You could easily call cannabidiol – aka cannabis-related – products a “hot” market right now. Gummies, sublingual oils, tinctures and vaporizable CBD oil are flooding the marketplace from boutique shops to grocery stores to gas stations. Weeding through the tangle of terms seems daunting, and perhaps a little disconcerting in a largely unregulated arena, but in the Twin Ports, two new local CBD stores have discovered client success and product stability.
Managers of Sutherland CBD in Superior and Modern Medicine CBD in Duluth say that self-directed consumer education, reliable sourcing and third-party testing can give consumers more confidence in the products. At the same time, the business owners are learning to navigate the advertising restrictions, client hesitations and standards challenges of their exploding industry.
The explosion started when the 2018 U.S. Farm Bill made it legal for farmers to grow industrial hemp, a cannabis plant, for the first time since 1970. (Some states, like Wisconsin, had allowed growth before then, outside the federal regulations.) Cannabis refers to the plant cousins that produce both marijuana and hemp; the difference between the two is the THC (tetrahydrocannabinol) component that produces the “high” from use of marijuana. Cannabis plants producing less 0.3 percent THC are considered hemp; those producing more than that are marijuana. CBD products come from hemp.
In Minnesota until Jan. 1, 2020, all products containing CBD derived from hemp were “illegal to sell under Minnesota state law,” according to the Minnesota Board of Pharmacy, but the board did not take enforcement action against sellers of any products that already meet the new requirements, which include some strict labeling and other specifications on the board website.
The legalizing of growing hemp and legalizing – in many states – of CBD has unleashed a flood of products. In a story this spring, Forbes magazine quoted studies indicating that by 2024, the CBD industry will surpass $15 billion and could reach $20 billion.
Craig Sutherland of Superior knows what a whirlwind of popularity CBD enjoys. Sutherland CBD is managed by Craig, who also is a Superior city councilor, and the store is owned by his parents and run with two brothers.
The Sutherland family opened its Superior flagship store in July 2018, the first CBD oil store in the Twin Ports region. Another store in Havasu, Ariz., where the family has ties, quickly followed, then a third in the Lakeside neighborhood of Duluth in August 2019. In September, a fourth store opened in Ashland, Wis.
The company’s “farm-to-bottle” practice ensures a reputable CBD source, and supports local agriculture, Sutherland said. The company purchases hemp from an organic certified farm in Wisconsin with a focus on sustainability practices.
“I know the farmer personally and visit the hemp farm to see the plants and know first-hand we are getting a quality product,” he said.
Wisconsin has allowed growing industrial hemp since 2014, and with the lifting of the federal hemp ban in 2018, Sutherland says, working with hemp products like CBD has become less restrictive.
Because the products are so new to the market and because former federal restrictions also meant a lack of studies about CBD use, some wild claims seem made about what CBD can do. There are studies underway to evaluate it as a treatment for many different conditions from Parkinson’s disease to mental health disorders, diabetes and cancer. The only CBD product currently approved by the Federal Drug Administration is prescribed as an anti-seizure medication.
Sutherland CBD’s website notes the company makes no medical claims for its products, but he does have personal experience. Living with multiple sclerosis since 2016, Sutherland had a severe flare-up of symptoms in 2018 that stopped him in his tracks, he said, until he tried CBD oil.
“With CBD, there was a big difference with pain and anxiety. It keeps everything manageable and now rarely do I take even an aspirin,” Sutherland said.
Some of the best liked products at the Sutherland shops do not involve the ingestion of CBD at all, but rather come in the form of topical salves and creams.
Their family stores do not have one typical demographic for customers, Sutherland notes. They serve grandparents to college-age consumers seeking relief from all types of pain and anxiety.
While Sutherland says word of mouth is sufficient to fuel a thriving business and expansion to four brick-and-mortar stores in under two years, the family has found snags with social media marketing and traditional bank services for the CBD business, most likely because the products are not legal in all states.
