A Small CBD Grower Inked a Huge Deal with Kroger

When Kroger, the largest supermarket and grocery store chain in the U.S., announced that it would start selling CBD in nearly 1,000 stores across the country, it took many by surprise that their partner in this venture was not one of the big names in the cannabis industry. Instead, Kroger selected Veritas Farms, an OTCQB stock that was worth $0.30 at the beginning of the year. Understandably, after the deal was announced, the stock has rallied to more than $1.40 amounting to a 345% increase.

The deal will see Veritas Farms, which operates a 140-acre hemp farm in Pueblo, Colorado, supply 945 Kroger grocery and convenience stores throughout the country with CBD salves, moisturizing lotion and lip balm.

“Kroger is a recognized retail leader, and we are excited to partner with them on this product launch,” Veritas Farms CEO Alexander Salgado says in a statement announcing the deal. “Their commitment further signals the growing importance of this significant new category for consumers and retailers.”

While from the outside looking in, this deal might seem like a lucky shot for VFRM, but the company also has deals in place with other major retailers like CVS Pharmacy, Neiman’s FamilyMarket and Bartell Drugs.

So, why is this small company so appealing to large retailers? The answer is Veritas’ small batch CBD and the transparency behind each bottle. Each bottle Veritas produces comes with a QR code that links to certificates of analysis done by a state-registered lab. As we have written about extensively, this level of clarity in production and level of quality is rare in an industry that is right now overrun with untested products filling shelves across the country.

This high degree of quality is most likely why Veritas reported a 361% increase in revenue from the first quarter of 2018 to the first quarter of 2019, rising from $331,416 to over $1.52 million. And while it’s unlikely that these big box stores are going to significantly increase sales for Veritas, the deal with Kroger will certainly boost brand name awareness for the company as CBD retailers can’t use popular marketing channels like Google, Facebook or Instagram.

“These national chain retailers have the ability to do so much more in-depth due diligence into the brands that they’re carrying from a quality assurance perspective, from a consistency perspective, Derek Thomas, VP of business development, told the Cannabis Business Times in an interview. So, when a consumer can go into a CVS or a Kroger, they know that the organization has just vastly more resources to ensure that that product is quality versus an independent retailer.”

Furthermore, the company has already created strong relationships with independent retailers across the country, which is really where the CBD industry is made.