Retail

Weed company Green Growth Brands to open CBD shops in malls across US, as Barney's adds 'cannabis lifestyle shop'

Key Points
  • U.S. mall owner Simon is about to open more than 100 shops selling products infused with CBD. 
  • It's partnering with Ohio-based cannabis firm Green Growth Brands. 
  • Department store chain Barney's is also opening a cannabis shop in its Beverly Hills location. 
CBD buds of chocolate by Chronic Candy are displayed at the Big Industry Show at the Los Angeles Convention Center, Aug. 31, 2018
Richard Vogel | AP

The biggest mall owner in the country is about to open more than 100 shops selling products infused with CBD, short for cannabidiol.

Simon Property Group on Monday said it was partnering with Ohio-based marijuana company Green Growth Brands to open 108 locations selling CBD products this year at Simon's U.S. malls, which include Roosevelt Field Mall in New York and The Galleria in Houston.

"We are constantly on the lookout for cutting-edge new concepts," John Rulli, president of Simon Malls, said in a press release. "We are committed to adding new and dynamic retailers and uses to our shopping destinations, and the GGB shopping experience is exactly the type of innovation our customers want and expect from us."

The two companies said the first location will open in March at Castleton Square Mall in Indianapolis. The others are slated to open later this year. Thanks to this partnership, GGB said it will be able to open more shops under its Seventh Sense Botanical Therapy ("Seventh Sense") brand for CBD-infused body care.

Peter Horvath, the CEO of GGB, told CNBC the company is already in talks with five other major real estate developers and plans to have 300 locations open (including the 108 with Simon) by the end of 2019. "The mall developers ... are in the business of renting space. They need more food and personal care and less clothing," Horvath said. "We fit into one of the categories that's growing. That's not an accident."

For GGB, the deal will help the cannabis company raise more awareness about its brands and promote education around the booming, albeit controversial, CBD industry at large. The increasingly popular compound, which comes from the cannabis plant, promises to deliver the calming benefits of marijuana without the high that comes from THC.

Most CBD was legalized in December when President Donald Trump signed the farm bill. However, Food and Drug Administration regulations still prohibit CBD from being added to foods and drinks, which could present some hurdles for restaurant owners already selling it in coffee and cocktails.

For Simon, landing GGB as a national tenant will help the landlord fill empty space at its properties. Mall owners have been struggling in recent months to fill storefronts, as brands such as Gymboree and Sears go bankrupt and shut stores or, like Gap and Victoria's Secret, scale back their real estate. Simon has been turning to non-retail tenants like apartments and hotels to fill that empty space.

Also on Monday, luxury department store chain Barney's said it will be opening a "cannabis lifestyle shop" in its Beverly Hills store next month, promising more locations to come. The retailer said the space, known as "The High End," will sell an exclusive vaporizer pen, pastilles and other CBD-related items.

"This is not a pop-up, [it's] not a temporary space," Barney's creative director, Matthew Mazzucca, said. "It's a category that we are embracing and getting behind."

— CNBC's Angelica Lavito contributed to this reporting.

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