KC-based CBD chain is booming, but its strategies are controversial
As a teenager, Vince Sanders watched his father go to prison. He dropped out of school and ended up serving time himself.
It makes an unlikely history for the 55-year-old founder of a fast-growing retail chain who owes his fall and rise to the cannabis plant.
Nineteen years ago, Sanders went to prison for organizing and financing a scheme to sell marijuana. Federal officials tracked it for five years and valued his take at $2.5 million.
“It actually was a lot more than that,” Sanders said recently, flashing a mischievous grin.
Few beyond family and close friends know about Sanders’ criminal record. He readily acknowledged his past during an interview, calling it neither a secret nor a “talking point” for the business he’s in now.
Sanders heads CBD American Shaman, the Kansas City, Mo.-based company he founded four years ago to market health-promising bottles of cannabidiol, or CBD.
CBD comes from hemp, which is a cannabis plant that has little or no tetrahydrocannabinol, or THC, the main psychoactive compound in marijuana that produces the high associated with the plant. Sales of CBD have been surging in recent years, and the industry gained a boost when the 2018 Farm Bill made it legal to grow hemp in the United States.
Sanders helped push for that change and to align state laws to accommodate hemp and CBD products through the U.S. Hemp Roundtable, on which he serves as one of eight board members.
“Personally, and for the industry, we’re big believers in second chances,” said Jonathan Miller, the group’s general counsel, who was unaware of Sanders’ marijuana conviction. He credited Sanders for “turning his life around, building a very legitimate and legal business model.”
That business model has put American Shaman stores in more than 30 states and garnered industry attention as a pioneer of CBD-specific stores. Most CBD operations have sold their products online or through other specialty health stores, drug stores and groceries.
Miller said American Shaman and similar businesses that have followed a brick-and-mortar path now have the rest of the industry thinking about CBD-focused stores themselves.
Sanders owns a group of companies that includes a franchising office at 2300 Main St. in Kansas City, manufacturing operations on Southwest Boulevard and a new hemp processing facility in Montana. Sanders said those businesses directly employ about 150 people.
Some CBD store rivals, who formerly did business with American Shaman, question Sanders’ tactics. They cite business practices that smack of retaliation. One rival said she felt “bullied” by American Shaman.
The extent of Sanders’ store network is difficult to pin down. He has claimed conflicting totals when asked how many American Shaman stores are open. And the company’s extensive list of “coming soon” locations includes several in the Kansas City area that aren’t intended to open at the addresses listed.
Other questions have been raised by American Shaman’s unusual reliance on former door-to-door vacuum cleaner salesmen, which has made it the target of a lawsuit in Ohio.
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Sanders grew up in Kansas City and said that, at times, he had a difficult life. His father struggled with problems that were exacerbated by drinking and had “drifted away,” Sanders recalled.
When Sanders was 15, a Kansas jury convicted his father of involuntary manslaughter. The charge sent Stephen Vincent Sanders to the Kansas State Penitentiary.
Sanders, whose full name is Stephen Vincent Sanders II, has described himself as a class clown who wasn’t into school. He dropped out of Southwest High School but said he later got his GED.
He married and became a father. The couple, now divorced, owned two homes in Kansas City and additional property in Overland Park. There also was a Corvette, a Mercedes-Benz and jewelry that included a women’s Rolex Chronometer.
Federal prosecutors said it was a lifestyle financed by illegal marijuana sales. Sanders’ guilty plea earned him a 32-month prison sentence, though he said he served only about a year. Prosecutors also sought forfeiture of $2.5 million, the alleged amount of Sanders’ ill-gotten gains, which he said they collected.
“Oh, I had it,” Sanders said.
Sanders said he has never held a paycheck job. Even as a teenager he ran his own auto detailing business — at a family-owned car wash at 77th Street and Wornall Road.
His other businesses manufactured an assortment of goods, from teeth whiteners and self-tanning lotions to male enhancement products and vape juice, or e-liquids, for electronic cigarettes.
Without an attentive father, Sanders said he became close to his mother’s uncle, Denny Van Tuyl, who was 11 years his senior. By Sanders’ account, Van Tuyl became something of a big brother or father figure to him.
