The CEO of Whole Foods just talked about the possibility of carrying cannabis products in his stores. What does this really mean, and what could it do for our model portfolio?
“If cannabis is ever passed in Texas, chances are good that grocery stores will be selling that, too.”
When a quote like that comes from the CEO of one of the nation’s largest grocery chains – and a subsidiary of Amazon, no less – it’s worth taking note.
Yes, that was CEO John Mackey talking about the likelihood of cannabis reaching the shelves of Whole Foods grocery stores in the company’s home state.
And it seems he may even be open to a variety of products. When asked whether we would ever see edibles in a Whole Foods, Mackey said, “Let’s see what happens with the market and the government regulations over time.”
Financial journalists have been making a lot of hay over these statements, and that’s understandable. If cannabis were available in major grocery stores, the potential profits for any party involved would be incredible.
For my part, I think it’s fairly likely that we’ll see cannabis products in grocery stores in the near future, but it’s going to play out a little different than everyone – Mackey included – may be thinking. However, I can agree that we are about to enter a turning point that sends cannabis into the mainstream.
But in the meantime, I wanted to let you know how cannabis is really going to appear in your grocery aisles…
Looking to Liquor
Old habits die hard, and it’s important to remember how new cannabis is as a recreational product. The very first legal cannabis sale did not occur until just six years ago.
The very legislators and bureaucrats charged with regulating this new industry were often deeply invested in the war against cannabis just a few years ago. While some may be recent converts to the benefits of legal cannabis, they aren’t ready to allow cannabis products to be sold alongside cigarettes at the grocery store, even though we all know those cigarettes are incredibly hazardous to human health.
So let me be frank: You’re never going to see pot brownies next to Little Debbie’s snacks.
In fact, your best chance of buying THC products from Whole Foods wouldn’t actually be inside the store at all.
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It is possible, however, that Whole Foods could open dispensaries adjacent to its grocery stores. This model is already in use for liquor stores connected to other grocers like Wegmans. Many states don’t allow the sale of alcohol within grocery stores, so these affiliated retailers act as a sort of loophole, allowing the parent store to boost profits without running afoul of any state regulations.
It may be some time before state and local legislatures determine regulations that would allow for a grocery-adjacent dispensary, though.
And it’s doubtful the first of those would appear in conjunction with Whole Foods, a company headquartered in a state that has yet to legalize even medical cannabis use.
But I do believe there is a far likelier way for Whole Foods to profit from the cannabis industry, and by now, you’ll be very familiar with it.
CBD Is the Key
In the end, what you are most likely to find on the shelves of a Whole Foods – or any other grocery store – is CBD.
It’s convenient, then, that Whole Foods itself listed “Next Level Hemp” as one of its top 10 food trends for 2019.
Of course, as I’ve said before, the FDA wants to keep CBD out of food products simply because it is a regulated drug. I’ll have more to say on the FDA’s positions on CBD later this week.
But CBD holds incredible potential as a nutraceutical or dietary supplement, alongside capsules of omega-3 fatty acids and Vitamin D3 pills.
That’s the market in which many of our key picks have staked their claim. The health properties of CBD are too great to ignore, and with the passage of the Farm Bill, hemp-derived CBD enjoys a federal legality that all other subsectors of the cannabis industry currently lack.
So even in Texas, a state that has taken no measures to legalize marijuana, low-THC/high-CBD cannabis is perfectly legal.
Remember, at the Institute, we’ve dubbed 2019 “The Year of CBD,” and we keep seeing more and more evidence of that.
Even as headlines dominate the news cycle with talk of a New York City CBD ban and the resignation of a CBD-friendly FDA head, the smart money continues to bet on this sector – and our members will continue to profit from it.
Ultimately, the opportunity CBD presents to grocers like Whole Foods is too great to ignore, and you should not be surprised if you see one of our model portfolio members on the shelf of a grocery store very soon.
Executive Director, National Institute for Cannabis Investors
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11 responses to “Cannabis in Your Grocery Store”
March 12 2019