The wellness industry is robust, and marijuana is gaining mainstream attention and acceptance. Starting a CBD business makes sense in this climate.
Cannabis companies cater to people wanting to know more about seeds, purchase weed brownies, find hybrid strains: you name it. Sellers who prioritize caution, transparency, and reliability are the ones who profit.
How do you ensure your company is among them?
Join us to discover the prospects within the CBD industry, specifics you should consider, and steps to a seamless launch.
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Is CBD Profitable?
Cannabidiol (CBD) is a natural, non-psychoactive compound in cannabis plants. It induces pleasant feelings and may aid various health troubles and general wellness.
This substance’s growing in popularity and variety, with numerous demographics exploring the countless CBD product forms. According to estimates, the US market may reach $20 billion by 2024.
With the federal approval of hemp-derived CBD and state-by-state legalization of cannabis, manufacturers are profiting from the industry. Expert marketers and educators capable of changing opinions and boosting acceptance are in high demand, too.
Entering a profitable industry can be a double-edged sword, though. On the one hand, you may reach millions of customers. On the other hand, numerous entrepreneurs feel the same, making the endeavor highly competitive.
Let’s see what makes the existing CBD brands successful and what you can learn from them.
Traits of Successful CBD Brands
The best CBD products can withstand the scrutiny of regulators and educated consumers. Brands may achieve this status by making careful manufacturer choices, doing third-party testing, and relying on science for their claims.
It’s also a good idea to pursue certifications. FDA facility registrations, Good Manufacturing Practices, and USDA organic labels instill consumer confidence.
Marketing is an extra layer of brand success.
Celebrity brands and those cooperating with existing companies have more initial visibility. Even without a jumping-off point, top players have creative ads and capture attention without causing drama.
5 Tips for CBD Businesses
Cannabidiol can be a tricky niche to enter if you’re unfamiliar with business or cannabis. Here are some CBD-specific tips to keep in mind as a new name in the industry.
1. Respect Your Legal Limits
The 2018 Farm Bill legalized CBD, but the industry has significant regulatory considerations. The Food and Drug Administration (FDA) governs all cannabis-derived products under 0.3% THC.
CBD currently sits in a legal gray area, but the FDA has one clear regulation. Marketing the products as surefire cures isn’t tolerated.
Don’t devise your brand and marketing strategy around the proposed health benefits. Be transparent about the existing research and what CBD may do without claiming it can do anything. Also, keep abreast of the newest FDA regulations.
2. Know Your Niche
Reaching every prospective CBD customer in the US is impossible. This substance comes in multiple forms, like vapes, edibles, cosmetics, and ointments for parents, students, and pets. Since you can’t cater to all, determine a focus based on your niche.
Figure out your target market and design your brand around their preferences. The demographic determines everything from product form to marketing.
For instance, parents may not want to vape in front of their kids, so a family-oriented brand may sell oils. Colorful packaging appeals to quirky Millennials, but business people might prefer sleek designs. Blogs for moms, TikToks for young people, no-nonsense approach for B2B, etc.
3. Develop Organic Marketing
Learning how to start a CBD business entails understanding cannabis-related marketing, which is often problematic. Laws limit traditional advertising, and social media heavily flags it. Organic and word-of-mouth strategies are your bread and butter.
Keep this limit in mind from the ideation stage. Local campaigns and micro-influencers are great for CBD, so research your town’s cannabis attitudes and local internet personas.
It’s also vital to identify your competitive advantage. What makes you different from other brands? You can’t pay your wаy to prominence, so find a way to earn it.
4. Start With Enough Capital
Finding lenders and investors to support CBD startups is tough. Banks still view the industry as too risky, and entrepreneurs often rely on bootstrapping.
How much money is needed to start a CBD business?
Estimates say that CBD entrepreneurs can expect to invest upwards of $70,000, but that depends on your goals, location, and scope. Six-figure investments may be more realistic.
The heftier costs include:
5. Plan for Challenges
Bureaucracy troubles most entrepreneurs, and CBD has double the red tape. Besides finding financing, common challenges on this front include:
These struggles will likely ease as the industry grows and gains mainstream acceptance. For now, stay adaptable and develop plans B and C ahead of time.
Starting a CBD Business: Step by Step
Once you think through the tips from above, it’s action time. Let’s see how to get into the CBD business step by step.
Step #1: Create a Business Plan
Jumping into a business without a solid structure may make you overlook potential obstacles. A plan helps you navigate regulatory policies and market demand and make savvy decisions.
Here’s what it may include:
Step #2: Manage the Paperwork
You don’t need a federal license to start a CBD business online, but your state may issue specific permits. In either case, it’s the moment to form a business entity.
Vendors who get CBD from wholesalers need a resale license, and those who sell edibles also require specific food permits.
Once you have a business, you need a CBD retail merchant account. This bank account lets you accept credit card payments for cannabis products. They’re relatively rare, but several US banks offer the service.
Step #3: Find a CBD Supplier
Unless you’re starting an independent hemp grow op, you rely on third-party manufacturers for your CBD. Finding a quality source can define you as a brand.
Reputable wholesalers offer certificates of analysis with detailed chemical content, ensuring your operation stays federally legal (under 0.3% THC). They also guarantee you’re not pushing fake products with little to no CBD.
Other tests you can get from these manufacturers are for safety purposes. Brand reputability grows if you can promise products free of bacteria, mold, pesticides, and residual solvents.
Step #4: Design Your Brand
Creating a brand is a multi-step process that establishes a memorable company identity. It hinges on your product or service and who you’re selling to.
Consider the visual, voice, and value aspects of your brand identity. Incorporate them into your blog, messaging, and naming for the best results.
Most importantly, choose a catchy CBD business name and website/packaging color scheme that appeals to your target demographics. Hiring professional designers pays in this step.
Step #5: Build a Platform
Your tech infrastructure affects your success rates among online shoppers. Even physical stores need an online alternative in the modern era, so don’t skip this step. CBD’s opaque regulatory status limits your options, but there are still several good ones.
We suggest BigCommerce, Shopify, or Shift4Shop for American manufacturers. These hosting platforms have site builders, too.
Design your shop around your brand identity, making it smooth and search-engine friendly. Add photos, descriptions, and keywords to facilitate the SEO side. Incorporate reviews and customer support into the overall design.
Thriving In CBD
Approached correctly, starting a CBD business can be a massive opportunity. The industry is among the fastest-growing in the nation, and the time is ripe to jump on the bandwagon.
Aspiring company owners should practice a combination of due diligence and creativity. Double and triple-check everything, leaving no loopholes in the plan. With the foundation steady, feel free to get playful and add a personal touch to this colorful market.
You may also buy seeds to grow weed and privately familiarize yourself with the plant and its derivatives. You can’t have too much knowledge to profit in this industry.
Kyle Kushman is an American writer, educator, activist, and award-winning cannabis cultivator and breeder specializing in veganic cultivation.
He is a representative of Homegrown Cannabis CO company, has been a contributor for over 20 years, and has taught courses in advanced horticulture at Oaksterdam University in Oakland, California and across the United States. Kushman also hosts a cannabis podcast called “The Grow Show with Kyle Kushman”.
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