In a time when building an online presence through social media is deemed critical for any business, CBD companies find many major social media outlets shut down or ban accounts related to the cannabis industry, including CBD oil.
Often, Sutherland said, such actions come without notice or explanation. That happened with their stores’ credit-card processing services, two of which cancelled without explanation, according to Sutherland.
Ultimately, the family installed an ATM outside the Superior store. Sutherland feels strong consumer demand is worth working around any skittishness in the finance world. “It’s the banks that are losing out on money,” he said, “because we will figure it out without them.”
Confusion around the interpretation of both state and federal laws related to hemp, THC levels and CBD can make the legal landscape uncertain.
When the 2018 farm bill made growing of industrial hemp federally legal, a 2019 memo from the USDA indicated states cannot interfere with the transport of federally legal hemp through their states, but just this summer, a delivery driver transporting hemp from Colorado to Minnesota was arrested in South Dakota, where hemp and all CBD derivatives are illegal. Felony charges remain pending in that case. In another well-publicized case, a elder woman at a Disney World security checkpoint in Florida was arrested and jailed for possession of CBD oil this summer. Her doctor in North Carolina had recommended it for her arthritis; the charges were later dropped.
Even in states like Florida where CBD oil is legal, the fact that it can be hard to easily discern between legal CBD (with less than 0.3% THC) and illegal CBD (with more than 0.3% THC) exacerbates the problems. Another Twin Ports store, Modern Medicine CBD, based in Duluth, sells most of its products through its website, but also has several small retail partners, including Cloquet Natural Foods. The company is owned by three Wrenshall High School friends: John Moder, Tyler Swanson and Jordan Berglund.
Like Sutherland, Moder came to the CBD products through his own medical need. After his military service left him with PTSD (post-traumatic stress disorder) and a mild traumatic brain injury, Moder searched for relief. In 2014, he tried CBD for his anxiety-related symptoms and quickly noted a subtle, positive change.
“I personally wanted CBD that was vaporizable from someone with training to discuss it; there was nothing like that here,” said Moder. That need pushed him to open his own company.
Traveling to Colorado, Moder and his partners found a reliable source at a CBD oil extract lab that gave them the option for private labeling. Once they found a product they trusted, Moder began building a customer base the old-fashioned way – by giving away product in early 2018.
He encountered many challenges similar to those of Sutherland – blocked from social media advertising, credit-card processing complications and a local banker who told them, “we don’t do business with marijuana companies.”
In fact, five local banks turned down Modern Medicine CBD for opening a basic business account, he said. PayPal and the online bank Azlo also turned them away. “Most said something along the lines of ‘There are just too many things we don’t know yet’, or ‘We are still figuring it all out’,” said Moder.
Things could be changing; the U.S. House of Representatives passed a Secure and Fair Enforcement Banking Act this fall to protect from prosecution banks working with cannabis-related businesses. That legislation still has to make it through a Repuclican-held Senate.
Dawn Staples, president of Superior Savings Bank in Superior, explained the banks’ hesitation.
“Currently federal guidelines are not clear when it comes to bank accounts for CBD businesses,” she said, “and when those are clarified through legislation such as the Secure and Fair Enforcement Banking Act, we will be able to open accounts for CBD businesses.”
“It’s been a marathon of hurdles,” Moder said. “We are riding a wave all the time, not because CBD is illegal, but because it’s not regulated.”
In the last year, Moder has made many home deliveries, a customer service he calls essential for the business. “Going to our customers and having a half-hour conversation has been important.”
Moving forward, while Modern Medicine CBD may not offer a traditional product, its expansion model is as traditional as Girl Scout cookie sales – develop a new delivery partnership, add more retail locations and automate online services.
“Centralize. Unify. Automate. That’s what we are focusing on,” Moder said. “Getting things all lined up into one funnel, Girl Scout-style.”
Kitty Mayo is a North Shore-based freelance writer.