With KC’s sprawling CBD empire, the science is still out, but the profits are rolling in
If you’d like to listen to the audio version of this story, check out the Streetwise podcast:
Kansas City might be one of the most crowded CBD markets in America. Its leading retailer, CBD American Shaman, might be the world’s second largest seller. And all of this cannabidiol might make us calmer, better rested, and less achy.
Or, maybe not. As with most of the claims circling around this burgeoning wellness industry, it’s kind of hard to know for sure.
A couple of weeks ago, I waded into the local CBD market. It’s a murky pool, so I focused on two questions: Why is there so much CBD in Kansas City? And does the stuff work?
For background, CBD, like the high-inducing THC, is found in the cannabis plant, of which one strain is hemp. In the 2018 Farm Bill, the U.S. Congress removed many of the restrictions on the sale, transport, and possession of hemp and its products, as long as the hemp doesn’t contain more than three-tenths of a percent of THC.
That opened up a universe of possibilities, which Kansas City has embraced in a big way.
My first stop is Green Grove, which I chose partly because it is the first CBD shop to crack the rarified environs of the Country Club Plaza.
Like other CBD shops I’ve visited in Kansas City, Green Grove has a spa-like vibe, with candles, plants, and kombucha on tap. Two big dogs are playing in the store when I arrive. The owner, Mike O’Hara, introduces the golden retriever as Hurley and the golden doodle as Finley. At age 12, Hurley is an avid CBD user, he says.
From perusing the Green Grove website, I know O’Hara describes himself as a lifelong entrepreneur. He started an insulation company in his 20’s, which he sold in 2017 and went looking for the next big thing.
“I wanted to do something that would build culture, have a positive impact,” O’Hara says. “This really checked all the boxes. Plus it’s a lucrative business. It’s set to grow substantially over the next couple of years.”
I am curious as to how someone gets into the CBD business. Do you need some sort of training or certification?
You don’t, O’Hara says. You find your own way. “We toured several manufacturing facilities all over the country and chose the best one that we could find,” he says. “That was about a six-month process.”
According to its website, Green Grove uses “proprietary technologies,” including “nanoemulsion,” which basically breaks down the size of the hemp particles to enable better absorption. Later, I will see other CBD companies in town use similar verbiage to promote their products.
O’Hara says the bulk of his business is internet and wholesale. He opened his store “to give us a name and a face.” Squeamish about hemp, Plaza management turned him down seven times before agreeing to lease him a space at 340 W. 47th St.
CBD can be consumed in a variety of ways, and Green Grove supplies most of them: tinctures, soft gels, vape, topicals, and gummies. O’Hara says he is partial to the gummies, and he pops a couple when he needs to feel “calm and focused.” The store offers samples, so I try a raspberry lemonade gummy. I’m not sure what it does, but it tastes delicious.
Like so much about CBD, its healing properties are up for debate. Because of a scarcity of research on humans, the market is racing wildly in front of scientific evidence.
That said, some studies do support claims that CBD, in high enough doses, can help with anxiety, insomnia, and chronic pain for some people. And although the FDA warns of a host of side effects, especially when CBD is taken with other drugs, for most consumers the biggest downside is the price. Medium-strength tinctures run in the $60 range in Kansas City, and I spotted a higher-strength bottle for $300 in one of the shops I visited. Topicals are also in the $60 range, and a month’s supply of mid-strength softgels cost about $85.
Products that purport to contain CBD are now available everywhere from boutique stores to gas stations. It supposedly can be found in coffee, cupcakes, cosmetics, even leggings. And there is no guiding authority for consumers to know what they’re getting. You have to study up on how to read labels, and be aware that the labels aren’t always accurate.
The best tip is to only purchase CBD products that come with a COA (certificate of authenticity), which means the product has been tested by an outside lab. Consumers can get test results by scanning a QR code with a smartphone, or find them online. The tests should reveal whether the product is accurately labeled, its cannabinoid profile, and the presence, if any, of heavy metals and pesticides.
“What the consumer needs to be aware of is not all of this stuff is created equal,” says Zach Allen. “There are a lot of bad actors out there.”
Allen is a co-founder of Hemp Haus, which has a store at 1708 W. 39th St. He started using a synthetic THC product more than a decade ago to combat the side effects of cancer treatments, and is a true believer in the value of CBD.
When I make a random stop at Hemp Haus, I find that Allen also brings his dog to work, an adorable 10-year-old poodle named Daisy. Daisy has separation anxiety and Allen carries her tucked under his arm the entire time I am in the store. If he needs to leave her, he usually calms her down with CBD first.
