25 Feb The Green rush
Like many in the industry, Trista Gresham got into the cannabidiol business because of her personal experience with the products. Gresham said she started researching CBD about 10 years ago, when she was prescribed medication to treat chronic migraines. “CBD has been shown that it helps with all different sorts of pain including blood flow, anxiety, depression, inflammation, mobility,” said Gresham, who had previously worked in health care and comes from a family of entrepreneurs. “So I just decided to go with that and try it and it really, really worked and helped me a lot, and I was able to not take the prescription medications.”
Inspired to help others discover the benefits, she opened her own CBD store last April in a strip center near Central and Tyler in northwest Wichita called Land of Oz — a nod to her Kansas roots. Like Gresham’s, new CBD stores seem to be popping up all over Wichita as more people look to cash in on a budding industry. A search for CBD stores on Google Maps turns up two-dozen locations scattered around town — increasingly in higher-profile shopping centers and busy intersections. The stores, though, come with their own nuanced set of business challenges and opportunities.
Low barrier to entry
On the surface, opening a CBD retail store in Wichita appears to be a simple task. There’s no specific license required in Kansas to sell CBD products beyond the standard retail sales tax registration. “It’s a great way for people to get into the industry without that licensing requirement, so you could open up a boutique clothing shop just as easy as you could open up a CBD store,” said Heather Hobbs Steppe, president of the Kansas Cannabis Chamber of Commerce, a cannabis industry trade association and lobbyist group.
The 2018 Farm Bill made it possible for retailers in Kansas to sell hemp-derived products, such as lotions, tinctures, and capsules, as long as they contain no more than 0.3% of the psychoactive compound tetrahydrocannabinol (THC) — although many products on the shelves can be found THC-free. “Right after that Farm Bill came out, you know, it was a rush to get in. It was a very low barrier to entry, it was an opportunity for people to step their foot into the cannabis world,” said Hobbs Steppe, who also owns her own store, KC Hemp Co., in Overland Park. “It is a thriving industry for Kansas, we’re talking millions and millions and millions of dollars that come in in revenue — a lot of dollars going into the state. And it’s been an incredibly beneficial. I don’t see this industry slowing down anytime soon.” Under the surface, though, the process to open a store is still cloaked in red tape.
Cannabis stigma
Trying to open Land of Oz, Gresham said she found many banks and insurance companies aren’t willing to work with CBD retailers because the industry is considered high risk, despite its legality. “Rates are astronomical for insurance on CBD,” Gresham said. “If you’re looking at products coverage on insurance, I mean, the rates for products coverage are around $3,000 a year and up, like $3,000 to $10,000 a year.” Similarly, finding a bank to open a business account and a processor to accept credit card sales of CBD products are also significant hurdles. “If you do not have somebody lined up already that’s willing to work with you on working capital, or enough money saved up in your accounts to buy your own product, you’re probably not going to get funding,” Gresham said. “I can tell you this place was started with all of my own cash. So I had no funding, no loans, no grants, no nothing.”
Another challenge unique to CBD retail: finding real estate.
Many landlords and building owners are unwilling to lease a storefront to CBD retailers because of the stigma surrounding the products and the clientele. Gresham said she was turned away from almost every vacant space she looked at on the west side of Wichita. “And it’s like, no, you don’t understand, it’s growing so well, it’s going to make money,” she said. “You’re going to get your rent one way or another, it’s going to bring people to your center or to your building complex, which is beneficial for landlords and the business owners.” After a three-month search, Gresham finally found Robin Plaza, the strip center near Central and Tyler, whose owners live in California — “so they’re all about it,” she said, laughing.
Enter Brett Harris, who has carved out a niche in CBD in real estate. Harris is a sales associate at Landmark Commercial Real Estate in Wichita but is also the master broker for Your CBD Store, considered the largest CBD retail chains in the world with 550 stores. In the last three years since he started working with the company, Harris says he’s done 68 deals in 42 states for Your CBD Store, including opening two of his own in Wichita, one in the Shops at Tallgrass at 21st and Rock, and one downtown in the Eaton Place building. Harris opened a third location, Delta Depot Store, his own locally owned brand, in November at 13th and Maize.
