Cannuka, a brand combining CBD and Manuka honey that was an early mover in CBD beauty, has shuttered.
The closure, which was announced via Instagram on Dec. 22 and is being communicated to consumers on Cannuka’s website, comes a little over two years after beauty and wellness company Better For You Wellness’s Letter of Intent, or LOI, to acquire the brand for an undisclosed amount. The acquisition was never completed. Married entrepreneurs Michael and Kelly Bumgarner launched Cannuka in 2017, and it subsequently entered 1,500 retail doors, including Ulta Beauty, Neiman Marcus and QVC, in the United States and United Kingdom with bestsellers such as CBD Calming Eye Balm and CBD Cleansing Body Bar.
BFYW was among a string of special purpose acquisition companies (SPACs) established from 2020 to 2022. Others are Hims & Hers, The Beauty Health Company, Powered Brands and Waldencast Acquisition Group. Due to its size, BFYW is characterized as a “micro-SPAC.” In September 2021, it secured around $30 million in funding to fuel acquisitions of companies generating $1 million to $15 million in sales in categories it calls appearance, health, nutrition, sleep, fitness and mindfulness. Along with Cannuka, BFYW had an LOI with OEM skincare supplier Ironwood, Ironwood’s glacial oceanic clay range NENA Skincare and Mango Moi. The Mango Moi acquisition was completed while the Ironwood acquisition was not. BFYW also acquired natural soap maker Better Suds and The Ideation Lab, which has The Jordre Well and Stephen James Curated Coffee Collection under its umbrella.
As part of its agreement with Cannuka, BFYW began offering sales and merchandise guidance to the brand. It helped take Cannuka from $30,000 in sales to around $500,000 in 2018 and $3 million in 2019. Stephen Letourneau, chief brand officer at BFYW, says, “I was fortunate to get involved and start overseeing the reformulation of the brand in conjunction with Michael Bumgarner. We had the first national retail launches for any CBD brand. We were the first CBD brand in Ipsy through a lip balm launch, the first in Neiman Marcus and then Ulta was the big break. We launched in all doors, and they normally don’t do all doors.” He notes there were a number of companies looking to acquire Cannuka upon its “meteoric success.”
Pandemic-related retail closures hit many emerging beauty and wellness brands hard, but they were especially difficult for Cannuka because, as a CBD brand, it faced advertising and payment processing hurdles that impeded its direct-to-consumer business—a channel other beauty brands were able to focus on as soon as stores closed. Additionally, some of the brand’s national retail partners declared Chapter 11 bankruptcy in late 2020, nullifying significant outstanding invoices. The brand had a vegan, CBD-free range in the works that never came to fruition.
Letourneau says, “We run at about 97% retail brick-and-mortar, so with COVID came a pretty significant hit to the bottom line.”
“I wouldn’t be surprised to see it come back in the future under a new iteration.”
Following the federal Farm Bill that legalized the hemp trade in 2018, there was a “green rush” that kicked up a CBD beauty frenzy. That frenzy has cooled considerably in recent years. To stay afloat as CBD beauty waned, beauty and wellness brands like House of Gro, Foria and Wldkat launched CBD-free product ranges or removed the cannabinoid from their formulas altogether. Despite the move and securing distribution at Target and Ulta Beauty, Wldkat still shuttered last year.
Wellness-focused CBD brands have fared a bit better. While Lord Jones, which initially became popular for its CBD gummies and pain roll-ons, shuttered its American operations in June last year, it subsequently traveled to the Canadian cannabis market. In 2021, Sagely Naturals, another early mover in the CBD topical space, was acquired by wellness company HempFusion Wellness Inc. Its business later went on hiatus, but was reignited in December last year.
In 2022, Equilibria acquired CBD marketplace and wellness brand Fleur Marche. In October 2022, Amanda Goetz, founder of House of Wise, disclosed via Twitter that the CBD women’s wellness brand was acquired by a “leading cannabis marketing firm.” In December 2022, CBD beauty and wellness brand Prima acquired fellow hemp specialist Prospect Farms to form the platform Uplifter Brands. In May 2023, Prima co-founder Christopher Gavigan shared on LinkedIn that the company had been acquired. No further information was provided.
Although BFYW has stepped away from Cannuka, Letourneau discloses the company is in active conversations with potential suitors about a possible sale of the brand. He says, “Does it come back or does it come back newly evolved? I wouldn’t be surprised to see it come back in the future under a new iteration.”
Letourneau remains bullish on the future of CBD as a beauty and wellness ingredient, particularly as new regulations like the Modernization of Cosmetics Regulation Act (MoCRA) require cosmetic brands to step up their rigor around product claims. “CBD brands have had to do that from the jump,” he says. “They’ll be one of the sectors of our industry that have already been operating and already understand the expense of that testing and will really be pushing a high quality product out.”
