While cannabidiol, also known as CBD, is still somewhat new it certainly is making huge waves in the marketplace. CBD offers overall wellness, which many consumers are seeking. It is one of the key compounds found in cannabis and hemp plants, but these products have a 0.3% or lower level of THC. Which means you can reap all the benefits without getting the high feeling that traditional weed gives you. The CBD business opportunities continue to grow with the expansion of product offerings.
In this guide, we will discuss cannabinoids, products, and business opportunities.
What is CBD?
If you are looking to invest in the CBD industry then you probably already understand CBD inside and out. This section will serve as a review to help those who may be early in exploring the possibilities of marketing and selling CBD products.
There are hundreds of cannabinoids, which is the compound that is found in cannabis and hemp plants. One of the most known is tetrahydrocannabinol (THC), which provides a high feeling when smoking cannabis. However, CBD contains very low amounts of THC, and this is partly why it has become so popular among consumers.
Consumers are now able to get the wellness effects from CBD without the worry of becoming high. Plus, this is the one thing that has helped legalize CBD. According to the 2018 Farm Bill, all CBD products that contain less than 0.3% of THC are legal.
There are many steps involved when it comes to creating CBD products. It begins with raw materials that will need to be cultivated and harvested. Therefore, if you are using industrial hemp you would need to cultivate or purchase a substantial amount of the plant.
Next, the CBD oil is extracted from the hemp plant through various methods. This can be done in house or you can outsource this process to another company. Once the extract is completed you will be able to sell the concentrated oil or use it to create a variety of products. Product offerings include tinctures, infused edibles, smoking CBD, and topicals.
BDS Analytics predicts that the CBD market will hit $20 billion in sales by 2024 in the United States. Due to the popularity of the CBD industry, there are more and more people who are toying with the idea of launching their own CBD company. However, it is important to understand that this industry does not come without challenges, especially with the ever-evolving legalities that come with these types of products.
You will find CBD products just about anywhere you go, including gas stations, smoke shops, pharmacies, and retail stores. With the industry on the rise, trendsetters expect the market to see an increase in 2020 allowing for more availability of products both online and in brick-and-mortar stores. Online sales of CBD products currently account for 60% of the sales channel.
New product lines are occurring all the time. Therefore, if you are looking for CBD business opportunities, you will have your pick of a wide range of products to offer. Here are just some of the products the industry is offering at the moment:
- Tinctures – A tincture is simply CBD oil that is placed under the tongue, which allows the oil to be absorbed. It typically comes in a small bottle that has a dropper. This is by far one of the most popular forms of CBD.
- Edibles – CBD edibles are all the time growing. This market includes baked goods, butter, candies, and foods. However, these products are subject to significant regulations from the FDA but have currently remained a common food product offered in a variety of stores and online.
- Vape Concentrates – If you are looking to vape your CBD, then you are in luck. The industry has accommodated those who love vaping. These products include a variety of CBD oils and waxes that will need to be used with a vaporizer to be inhaled.
- Topicals – Products such as gels, creams, and sprays have all made their way into the market. Designed to care for aches and pains these products can be applied directly to the skin.
- Capsules or Tablets – If you are not a fan of consuming CBD oil, you do have the option to get your daily dose by taking a tablet or capsule.
- CBD Hemp Flower – If you like a more traditional way of consuming CBD, you can opt to buy CBD hemp flower and smoke it. You would roll it like you do a cigarette.
It is also important to note that there are various strains of CBD. Which opens up a world of opportunity when it comes to products. In addition, there is a market that is being newly explored, which includes CBD products for animals. These products are formulated to help calm your pets, such as dogs or cats. Just another avenue that you can explore when wanting to start your own CBD business.
How to Start a CBD Business
With so many unique opportunities within the CBD industry, there are many avenues that you can consider. With any business, it will take loads of hard work and effort to launch your company. This market has a level of uncertainty when it comes to the regulations of this industry. However, with all the expected growth, seeking a business opportunity in the CBD industry may prove to be well worth all the hurdles that you may reach during the startup phase of your business.
Understand and Comply with Laws and Regulations
On a federal level, hemp-extracted CBD products are legal. These products would be created with industrial hemp. All products that have a 0.3%THC level or lower are legal to sell. Once the THC level goes over 0.3%, it is illegal to sell.
When deciding to become a CBD retailer either online or in a store, you will need the following:
- Business License – You will need a corporation, as well as an EIN/TIN for your CBD company.
- Product Knowledge – Next you will want to explore your options and understand what each product can offer. It will also be important to know the process of extraction and development for each product.
- State Laws – If medical marijuana is not legal in your state, then you will want to be sure that you can sell CBD products that are derived from hemp. You will continuously have to keep your eyes on hemp laws in your state and make sure you comply with their regulations.
- Instructions – Work out all product dosing, packaging, and company terms.
Launching your company with a strong business plan and policies will help your business thrive. However, you will also need to come up with a strategy for financial support, as well as stakeholders. Here are some parameters you should consider when developing your business plan:
Products and Services
- Identify products that customers are looking for.