He said CBD store owners typically look for a 750- to 1,200 square-foot space, preferably near a grocery store. But in Wichita and across the country, Harris said some people are especially resistant to the idea. “Every day I’m dealing with brokers, listing brokers and ownership who are very convinced that we’re cannabis, we’re going to put a neon sign up, we are going to bring in shady people,” he said. “… There’s a stigma. Every day I’m fighting the cannabis stigma.” A former radio personality, Harris said his communication skills help convince landlords to reconsider. And with Your CBD Stores, specifically, Harris said he’s able to make deals for Class A retail space because the stores are designed to be more “bougee.”
“The one thing that Your CBD Store does brilliantly is they cater to that upper demographic, when really the industry has been catering to youth and under 30s. Well, 30-plus right now want to have an educated conversation about cannabinoids, CBD and Delta 8, and they want to take their time and they want to be in an atmosphere of a store that feels more like a spa,” Harris said.
Economic potential
There’s no denying the CBD market, while often misunderstood, is booming. Sales of CBD products in the U.S. hit $4.6 billion in 2020, and by 2026, the market is expected to reach $12 billion in sales, according to data released in October by cannabis research and data firm Brightfield Group. Locally, tracking CBD activity in Wichita and in the state of Kansas is a challenge. Because businesses aren’t required to have a license, there is no data that tracks the number of stores statewide. A search for business entities in the state of Kansas with the keyword “CBD” returns 55 results, but about half are no longer active.
While Wichita may be slow to catch onto the trends, look around town and you can’t miss the signs and billboards. “I think what’s driving it is that there is a tremendous amount of people right now who are struggling,” Harris said. “The amount of people right now who are not sleeping, who are not in a good place, and who are tired of big pharma and tired of the medications they’re taking are right now running into my store saying, ‘I need help.'”
Because CBD is so unregulated in Kansas, Gresham said small, locally owned shops like hers have the task of trying to educate customers about the products. At Land of Oz, Gresham said her products are third-party lab tested and come with lab results and certificates of analysis that list ingredients in detail — unlike the gas stations and liquor stores that sell CBD products on their countertops. “That’s one of the main reasons they keep coming back,” Gresham said. “Not just the product works, but the fact that I can tell them anything they need to know about the product.”
Advocates say Kansas has a long way to go to harness the economic potential of cannabis, particularly considering many of its neighboring red states, including Oklahoma, Missouri and Arkansas, have already legalized the use of medical marijuana. “We’re surrounded by it in the Midwest,” said Hobbs Steppe, with the Kansas Cannabis Chamber of Commerce. “… So people are just getting a little frustrated with how long it’s taken Kansas to kind of get to this point.” The group has helped draft and lobbied for passage of the Kansas Medical Marijuana Regulation Act, which would legalize medical marijuana in the state. The bill passed the House in 2021 but is now being redrafted by Senate committees. Hobbs Steppe said the Cannabis Chamber is hopeful that it will be passed this year, with an active medical program up and running by 2024. Whatever happens in the Legislature, though, the local CBD market will continue thrumming on. “We’re still very hopeful and optimistic that we’ll be able to get this done this year and we’ll start seeing those industry opportunities open up from a business perspective,” Hobbs Steppe said, “but just because we will have a medical program doesn’t mean that our CBD industry and our hemp industry is going anywhere or going to slow down.”
What’s legal in Kansas?
The 2018 Farm Bill removed hemp, defined as cannabis and derivates of cannabis with extremely low concentrations of the psychoactive compound delta-9-tetrahydrocannabinol (THC), or no more than 0.3% THC, from the definition of marijuana from the Controlled Substances Act. Kansas followed suit in 2018 and passed SB 282, which changed the definition of “marijuana” to exclude cannabidiol (CBD).
How does Kansas compare to the rest of the Midwest?
- Oklahoma voters approved medical cannabis legislation in 2018.
- Medical use was legalized in Missouri in 2018 through a ballot initiative.
- Arkansas legalized medical use of cannabis in 2016 by way of a ballot measure.
- Nebraska does not allow the use of recreational nor medical marijuana.
- Cannabis in Colorado has been legal for medical use since 2000 and for recreational use since 2012.
Article by Shelby Kellerman from the Wichita Business Journal
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