certain states that allow it. The crop must be grown or cultivated for purposes of research conducted under a state-approved agricultural pilot program or other agricultural or academic research. The state agencies or universities in these programs can license third parties to grow hemp and sell products derived from it, which is how suppliers like Ananda and Natural Native can legally manufacture CBD and sell it to your pharmacy.
In addition, a 2016 law explicitly prohibits enforcement agencies, most notably the DEA, from using federal funds to “prohibit the transportation, processing, sale, or use of industrial hemp” that is grown in accordance with the 2014 Farm Bill.
Lastly, a court ruling between the DEA and Hemp Industries Association determined that imported, non-psychoactive hemp does not fall under the purview of the Controlled Substances Act.
“Taken together, the Ninth Circuit’s order in Hemps Industries Ass’n v. Drug Enforcement Administration and the Farm Bill and Omnibus Law appropriations riders constitute an expansive, permissive federal regime for industrial hemp,” wrote two attorneys from the office of Frost Brown Todd in a legal analysis. “These authorities legitimize industrial hemp and derivative products and immobilize federal agencies that might otherwise pursue enforcement.”
Although CBD has been allowed federally under specific circumstances, each state has the right to allow or disallow it. The analysis from Frost Brown Todd did not find explicit prohibitions in any state nor explicit permissions in most states.
Even if CBD can legally be sold in your state, it can’t come with any health claims, no matter how minor.
At TrueCare Pharmacy, Bellesine said he’s very careful not to promise patients anything. Instead, he simply offers testimony from his patients who’ve experienced benefits. “When I talk to people, I say, ‘This is just what other people are telling us. They are coming back and telling us the same things.’”
The bottom line for your pharmacy: Purchase only from suppliers who’ve obtained CBD from hemp cultivated in accordance to the 2014 Farm Bill; make sure your state allows it; and don’t make any health claims.
Purchasing CBD products
With little-to-no regulation, CBD products are easily susceptible to fraud. Without proper vetting, your pharmacy could end up with products that don’t contain CBD at all, contain less CBD than claimed, contain too much THC, or contain contaminants, among other risks.
“So much of this is really the wild west,” Schneider said. “You can buy a product, and seven out of ten times what’s in the bottle doesn’t match what’s on the label.”
A 2017 study published in JAMA found that 69 percent of CBD products purchased online were mislabeled, containing more or less ingredients than claimed. Twenty percent had THC levels high enough to potentially result in intoxication or impairment. Over the last three years, the FDA has sent more than 40 warning lettersto CBD sellers who’ve falsified the content in their products.
Bannister and Schneider both said to make sure your supplier can provide a certificate of analysis for each batch of products to verify its purity and its THC level. Bannister suggested going a step further by tracing the products to the original farm. Schneider emphasized the importance of seeing the supplier’s license with the state agriculture department or university operating under a pilot program.
Another important factor to consider is the amount of resources and education the supplier can provide. “Everything starts with education,” Schneider said. “Most pharmacists never studied the endocannabinoid system and are not familiar with how CBD works in the body. A reputable company will provide training for the pharmacy owner and staff.”
Some suppliers offer an initial training session on the endocannabinoid system and the fundamentals of CBD. That’s how Mills gained the majority of her knowledge initially, mostly from Ananda Professional. “When you’re first getting started, a lot of your information will come from the company you’re buying from,” Mills said.
CBD education
CBD is a novel product with little clinical evidence, lots of anecdotal proclamations, stigma associated with marijuana, and confusing legality that make many consumers hesitant. The majority of CBD users learn about it from friends, family, and the internet.
Your pharmacy may be patients’ only reputable source on CBD information, and you’re likely their most reputable source. The best way to know how to counsel patients on CBD is to learn the science for yourself, said Mills. “Take a look at the reason why it works, because once you understand why it works then you understand why it works for so many different things.”
Some sellers and suppliers claim that because CBD is a natural product, it won’t interact with any other drugs. Pharmacist Bellesine knows better. “It does have a lot of interactions,” he said. “Just as you would with any drug, you want to learn CBD’s interactions and be able to counsel patients on the product. That’s where the pharmacy really shines because we understand the drugs, we understand the possible side effects, we understand how they’re taken out of the body. The head shop down the street doesn’t have a clue.”
Bellesine began by researching the only FDA-approved drug containing CBD, Epidiolex. That provided some insight on possible interactions, as well as the possible side effects. “If you’re going to be a good pharmacist, you better understand your drugs or nutraceuticals that you’re going to be dispensing,” he said.
PHARMACY OWNERS STATE THEY HAVE NEVER SEEN A BETTER FRONT-END PROFIT GENERATOR FOR INDEPENDENT PHARMACIES THAN CBD.
Deciding dosing is tricky because CBD isn’t a well-researched or tested product.
Lastly, your pharmacy should inform every patient about CBD’s effect on drug tests. This has been a significant issue for Mills in the year she’s been offering CBD. Even though legal CBD products contain no more than .03 percent THC, that can be enough to show up on a drug test, Mills said.
“Identifying those people and asking if they’re drug tested was one of the things we had to learn the hard way. We had a few people who were not able to get a job because of the CBD oil,” Mills said. “We always tell people, if you can’t risk it, THC-free is the way to go.”
However, even THC-free products won’t always put patients in the clear. “They can cause a false positive with the most commonly used immunoassay tests, because they have low specificity and can confuse CBD for THC,” she said. “A hair or serum test will confirm a true negative in these cases, but a false positive is certainly possible.”
Forecasting the future
We’re in the budding stages of the CBD rush. With so many variables lurking legally and scientifically, no one can predict how long the market will stay this hot. If the 2018 Farm Bill is passed, there will likely be an influx of suppliers, driving prices, and therefore profits, down. Once national pharmacies and retailers get involved, competition will be steep.
In addition, new scientific research could contradict many of the current claims and consumers may begin to abandon CBD altogether. On the other hand, studies could corroborate the therapeutic benefits or discover even more. The market could continue to cruise and even expand.
Either way, pharmacies should always keep their advantage over other retailers. “We have the edge of being the experts in drugs,” Bellesine said. “Knowledge along with your good pharmacist reputation will draw patients to you.”
For the moment, the bandwagon is barreling forward. Will your pharmacy hop on? “The time is perfect for independent pharmacies to get involved with CBD and do so before the chain pharmacies and mass merchandisers,” Schneider said. “There is no better retail location for patients to turn to than an independent pharmacy.”