As CBD product manufacturers ride the wave of industry growth post-Farm Bill, Medterra CBD, a wholesaler-turned-retailer, is expanding onto CVS’ shelves, as well as internationally.
When CEO Jay Hartenbach co-founded Medterra two years ago, the company partnered with GenCanna, a Kentucky hemp farm that specializes in isolating CBD. Medterra originally aimed to bring transparency and clarity to the CBD wholesale market, but ultimately transitioned its focus to retail to sell directly to the consumer.
“We recognized that there were a lot of companies selling online that didn’t necessarily have the best customer service or the fair pricing that we thought [should be] in the marketplace,” Hartenbach tells Cannabis Business Times. “So, we started our e-commerce business in July 2017, and within six weeks, we had sold to all 50 states, and that really kicked off the transition of Medterra from a wholesale company into a retail, consumer-focused company.”
Now, Medterra sells its products in 16 countries, and is working with major retailers like CVS to bring products to what Hartenbach calls a more mainstream consumer. Here, he discusses why this is a strategic move for the company, as well as the broader industry trends that are emerging.
Cannabis Business Times: Why was selling products through CVS a strategic move for Medterra?
Jay Hartenbach: It’s very silly not to look at a major retailer and be interested in helping them distribute CBD products. For us, we wanted to be a part of that. We really positioned ourselves to be somewhat of a leader in the space and focused on education and transparency to consumers. We want to be a part of the tide changing from CBD being more of a fringe product to a much more mainstream product. There definitely are pros and cons with working with any retailer, but the pros definitely outweighed [any cons to what] we were looking at doing with CVS in helping them bring CBD to their consumers.
CBT: What was the process like for the company to get its products onto CVS’ shelves?
JH: I can’t go into too much detail on the selection process, but what I can say is, as a company, we had to go through a very thorough vetting process. They wanted to see and understand where all of our products were manufactured, where our hemp was grown, how we were organizing and managing the company, and how we support the actual sales of those products within CVS. We were very fortunate to have some experience in the industry because I think we make a very good partner for retailers. Having that background on the wholesale side, we’ve got a very stable and consistent supply chain—that’s what we really built our initial business on. Then, on the retail side, we’ve obviously learned a lot about marketing and ensuring consumers are familiar with the Medterra brand name. It was a very thorough selection process. I don’t know how many people were included in it, but [CVS] definitely did their homework and made sure they were working with the right CBD companies during that initial launch.
CBT: What are some regulations that the company must pay attention to as it extends its reach into these larger retailers?
JH: From a state-by-state standpoint, every state has the opportunity to make CBD legal or illegal, [to] make a comment on that with the passing of the 2018 Farm Bill. No state has done so, but there are obviously states that are easier to do business in and there are other states that make business a little bit more difficult. We do have to be aware of that with a lot of these major retailers. Because of the presence they have, we’ve chosen to launch with them in states that are a little bit more friendly to CBD.
As far as the actual regulations go, we just make sure that when we’re working with any type of partner, that they focus on manufacturing products in the right way, having the right GMP certification, and ultimately, just delivering that quality and consistency that we’ve come to expect in the last couple of years in developing Medterra.
CBT: How will sales through CVS impact the company going forward?
JH: We focus a lot on building awareness about CBD, education and the Medterra name. It’s our expectation that working with CVS, we will have a greater visibility to consumers that are accessing and using those CVS locations in the select states that they launched in. So, we see it as raising the overall awareness of Medterra as well as bringing in a new sales channel for us. (Editor’s note: CVS will begin selling CBD products in California, Illinois, Maryland, Colorado, Alabama, Indiana, Tennessee and Kentucky.)
CBT: What does it mean for the industry that big box stores like CVS and Walgreens are starting to sell CBD products? What market trends do you foresee as the industry matures?
JH: I think one is differentiation. As these larger retailers are coming into the space, for CBD companies to stay on shelves and be attractive to consumers, I think they have to differentiate themselves. I think this is signifying that CBD has gone mainstream, which is great to see and be a part of, but I think it puts a lot of pressure back on the CBD companies to stay relevant. What may have worked a couple years ago when the market wasn’t as nearly competitive or as large, it’s now staying ahead of that innovation curve and providing products that are unique to their consumers and attractive to the retailers that are carrying those products.
I am always asked, ‘Is this the peak of CBD, now that you’ve made it into the mainstream?’ I think for a lot of us, we’ve seen this tremendous growth over the last couple of years, but I think we’re just scratching at the surface. It’ll be interesting to see the innovation that happens in this space. Certainly, the other cannabinoids beyond CBD are interesting, and as more research comes out, I think there’s going to be more interest in exploration in that space—the CBNs of the world and CBGs. Those, I think, will also be a very interesting trend to follow as this all evolves.
CBT: What are some of the company’s shorter- and longer-term goals?
JH: In the short term, we’ve got several other national retailers that we’re looking to launch with in the coming months. We’re really excited about that and will be focusing on that. From a long-term perspective, we’ve been focusing a lot on our international expansion. We just opened up our European headquarters in the Netherlands. That will be servicing all of Europe. We are opening our Latin American office in Mexico City in the coming months to service the Latin American market, as well. So, from a long-term perspective, we’ve established ourselves as one of the top CBD companies in the United States, and now we’re looking to continue that trend internationally. We’re already in over 500 doors in Europe. In the United States, we’ve got 2,500 locations, so that brings the total to 3,000, and then we also have Japan, which we’re opening 24 stores with a chain called The Opal, which is actually found in all of the subway stations in Tokyo.
I think the other long-term goal for us is continuing with that innovation, as I was saying. We’re looking at CBD as this really powerful and special compound, but instead of just selling a CBD product, how can we include it with other powerful ingredients to get that ultimate factor and increased efficacy to consumers?
Editor’s Note: This interview has been edited for style, length and clarity.