Pharmacy giant CVS Health Corp. has decided that the burgeoning market for cannabidiol, or CBD, is too good to pass up. CVS agreed this week to carry U.S. cannabis retailer Curaleaf Holdings' line of topical CBD products in about 800 of its stores in 10 states, and soon on CVS' website.
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"We've heard from our customers that have used those products [CBD] that it's helped with pain relief," CVS CEO Larry Merlo told CNBC. "We're going to walk slowly, but we think that this is something that customers are going to be looking for."
The agreement has the potential to grow, since CVS has more than 10,000 locations nationwide, but neither party commented on that possibility.
Curaleaf CEO Joseph Lusardi announced the deal during the company's fourth-quarter conference call this week, and said more agreements with other retailers are in the works.
CBD, which is derived from hemp, has no psychological effect when consumed, because it contains very little tetrahydrocannabinol, or THC, which is the psychoactive chemical in cannabis.
The most recent farm bill, which President Donald Trump signed in December, legalized CBD on the federal level, with some caveats.
Though testing on the efficacy of CBD has been sparse, the product has nevertheless grown in popularity recently as a treatment for various conditions, including pain, inflammation and skin conditions.
Curaleaf, which cultivates, manufactures and retails its cannabis products, has been expanding at a strong pace recently. Currently it operates 42 dispensaries in 12 states. According to Curaleaf Executive Chairman Boris Jordan during this week's conference call, the company plans to have 70 dispensaries open by the end of 2019.
"Five years ago, we set out to build the largest multi-state retail and wholesale cannabis business in the country, and we have met that objective," Jordan said. "We have gained the expertise to build more dispensaries faster and more efficiently than anyone else."
The company has been expanding through organic growth, as well as acquisitions.
Curaleaf reached an agreement this week to acquire Acres Cannabis, which has 269K SF of cultivation facilities and room for expansion on 37 acres in Amargosa Valley, Nevada.
Acres also has a 19K SF dispensary in Las Vegas that is open 24/7 and includes a marijuana farmers market every weekend, a museum devoted to cannabis, and an open-view test kitchen where customers can see the processing of edibles and extracts.
In October, Curaleaf raised about $400M when it went public in a reverse takeover, which valued the company at $4B.
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