It was Van Tuyl’s cancer that led Sanders back to cannabis — this time for the possible curative powers of CBD after traditional medicine seemed to fail his uncle. Van Tuyl died in 2012.
It’s a story Sanders tells often. Personal experiences with CBD are often the drivers of those in the CBD business.
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For Sanders, shifting from witnessing CBD’s promise to marketing CBD products came slowly.
For starters, there was that marijuana conviction in his past.
“There was a lot of hesitation and homework to make sure this is legal, right?” he said. “I talked to a lot of attorneys.”
Convincing others of its legality was nearly as painstaking. Sanders said he approached smoke shops, chiropractors, vitamin and health stores. Each store that carried his early American Shaman CBD products did so after extensive education about its legality and effectiveness, he said.
At that point, Sanders sold only wholesale. The chiropractors and shop owners were his sales force.
All of that changed when Brendon Hodgson came along.
Hodgson convinced Sanders that they could retail CBD directly and they opened The CBD Store at 18th and Oak in Kansas City. Sanders produced the CBD that the store sold under an Evolution brand.
It worked out, and Sanders said the city’s First Fridays were the key. The CBD Store held an open bar and pitched CBD while a captive audience waited for drinks.
A second store in Brookside, owned and run by two women whom Sanders said approached him with the idea, took a bit longer to succeed. After that, there was a third. More retailers followed, buying products from CBD American Shaman and reselling them to consumers.
The group grew to about 40 outlets when Sanders shifted to his current franchise business model.
That core business sells franchise rights to prospective store owners who are committed to buying CBD products from Sanders’ manufacturing company. All but six CBD American Shaman stores are owned by franchisees.
“He basically made his own customers with this franchise model. It’s really good,” said Cyrus Riahi, a Lenexa entrepreneur who briefly co-owned a store in Columbia, Missouri, and now operates rival Buddha Leaf stores.
Riahi said the franchising strategy has allowed American Shaman to dominate the Kansas City-area CBD market.
“I’ve only got two stores here in Johnson County, and they’re my lowest-sales stores,” Riahi said.
Sanders credited one of his early wholesalers with another strategy that accelerated the store count growth. It’s called an affiliate program.
Under that program, franchise owners who bring in another franchisee earn a dime for every dollar of product that recruits buy from American Shaman. They can get a similar deal for recruiting smoke shops or others to buy American Shaman products wholesale.
According to Sanders, the affiliate program is also why so many of his franchisees are former Kirby vacuum cleaner salesmen.
That idea came from Jason Todack, who had been a Kirby vacuum distributor. Todack said Kirby worked the same way, and it helped attract fellow Kirby salesmen to American Shaman.
Today, Todack owns only one store but said he earns between $15,000 to $25,000 a week from the affiliate program.
In its lawsuit, which was filed a year ago in Ohio, the Kirby Co. tells a different story.
It claims American Shaman poached 20 or more Kirby salesmen. The suit names Sanders, American Shaman Franchise Systems Inc.; its president Bud Miley, a former president of Kirby Co.; and two other individuals who had been at Kirby. Todack is not a defendant in the suit.
Sanders said American Shaman “hasn’t done any Kirby people” since the lawsuit was filed. He called the lawsuit ridiculous.
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Sanders’ shift from wholesaling CBD to organizing a network of CBD franchise stores did not sit well with some of his early retailers.
Trevor Burdett, who was recruited by Todack, bought American Shaman products and sold them under the American Shaman store banner before there was a franchise system. When American Shaman wanted him to convert to a franchise arrangement, Burdett complained that he had only a week to review the lengthy legal document.
“I had to sign a franchise agreement or they would stop selling to me,” Burdett said.
He concluded there were no benefits to becoming a franchisee. He dropped American Shaman and began setting up his own CBD stores called Sacred Leaf.
When Burdett sought to trademark his Sacred Leaf brand in June 2018, he found Sanders had beaten him to it by two months.
“That seems to be their go-to. If you cross American Shaman, they will file a trademark on your name and try to shut you down before you even get into business,” Burdett said.
