Your 2020 Guide to CBD Business

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If you are an entrepreneur then you already know business opportunities do not knock at your door, rather you grab them even before most realize their full potential. Although you can recognize the risks associated with starting a new venture in a comparatively new industry, you can clearly see the rewards afterwards. If you have a look at CBD market growth over the last few years, it gives you a clear indication of enormous CBD business opportunities.

With a Compound Annual Growth Rate (CAGR) of 22.2%, the CBD market is anticipated to grow as a 23.6 billion dollar (USD) industry by the year 2025[1]. As an entrepreneur, you analyze the data and set up plans to execute that will eventually help you reach your business goals. From your observation, you can easily realize that it is an ideal time to launch your own CBD business.

In order to become successful in any industry, you have to face challenges and the same is applicable for your upcoming CBD business. The information we are about to share with you might smooth the journey for you more or less.

Things You Need To Know Before Starting Your CBD Business

Your journey towards launching a successful CBD business starts with gathering knowledge and information related to the industry. CBD market is still unregulated and as a matter of consequence, there are fraudsters like you will find in any other industry. In some states, CBD products are in the legal grey area. So you must learn the dos and don’ts related to this industry.

CBD Business Facts

Cannabidiol shortly known as CBD is a compound naturally found in Cannabis sativa plants. It is one of the many derivatives you can find in the Cannabis plants. Some other derivatives of Cannabis plants are THC, CBG, CBN, CBC, etc.
THC is the psychoactive compound and is the most popular compound in the medical marijuana community.
While Extracting CBD from Cannabis plant it is common to have a trace amount of THC along with other Cannabinoids.
CBD extracted from the Marijuana plant can have a higher level of THC content than that of Hemp derived CBD
2018 Farm Bill legalized the cultivation of hemp and hemp-derived products. As a result, CBD extracted from industrial hemp is now considered legal all across the USA
If a CBD infused product contains no more than 0.3% THC it is considered legal in all states. But if the level of THC in a particular product surpasses that amount of THC, it will be considered legal only on those states where medical marijuana is legal and might require a prescription for legal purchase.
CBD extraction process plays a vital role in determining the quality of the end consumer product. CBD can be found in various forms like CBD isolate, Full Spectrum CBD, Broad Spectrum CBD, etc. CBD isolate is the purest form of CBD that contains just Cannabidiol.
Some manufacturers offer CBD in nano water-soluble form which ensures maximum bio-availability.
In order to launch your CBD products from seed to shelf, you need to utilize 3rd party providers that will take care of extraction and manufacturing.
Partnering with white label CBD manufacturers can help save you time and money.
A private label CBD company can serve you finished goods with your own branded label and thus you can enter the market with minimum investment.

Identify the Demands in CBD Market

According to BDS Analytics and Arcview Market Research, the leading cannabis sales data researchers, the cumulative CBD product sales in the USA will probably surpass 20 billion USD by the year 2024.[2] And there is no wonder why. CBD as an ingredient has penetrated into a vast array of industries including but not limited to the following:

Pharmaceuticals
Food and Beverage
Cosmetics
Healthcare products
Pet products
Skincare products

Cannabidiol has found its way in repetitive headlines from major news publishers, as anecdotal belief suggests that CBD can be used for:

Stress Relief
Treatment of Anxiety and Depression
Pain Mitigation
Diabetes Prevention
Alleviation of Cancer Symptoms
Acne Reduction

Besides, marketing initiatives from industry insiders, promotion from social media influencers, and growing application areas have made CBD the latest consumer trend. People falling to buy products containing CBD because of the therapeutic benefits it has to offer. As a result, mainstream retailers like Walgreens Boots Alliance, CVS Health, and Rite Aid are now offering CBD infused products to their customers. Apart from sales generated through cannabis dispensaries and mainstream retailers, CBD generated an exploding amount of online sales through CBD eCommerce websites. In fact, CBD e-commerce sales account for 60% of the overall sales channels.

Identify the Hot Selling CBD Products

The next logical step towards the successful launch of your CBD business is to identify the hot selling CBD products. In 2018 FDA approved Epidiolex, a CBD based pharmaceutical product for the treatment of seizures. The acceptance of CBD infused products for medical and wellness purposes is increasing rapidly. It is believed that CBD has antioxidant, anti-aging, and anti-inflammatory properties. Maybe that’s the reason for the rising demand of CBD infused cosmetics and personal care products.

