CBD retail sector takes flight with at least 30 stores in the Chattanooga area

Chattanoogan Kelly Brock recalls starting a business in 2017 with her sister-in-law, Betsy Scanlan, and David Nicholson with between $1 million and $2 million in seed money.

Brock says that business, The Good Patch, grew 100 percent per year from 2019 to 2021 and finished its investment "A" round last year, as well. She says Good Patch products – topical patches infused with plant and CBD (Cannabidiol)-based ingredients - can now be found in Ulta, Target and, as of last month, in more than 4,000 CVS stores nationwide.

"We started out shipping product from my tiny little basement," Scanlan says. "Now we have a team in California, a big warehouse in Jasper, Georgia, and 25 to 30 employees.

"The three of us were talking the other day and kind of said, 'Can you believe this?' It's a dream," she adds.

A dream for the company's founders, perhaps, but not a surprise to Dr. Frank Butler, the Frank W. McDonald/UC Foundation Professor of Management at the University of Tennessee at Chattanooga.

"In 2014, CBD product sales nationwide were $108 million," says Butler, citing figures published in the Hemp Business Journal. "In 2021, CBD product sales were $1.6 billion.

"That's tech-sector-type growth," he adds. "Incredible, mind-boggling growth."

That growth was spurred in large measure by the federal Farm Bill, signed into law in December 2018 by then-President Donald Trump. The bill shifted governance of the hemp industry and CBD to the federal Food and Drug Administration (FDA). Prior to the Farm Bill becoming law, CBD fell under the federal Controlled Substances Act and the purview of the Drug Enforcement Agency.

A Google search of CBD retailers in the Chattanooga area turned up more than 30 locations. Grass Roots Health, which opened in 2017, is thought to be the first CBD retailer in Chattanooga.

According to WebMD.com, CBD and THC (tetrahydrocannabinol) are found in both marijuana and hemp. Marijuana contains a much higher concentration of THC, which gives users of that drug a "high." Conversely, hemp contains much more CBD. While the FDA has, to date, approved only a single drug containing CBD oil – Epidiolex, for epilepsy – advocates say CBD effectively treats a wide range of conditions.

Holly Hackler counts herself among those advocates. A paramedic by training, she now owns and runs Scenic City Hemp Co. in Copperhill, Tenn., and Ocoee Botanicals, near Cleveland, Tenn. Both stores stock CBD products, among other offerings.

"A lot of problems we have with our bodies start with inflammation, and CBD is a natural anti-inflammatory," she says. "I struggled for a long time with back issues and my sleep schedule. I was eating so much Advil, and it was tearing up my stomach.

"I've always been a cannabis supporter, so when the Farm Bill [became law], I gave [CBD] it a whirl. It was a game-changer for me," she adds.

Hackler says her business is equally healthy. Scenic City Hemp grew 40 percent from its first year to its second year, despite the global pandemic.

"That first six months, we got out and marketed at rafting outposts and got pretty busy from the start," she says. "Then the pandemic happened; I thought, 'what have I done?' but we did parking-lot pickup and got through it.

"Most businesses lose money in the first five years, but we're paying our bills and are on track to increase again this year. So far, it's looking good," Hackler says.

The same apparently goes for the entire CBD-related industry as well, given that Business News Daily projected in April that sales in that sector are expected to hit $20 billion in 2024. Butler, the UTC business professor, says lots of businesses "ride a wave," then fizzle out, but "this doesn't feel like that."

"This feels like it'll be long-term," he says. "People are seeing value to this, there are a lot of different beliefs as to what [CBD] can do, and right now it's just a pure growth industry, without a lot of [regulatory] checks and balances."

Butler feels that as more research is done on CBD-related products, increased state and federal regulation will be the result. John Kerns, co-founder and CEO of Chattanooga-based New Bloom Labs, says the future of the industry in that context "comes down to sensible public policy."

"We cannot discount the role, the importance of federal leadership here," says Kerns, whose company provides chemical analysis of cannabis and cannabis-derived products for the purposes of quality control and legal compliance.

Kerns adds that, in a larger sense, the hemp industry's potential is a long way from being realized.

"We're starting to see some price stability in cannabinoids [such as CBD]," he says. "That specific part of the hemp market is starting to right-size itself, but the overall promise of what a domestic hemp program could look like at scale? We haven't even begun to realize what that could look like.

"Whether it's demand for textile applications, or building-material applications – that's all still in the creation phase," Kerns says. "We're just beginning an industry-wide R&D [research and development] process."


* Grass Roots Health proprietor touts her own experience successfully fighting chronic pain with CBD products

* Taking root: Hemp famers say business is growing again after a rocky patch