Get ready for weed bath bombs, Urban Decay Eyeshadow in Kush and Cannabliss Organic Revitalizing Serum.
Medical marijuana may be facing regulatory hurdles across the U.S., but the beauty brands - from small organic store distributors to multinational beauty conglomerates - see a future in cannabis too big to ignore.
Blake Schroeder, CEO of Kannaway, describing his company's beauty line as an "entry way" product for new markets and more acceptable by the mainstream consumer.
Beauty "went from something we didn't talk about at all at in the company to this becoming a significant part of our sales," says Schroeder in an interview with Real Money. "As we continue to expand, this is a product that we can lead with that's going to have less regulatory issues than other cannabis-based products."
Last year, the beauty line represented less than 5% of Kannaway's business, until the company decided to refocus. The beauty segment shot up to almost 11% of the company's sales.
San Diego-based Kannaway, has six beauty products derived from cannabis, including a detox soak, a toner, serum and an exfoliant. It launched its first beauty product only 2.5 years ago and is fast becoming one of the early movers in the European space.
Kannaway is owned by a publicly listed company Medical Marijuana Inc. ( MJNA) , whose stock price didn't rise above $1 over the past five years.
On Wednesday, CV Sciences, Inc. ( CVSI) , a distributor of cannabidiol (CBD) oil and specialty products, said it's expanded distribution to 1968 stores, an 11% growth compared to the previous quarter.
CBD is primarily made from the male marijuana plant, typically also used to produce hemp. The female flowers include THC and have much more psychoactive properties.
The CBD market is projected to reach $1.6 billion by 2021, according to research from The Brightfield Group.
Given restrictions on research into the medical properties of cannabis, companies are figuring out new ways to reach new market segments.
An 'Entryway' Product to Mainstream
Schroeder says beauty is a "major part of our growth story, as we expand our company around the world."
Kannaway launched its beauty product line in Europe and now they can ship to all EU countries.
"People don't know about CBD and we get to explain; it's a real opportunity," he says, noting an early-mover advantage. "Not everyone understands that CBD is not psychoactive," Schroeder says. That's why the beauty line is "an entryway into the space and it's becoming more mainstream."
Increasingly, it's the beauty and lifestyle industry that is making embracing cannabis faster and is finding ways to cater to cannabis craze and growing demand.
Oscar winner and lifestyle guru Gwyneth Paltrow, renown for controversial new-age or overpriced items , is partnering with MedMen ( MMNFF) to curate a selection of products that will be featured in MedMen's retail stores.
Although her advice often receives mixed reviews and popular culture parodies, the company has been growing steadily in terms of its size, fundraising prowess and cultural reach. It grew from a newsletter to an events platform and its own beauty and skincare line.
As a priestess of luxury wellness, Paltrow has welcomed cannabis.
"It really has the potential to shift old patterns of thought and change lives, and I feel like we really could be on the precipice of something a lot bigger than we realize, scientifically," she told attendees at the In Goop Health conference in Los Angeles in June.
MedMed's new location along trendy Abbot Kinney Boulevard in Venice, Calif., will showcase a Goop-curated selection of products.
The first batch includes five lifestyle products, including a CBD patch, a vape pen and chocolate and tea.
"Cannabis as a consumer product is a fairly new phenomenon, medical marijuana has been in California for two decades," says Daniel Yi, a spokesman at MedMen. "You're seeing the emergence of products and retail brands today that in 5-10 years from now might be the Apples ( AAPL) , the Starbucks ( SBUX) , and the Lord & Taylors of the world."
Big beauty brands flirting with cannabis
Large cosmetics conglomerates are also eyeing the cannabis craze.
Kat Von D has a "Beauty Studded Kiss Crème Lipstick in Plan 9", a brand owned by LVMH Moet Hennessy Louis Vuitton SE ( LVMUY) . LVMH also owns Fresh, which has Cannabis Rose Eau de Parfum.
Beauty products with Cannabis-derived ingredients vary widely in price range, Pain Relief Lavender Rub from CBD for Life ($25) to IPekar's Sleeping Mask Infused with CBD Oil ($125).
"As it continues to be normalized and we'll continue to have favorable legislation passing, yes some of the bigger players are going to become involved," Schroeder says.
The investors are interested, too.
Jeff Howard, managing partner at Salveo Capital said the venture capital firm's focus is on ancillary companies that support the hemp and marijuana industry. Salveo is "very interested" in the CBD market and is always evaluating companies in that space, he said.
"We've only scratched the surface on applications for CBD," Howard said. "In the future, we'll see more health and beauty products, nutraceuticals and a whole host of things: we continue to look at that market."
Small players
While CBD attracts bigger players, others remain as small as a one-person operation and a range of players are entering the market in response to a growing interest in both cannabis and naturally-derived wellness products.
Holli Rovenger, based in Florida, said she has been developing a new Cannabichromene (CBC) product called O Yes Passion Muscle Rub for about $24 an ounce. She expects to start selling it in September off a website and through house parties.
"It's all about helping women feel better about themselves sensually and increasing their self-esteem," she said. "The idea is for women to be comfortable saying to your significant other, 'Let's try this' in the bedroom."
If estimates for both cannabis and organic, naturally-derived products will prove right, this segment of the cannabis market will continue to see double and triple-digit growth.
- Steve Gelsi contributed reporting to this article.
