Vince Sanders wasn’t the first person in the country to start a CBD business. And American Shaman certainly wasn’t the first company to start selling CBD products in brick-and-mortar retail stores.
But American Shaman developed a retail franchise model, backed by its own in-house brand of CBD products, that would be imitated, if not downright duplicated, by numerous competitors as the CBD trend began to sweep across the United States. If imitation truly is the sincerest form of flattery, the American Shaman CEO must have a lot of admirers.
American Shaman was launched in 2015, but the company didn’t open its first franchise until April 1, 2018. Today, there are about 365 American Shaman stores open throughout the country — 44 that are corporate-owned, while the rest are franchisees.
Sanders spoke with Marijuana Venture about his wealth of experience in the CBD space, how COVID affected American Shaman’s revenue, and where he sees the CBD industry headed.
Marijuana Venture: How did the American Shaman brand come together?
Vince Sanders: At the time, I had an e-liquid company, and I had a booth at a trade show in Las Vegas in March 2015. I rapidly — literally in a matter of weeks — threw together American Shaman. It wasn’t an e-liquid, so it deserved its own brand. And it just came together completely organically. In a very short period of time, my graphic artist literally came up with 90% of what you see today as our branding and marketing.
Everything we’ve done, we’ve been very light on our feet and very aggressive. It was doing things right and continuing to raise the bar on what we do, but the whole direction of the company, even to this day, is very organic, which is kind of amazing. I didn’t start out with this great plan of franchising stores.
It has a kind of higher-power type of feel to it, honestly. It’s been so much work and planning and two steps forward, one step back. To have a ride like this, you almost feel like winning the lottery. It’s hard to take credit for it.
MV: Were the retail stores part of your plan from the beginning?
VS: I never really had a desire to be involved in the retail end. I kind of prefer the manufacturing side, where I can stay in one location to watch everything and stay on it. When you’ve got stores flowing across the United States, it’s kind of hard to do. Retail is a large section of the business that requires a great deal of attention. But the more you do, the better you get at it, and we very well may continue to grow that side of the business.
MV: Why has the brick-and-mortar retail model worked so well for American Shaman?
VS: A huge percentage of our business is baby boomer, female, white collar, educated. They didn’t want to just throw a dart online because they’ve heard of CBD and want to try it. They want to understand it. They want to know how to use it and why they’re using it. And that’s where the store model works so well, and that’s why the stores look the way they do. With the wood and stone, they have a med-spa feel to them. When a 60-year-old woman opens that door, she needs to be comfortable.
If it looks like a head shop, she’ll let that door swing back closed.
MV: American Shaman is probably most well known for its retail chain, but you also sell CBD products online. How do the brick-and-mortar and e-commerce pieces of the business work with each other?
VS: I was worried early on that people would graduate from the stores to buying online once they were really comfortable with the products. What we’ve found is that doesn’t really happen. That becomes your CBD store, just like if you had a doctor or a lawyer or the person who cuts your hair.
What’s more amazing, because we keep good analysis on zip codes and where orders are coming from, is that the more successful the store is, the less leakage you see. With the top performing stores, you literally do not see any online orders in like a five-mile radius.
When you’re looking at today’s society, with the ease of ordering online, it’s shocking to me.
MV: With so many CBD retail chains popping up across the country, and CBD now being sold in a lot of grocery stores, do you think American Shaman benefited from a first-mover advantage?
VS: Being first to market was certainly a benefit in growing the company because we were the only game in town, and we’re still the most recognized name even though there’s more competition out there. We know that in order to stay ahead, we have got to continue to raise that bar and never become lackadaisical.
We’ve spent millions of dollars in advertising over several years and people are confident that it’s a high-quality product.
If you came in fresh, it’s just so hard to do that. Even if you had a lot of money, it just takes time to reach that market.
MV: Are you seeing market saturation in certain areas?
VS: Absolutely. It’s not that expensive to open a 1,500-square-foot store in a strip mall and buy some product to get open. So you started seeing mom-and-pops, you started seeing other CBD companies, as well as us. There is definitely some market saturation.
I think the other thing that has led to saturation was the passing of the 2018 Farm Bill, which I’m super happy about, but once it was clear and it was no longer any type of gray area, you had that green rush. Everybody rushed in. A million different CBD products. They’re in gas stations. They’re everywhere. By late 2019, there was a massive saturation of CBD products, but they weren’t moving, for the very same reasons we’d learned four years prior.