- Determine your target market.
- Identify your target customer market.
- Interest and demand by customers for CBD products.
Methods of Financing
- Determine all avenues of funding for your business.
- Determine your brand and set up your products.
- Design a plan that will boost awareness of your products and help you market within your demographic target area.
Planning and Execution
- Know your channels for strategic implementation.
- Explore digital outlets.
- Promote upcoming promotions and events.
- Set reasonable goals for sales targets.
- Ensure you stay on track to reach your goals.
You will want to go with a hemp supplier who offers high-quality products. This is true no matter the case if you are wanting to make your own branded CBD, or invest in reselling and distributing another brand. Here are some things that you will have to consider:
- CBD Source – While many European farmers have experience in growing hemp and have a good reputation within the industry, the number of US hemp providers has grown over the last several years. When hemp is cultivated in-house, you must know what farming methods are used. This will help you verify that all industry standards are being met.
- Certificate of Analysis (COA) – The COA report will determine the levels of THC, CBD, and other molecular compounds within any cannabis products. Each batch will have a COA report, which will reflect many components, including purity, percentages, and concentrations. To confirm the potency and purity of CBD products, you would want to have them evaluated by a third-party tester.
Your website will be one of the most important components of your business. More and more people are turning to the internet as a means of getting the products that they want. It is the most convenient way to shop and have things delivered right to your door.
CBD users are searching for products online, so you have to make sure that your website is accessible and user friendly. You will also want to make sure that it is optimized with a variety of search terms so that it pulls up in a Google search.
There are various platforms that you can use to create your website, such as WordPress or Shopify. If you are not tech-savvy, then there are loads of options when it comes to hiring a digital marketing company to take care of building you a website.
Always make sure that the content that you are putting on your website is compliant with state and federal laws. You also want to make it engaging for your customers and useful. It is a great idea to check out some competitors in your market to see what type of content they are providing their customers.
Updating your website continuously with fresh content will entice customers to return often. It will also help search engines learn more about your business and what you have to offer. You will need a strong SEO strategy to improve your website rankings and move up in search engine results. This will help you reach more customers and quickly grow your business.
Establish Your Brand
With the creation of your website, you will also want to consider all aspects of your brand. It will be important that you identify your brand so that you can easily market it. You will want to think about your company’s name, logo, and color scheme. These are all things that will stick out in your customer’s minds. They may not always remember a name, but a logo can help them quickly identify your brand.
Everything that you do in your business you will want to make sure that it surrounds your brand. You want to concentrate on brand awareness, as this will help customers become more familiar with your products, what you offer, and who you are.
Be sure that you continuously update yourself on the knowledge of CBD, as your customers will have loads of questions to ask you. You want to offer them the best customer support, as well as high-quality products. Be sure you never make medical claims when it comes to CBD products, but offer your customers information and products to help improve their overall wellness.
People who feel comfortable reaching out to a company with a question and receiving an answer will more than likely do business with you again.
Not only is your website important, but you also need to have a good presence on some social media platforms. You can think of these platforms as free advertisement. You will be able to easily engage with your customers and offer your products. Plus, you can promote upcoming events or sales.
Not having a social media outlet is a bad idea for any company, as most people are a part of some type of social media. It does not matter which platforms you choose, just make sure that you stay active on them. Customers want to see active businesses. The worst thing you can do is have a business page on social media and never use it.
Challenges For CBD Businesses
The CBD and cannabis industry has some unique challenges that other industries do not. Most of them fall under the regulations and guidelines set by the federal government and state laws. Here are some things that may pose a challenge when seeking a CBD business opportunity:
- Banking – Being able to access a reliable banking service may be somewhat complicated because of the regulations within the CBD industry. Many banking institutions will be hesitant about doing business with CBD or cannabis companies, as they consider it a risky industry. Many CBD businesses experience abrupt closures of merchant accounts or have to switch banks, which can lead to a disruption in your business operations.
- Insurance – Affordable insurance can be tricky when owning a CBD business, as it is flagged as a high risk. Even though industrial hemp is legal, insurance prices are very high.
- Payment Processing – Secure payment processing is a must in any industry, but CBD businesses may find that they are charged high fees when it comes to processing.
- Capital – Lenders are more reluctant to fund CBD companies, as the industry is viewed as a risk. Many CBD businesses are having to rely on outside investors or alternative lenders to help grow their capital.
As the industry continues to grow, these challenges will dissipate. It will be easier to validate businesses who are offering products that have been legalized for several years. Plus, other professionals will become more educated about the industry and it will pose as less of a threat. It is always good to go into this type of business with a backup plan, as this will save you a lot of time and money.
CBD Business Opportunities
There are many CBD business opportunities, but you have to understand what it will take to get your business off the ground. It is one of the fastest-growing industries in the nation, and the continual growth will only strengthen future opportunities.
If you are looking to start your own CBD business, we offer wholesale opportunities. Reach out to us and we would be happy to go over any questions that you may have, as well as walk you through the steps of becoming a wholesale distributor with our company.
Does CBD oil smell like Weed? Check out our blog for the answer.