Public records show Sanders trademarked “SUNMEDCBD” about three months before Florida-based SunFlora Inc. filed a trademark on “SUNMED CBD.” SunFlora, founded by a former American Shaman wholesaler, supplies SUNMED CBD products to Your CBD Stores through licensing agreements.
SunFlora acting CEO Marcus Quinn declined to comment for this story.
“He did it to us, too,” said Emily Christianson, whose CBD HempDropz brand Sanders claimed in a trademark filing in 2018.
Christianson, who previously bought American Shaman products wholesale, balked at the franchise offer and said she felt “bullied” by how American Shaman handled it.
She said the company set up an American Shaman franchise directly across from her CBD store in Springfield, Mo. The plan, she was told, was for it to “crush” her as a former wholesaler turned competitor.
Kathleen Wade, who opened that American Shaman Springfield store, corroborated that the plan targeted Christianson.
Wade said she already had leased space in a different location in Springfield, but Sanders required her to open across from Christianson’s store.
Sanders denied any such requirement. He and Wade agreed that they have other disputes, and Wade said she “walked away” from the franchising company.
Burdett, Christianson and Wade all said Sanders turned on them suddenly.
“I swear he was a good guy until he turned out to be a snake,” Christianson said.
Did Sanders intend his trademark-grabbing tactics to stop his former customers from becoming rivals?
“Perhaps,” Sanders said. “Every one of these people started with us. We spent an enormous amount of time and effort training them and teaching them this industry. How do we protect ourselves from that kind of thing happening?”
As for being called a snake or turning on people, Sanders chalked up those sentiments to the rough-and-tumble world of business.
“This is a competitive world,” he said. “If you want to play in a competitive league, then step up.”
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How well Sanders’ American Shaman is faring in that competition is difficult to say.
As a privately owned company — Sanders said he owns it all and has no investors — American Shaman does not disclose financial information publicly.
One large CBD company does report financial details. CV Sciences Inc. sold $16.8 million of PlusCBD consumer products during April, May and June, chalking up a profit of $1.2 million.
The San Diego-based company doesn’t operate its own stores or offer franchises. Instead, it supplies products to 4,591 retail stores “mostly in the natural product industry” but also to 945 Kroger stores under a deal announced in July.
American Shaman’s distribution map looks more like rival SunFlora, whose website lists 290 locations for Your CBD Stores in 32 states.
But American Shaman’s store map is a bit fuzzy.
In a March interview, Sanders said the company had “a little over 300” stores, that 100 were “building out” or “finding locations,” and that the count “would be at 400” in 60 days.
“They’re writing 50-plus new franchises a month,” he said on Dick & Loy’s Media & Marketing Mayhem podcast.
On June 26, the American Shaman website listed addresses for 244 open stores in 30 states. The same month, however, Sanders told KCUR’s Andrea Tudhope that there were many more stores.
“We had 391 stores as of yesterday, open,” Sanders said when interviewed on June 20.
In a subsequent interview for this story in August, Sanders said the website’s 244 store count in June probably was accurate at the time. The larger number he’d given to KCUR in June must have included stores opening soon, he said.
After reviewing company records, Sanders said there were 299 American Shaman stores open, an additional 295 stores with leases and in the process of being built for opening, and 352 more store franchises that had been sold but were still scouting for locations.
American Shaman’s website lists addresses for hundreds of stores that are “coming soon.” Often these addresses are not specifically where the store expects to be opened. The company often “pins” an address in the general area where a franchise is being planned.
American Shaman CBD products also are sold through retail stores in six states where the company isn’t yet set up to offer franchises.
Several times during the August interview, Sanders said things were happening fast.
To wit: He wants to offer tours at the factory on Southwest Boulevard. The company’s CBD processing facility in Montana is now up and running after a year of work. He’s promoting more regulation of the industry to drive out “bad actors.” He’s taking steps to get into the white-label side of the business, which would mean selling CBD products through other retail outlets but not under the American Shaman label.
American Shaman will be reserved for the franchise stores, which Sanders now said will number 600 in November.
“We want to be the biggest,” Sanders said. “We don’t want to be a boutique brand. If you think CBD, I want you to think American Shaman.”
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