The CBD market is undergoing exponential growth. Many are clamoring to understand this magical golden oil, and word-of-mouth marketing has people buying CBD oil for everyone from grandma to the family dog. If you’re thinking of joining this fast-growing CBD industry, read this introduction to starting a CBD business in 2019.
How to Monetize CBD Oil
While CBD oil can be sold on its own, it’s also an incredible addition to existing products. Innovative entrepreneurs add CBD oil to foods, lotions, cocktails, and anything else they can imagine. Diners enjoy recipes made with CBD oil, coffee-lovers can get a shot of CBD in their java, and massage oil infused with CBD adds extra pain relief to an already soothing experience.
As with any evolving business model, regulations are still being drafted. Because CBD is still shrouded in mystery, many people get into business before understanding the basics.
CBD Basics: What You Need to Know to Begin a Successful CBD Business
People use CBD oil to treat many ailments, including
- Pain and inflammation
- Cancer symptoms such as nausea
- MS symptoms including muscle spasms
- Cessation from stronger drugs, including opiates
CBD oil is legal in every state, however the Food and Drug Administration (FDA) has not approved CBD oil as a medicine. As of the writing of this post, the FDA continues to test the effects of CBD oil. As a CBD business owner, it’s important to not market CBD oil products as medical drugs.
CBD Business Challenges
Some people are turned off from CBD because it’s associated with marijuana. Part of running a CBD business will include educating your potential customers on the difference between cannabidiol (what CBD is made of) and tetrahydrocannabinol (the chemical in marijuana that makes people feel high). CBD oil is made from a part of the plant that has no psychoactive effects, but many aren’t aware of the difference between the two, and that poses challenges for new CBD business owners.
Learn how to talk about CBD oil. People stay away from CBD oil because they don’t really understand it. Use what you learn to explain how CBD oil can help people live better lives. Get personal. Understand the different CBD benefits so you can help people combat their ailments with a natural product.
As more people understand that CBD includes all the benefits of the cannabis plant without the psychoactive effects, they are more willing to purchase it, use it, and tell their friends. It’s a matter of education, and if you plan to start a CBD business, you’ll want to put strategies in place to educate your customers.
Risks of Starting a CBD Business
There are several risks involved when it comes to operating a CBD business.
Laws and Regulations for CBD Businesses
Selling CBD products is considered a risky business because of the federal government’s stance on marijuana. Numerous organizations and activists are trying to reform cannabis laws, but this uncertainty adds some risk to opening a CBD business. As the laws regarding marijuana and hemp use in the United States are still being written, operating a legal CBD business can be tricky.
Hemp-extracted CBD products are legal in all 50 states, as well as federally, as long as they are produced from industrial hemp and THC (tetrahydrocannabinol) levels remain below 0.3%. CBD produced from marijuana (instead of hemp) has a much higher THC level, so it is still considered illegal in states where cannabis is criminalized.
Before you start selling CBD products, investigate the laws in your state. Plan to operate online? You’ll also need to investigate the laws for online sales to other states.
Bank and Payment Processors
Due to the risks inherent in the emerging CBD industry, many banks and payment processors are hesitant to work with merchants. You may require a high-risk merchant account to handle money associated with a CBD business. There are very few merchant options available, and many online businesses are resorting to echecks as the only accepted form of payment.
Create a CBD Business Plan
Just like any other business, CBD-minded entrepreneurs should write a sound business plan that examines the benefits and risks of entering the industry. When writing a CBD business plan, take into consideration how current laws could affect your plans so you can mitigate risk.
Additionally, learn or team up with someone who knows how to process payments and market CBD-related products. Much like a traditional business, CBD business owners need to establish solid branding. They also need to consider where they will source their products, how they will store it, packaging and any necessary distribution methods.
Put a plan in place ahead of time so that you can see success in starting a CBD business.
Tips for Entrepreneurs Interested in Marketing CBD Products
Despite the risks, smart entrepreneurs are rushing to add CBD products to their businesses as laws change and sales channels open. The numbers show that customers are interested in the benefits. Each year, more states legalize medical and recreational marijuana use, making cannabis, hemp, and CBD products a potential cash crop for forward-thinking entrepreneurs.
The key to starting a CBD business is education. Attend workshops, conferences and seminars to stay on top of this rapidly changing industry. CannaCon is the best B2B cannabis convention and is coming to your region! Mark your calendars for CannaCon Northeast Aug. 23-24, 2019 and CannaCon South Sept. 27-28, 2019. Register now so you don’t miss a thing!