That kind of muddied the waters, and of course in 2020, COVID hit. That hasn’t been kind to anybody in retail; it’s certainly killed off a lot of businesses that were dying anyway, but it just expedited their deaths.
So I think you’re definitely seeing a clearing of that market. You’re going to see a lot less CBD in gas stations and smoke shops and that type of environment. You’re going to see more professional operators. As any industry matures, it’s boiled down to a handful of big players. I don’t care if it’s computers or cars or cigarettes, every market comes down to a few big companies.
MV: Obviously you’re going to be a proponent of the CBD-specific retail model, but what are your thoughts on the future of brick-and-mortar CBD stores? Can they remain viable when people have become more familiar with CBD and they can pick up their products at any major grocery or pharmacy chain?
VS: I think it’ll be a long time before the knowledge base is out there for people to just pick it up in the grocery store and get the real results that most people are looking for. Without somebody guiding you or taking the time to educate yourself, the vast number of consumers simply aren’t going to get the results they’re looking for.
I think it’s a long time before it really becomes a major supplement. How many years? I don’t know. Maybe that’s three years. Maybe it’s five years before there is a mass understanding out there.
The upside to us, because we have been around so long and we have cultivated these loyal repeat customers, is that I think we will continue to thrive in that market, for the same reason that our customers don’t go online even once they know how to take it and what to take.
Maybe our growth does slow down in three years, or maybe it even stops. We’ll find out. The key is always being diligent and paying attention and trying to keep your hands in the mix at all times to realize if the market’s turning. That’s what we’re constantly doing, multiple times a day. We’re talking to everybody from store owners to consumers. We’re always looking around at store shelves, seeing what’s going on.
The movement on grocery store shelves right now is almost nonexistent. I’m shocked by how slow it is. So I think it will eventually go up from where it is, to some degree.
MV: With COVID having such a major impact on retail all over the country, how did American Shaman do from a revenue perspective last year?
VS: Total gross sales were flat in 2020, actually just a little less than where we were in 2019. Global retail sales were just over $100 million in 2019. In 2020, we’re still getting our final figures, but I think we’re going to be just under $100 million.
But that was our first year that we didn’t double or quadruple sales year over year. That’s just the rate we grew. At some point, it’s hard to keep doubling. It’s one thing to go from $1 million to $2 million, or $5 million to $10 million, but $100 million to $200 million is an enormous leap.
We’ve been really cautious. We didn’t want to trip over ourselves moving too fast. Starting ’18 and even ’19, we were growing so rapidly that we tried to control our growth, and we were really going to control that growth even more in ’20, but the economy did that for us.
MV: A lot of people in the cannabis space point to the “Weed” series with Sanjay Gupta as being a turning point, where people on the outside of cannabis began to believe in its medicinal value. Has there been any sort of turning point moment like that that you’ve seen since starting American Shaman?
VS: Unquestionably, the “Weed” series has definitely helped. And that may be the originator, the catalyst, if you will. The whole idea of marijuana being illegal is, of course, we know, absurd. But now, 70% of the people polled in the U.S. are for total legalization. I’m sure there is not anything that 70% of the people agree on at this point in time. Even stuff like clean air and climate change, half the people think it’s false or not important.
I think 70% of the people agreeing is equivalent to 100% of the people agreeing 10 or 20 years ago.
And as marijuana becomes more and more legal, more and more people actually know somebody who’s benefited from using it. Nothing goes further than personally seeing something or having a close friend or family member telling you something. A friend or a loved one telling me something is equal to a thousand commercials about something.
MV: Where do you see the future of the CBD industry heading?
VS: I think a big part of the future is the minor cannabinoids and terpene blends. We make CBG and CBN products already. Those are big sellers. And we’re working with all kinds of different custom mixes and blends that we’re always trying.
We were also part of a large liver toxicity study, with 804 people, because liver toxicity was one of the big pushbacks by the Food and Drug Administration. We have to wait for the scientists to put the numbers together, but we’re well under any numbers that would suggest liver toxicity. And we’re getting some clearance on some other studies, including human trials, which we’ve been applying for for the last several years. The FDA would never even get back to us, but now all of a sudden, they have reached out.
So I think the future looks pretty bright.
This interview has been edited for length and clarity.