Hemp Haus doesn’t sell under its own label, but retails name brands like Ananda and Puffin Hemp. I look around expectantly for the gummy samples, but Allen says he doesn’t carry them. He’s marketing a health product and doesn’t want to spoil it with sugar and chemicals.
OK, I respect that. Hemp Haus is a serious business with a devoted customer base. Perhaps his biggest challenge, Allen tells me, is standing out in the crowd.
“It’s insane,” he says. “There’s more hemp per capita in Kansas City than any other place that I’m aware of.”
Even Dillards has gotten into the hemp business, Allen notes. “The department store?” I ask. “Yes,” Allen says. “Freaking Dillards!”
I check and see that Dillards is indeed selling a line of cosmetics with CBD. But by far the biggest reason for Kansas City’s saturated market is its location as the headquarters of CBD American Shaman.
Everyone has seen these stores with the multi-colored feather-like emblems. They’re tucked into strip malls and along the streets of business districts, more than 300 around the nation and at least 30 in the greater Kansas City area.
The stores are franchises of the company that Kansas Citian Vince Sanders founded just four years ago. He purchases hemp from farms in Kansas, Kentucky, and Montana and manufactures CBD products in a facility on Southwest Boulevard. As the company grows, it is experimenting more with specialty products, including a new supplement, CBNights, that “supports a health sleep cycle,” as Sanders puts it.
American Shaman is a privately held company. But Sanders tells me he recently opened up his books to Brightfield Group, a market intelligence firm for cannabis industries, and he’s expecting rankings to be released very soon.
“I believe we’re going to be number two in the world. Number one is going to be Charlotte’s Web,” Sanders says. “We should know in 30 days.”
That would be news if it happens. Less surprising is Sanders’ affirmation that he, too, thinks the Kansas City CBD market is saturated.
“It would be pretty difficult to find a decent spot here to make a living,” he said. “What’s kind of sad is because it’s a cannabis product you have this green rush mentality. People think, ‘All I’ve got to do is open a store and money’s just going to blow in here.’ I hate to see anybody lose their life savings or go out of business, but that’s really what you’re setting yourself up for.”
Those remarks will likely induce guffaws in Kansas City’s CBD community, where many people view Sanders as a ruthless giant looking to snuff out independents, especially those who try to break away from his empire. As KCUR detailed in a story last year, Sanders has been known to exact revenge on sellers who try to go out on their own by beating them to the punch on trademarks and opening franchises in close proximity to their businesses.
Sanders is unapologetic about the complaints. American Shaman invests a lot of money in recruiting, training, and promoting its franchisees, he tells me. To then use that expertise against the company is regarded as an act of aggression.
“We just say, ‘OK, now that you’re a competitor, we’ll beat you,’” Sanders says.
The giants of the industry, like American Shaman, may eventually overtake the market. But for now, even in Kansas City, there seems to be a spot for entrepreneurs and true believers.
The final CBD store I visit is the mothership franchise of Hemp Haven, at 20th and Main Street in downtown Kansas City.
“It’s a great industry. I’m very blessed to know the people,” says Danielle Friedrich, a co-founder.
Friedrich says CBD saved her after a tsunami of life crises struck when she was 29. “I lost my sister, went through a divorce, and found out I couldn’t have kids in a very short time,” she says. She took CBD to control anxiety and panic attacks and swears by the results.
Friedrich and her partner, Jay Humfeld, decided to quit their day jobs and go all in on CBD. They grow their own hemp on two farms in Missouri. “We’re learning about the plant before it ever gets to oil,” Friedrich says.
Hemp Haven has hired a nurse to educate customers and franchise owners. Besides the Kansas City store, it has six franchises operating at the moment. Friedrich says the market here is “the most saturated I’ve seen,” but she sees it becoming better, if not necessarily bigger.
“I think the dynamics of our industry are changing,” she says. “At first, everybody jumped. Now people are getting more educated. I love this industry. I love helping people.”
Does CBD help people? It’s difficult to spend time with someone like Friedrich and not come away thinking that it can.
As for myself, I purchased a trial package of two hemp softgels at Hemp Haus, popped one before bedtime, and slept blissfully through the night. And I rubbed some topical solution from one of the American Shaman franchises on my left thumb joint, which has been giving me trouble. It felt good for about a day. Maybe those things would have happened anyway, but they did coincide with my CBD experimentation.
After my visit to Green Grove, where I sampled a gummy and some oil, it struck me that I was feeling—as O’Hara had predicted—quite calm and focused. With an unexpected burst of energy, I drove to the self-serve and washed my car.
Was this a CBD rush, or just the effects of a rare burst of sunshine back in those innocent days before life as we knew it got canceled over the COVID-19 virus?
To repeat, it’s kind of hard to know for certain when it comes to CBD. But I’ll probably be back for more.