You can commonly find CBD as:

tinctures
oils
capsules
concentrates
soft gels

in dispensaries, pharmacies and online stores. Topical forms of CBD include:

lotions
salves
balms
lip balms

The popular edible forms of CBD are:

gummies
chocolates
coffees
candies

Meet The Legal Issues Related To Your CBD Business

CBD regulatory landscape is changing in course of time. What does it mean to your CBD business? It means you have to comply with the rules and regulations set by the state and federal government. Hemp cultivation is now legal all across the USA. Thanks to the 2018 Farm Bill. It essentially unlisted hemp and hemp-derived CBD products from DES’s controlled substance act. However, the FDA is overseeing the CBD market.[3] The organization has set some dos and don’ts that you need to follow while trying to establish your CBD business.

Some key points to note here are:

CBD derived from Hemp is federally legal to sell. As hemp-derived CBD contains less THC. Tetrahydrocannabinol or THC is the compound that creates the high. Medical marijuana users need prescriptions to obtain THC enriched marijuana products. And it is only legal in states where medical marijuana is legal to sell.
CBD can be derived from the marijuana plant. But marijuana-derived CBD contains a higher amount of THC. The legal threshold of THC in any CBD products is 0.3%. If any product contains more than that, it is federally illegal to sell.
According to the FDA, it is illegal to market CBD as a dietary supplement either by labeling so or adding it to a food.

Set Standard Operating Procedure (SOP) for Your CBD Business

The rules of success for your CBD business is quite similar to any other business you might have launched. You have to take some extra precautions to meet the legal landscape regarding CBD products that you are going to offer to your target market. The market is growing exponentially. It might get saturated. But one thing that matters the most is your brand’s promise to its customers. If you do not comprise with the quality of your products, they will stand out eventually. They will solve the problems of your customers and in return, they will fall in love with your products. That’s the gameplan to ensure long term success. However, we want to keep things organized. That’s why we are going to discuss the to-dos for you to launch a successful CBD business in following bullet points:

Name Your Business: The first step for you to launch your very own CBD business is to name the business. We discussed earlier CBD as a consumer product is still not fully regulated. It is still in the legal grey area. So you should avoid mentioning CBD while choosing a name for your business. This will help avoid red flags by your bank and other financial institutions. Also, you might want to sell other products in the future that do not contain CBD. So, name your business focusing Health and Wellness niche along with your personal choice.
Register Your Business: Register your CBD business entity as an (LLC) Limited Liability Company. You can name your LLC the same as your business name i.e.: Your Company, LLC. If you are not sure how to set up an LLC in the USA you can read this article from Legalzoom. They are one of the many third-party providers who can help launch your business as a legal entity.
Branding: Now that you have set up your business entity, it is time for you to start branding your CBD business. Part of that includes creating a unique logo for your business, setting up a website, etc. Again you can outsource these tasks to third party providers. Your goal as an entrepreneur is to save time as you know it is the most valuable resource you have. Trying to do everything by yourself will lead to terrible consequences. So acknowledge the fact that you are not good at everything that you do. You should be doing the things that you are good at and set a budget for branding your CBD business.
Sourcing Products: This is the mission-critical point that can make or break all the time and money you will invest to launch your CBD business. You can realize the amount of work it might require to extract CBD from industrially cultivated hemp. Then to manufacture finished products out of that CBD. Bringing a CBD product from seed to shelf is not that easy. A number of steps are involved to make that process work. Again time is the most critical asset for your business to become successful. So you don’t want to do everything by yourself. You ask yourself, how can I launch my CBD business then? The answer is you partner with a white label CBD manufacturer. A white label CBD manufacturer will save you time and money by manufacturing the products for you and you can use your own brand’s logo on the products they manufacture. Sounds, so simple, not really. You have to show your diligence while partnering with a white label CBD manufacturer. You must consider the following facts white choosing a white label partner for your CBD business:
1. Make sure your private label CBD manufacturer produces products that contain no THC or at least the THC threshold doesn’t cross 0.3%
2. Ask if they provide (COA) Certificate of Analysis for the products they manufacture from independent 3rd party lab tests. If the answer is no that is a red flag for you to partner with such manufacturers.
3. Read the reviews about them online, know more about their customer support. How long it will take for them to process your order? What is the minimum order quantity (MOQ)? These are some of the questions you must ask before partnering with a private label CBD products manufacturer.

Related: Maxvera Wellness is one of the top-notch manufacturers of white label CBD products and other high-quality nano supplements. Their proprietary nano emulsification process ensures the highest bio-availability in the private label CBD products they manufacture. After years of supplying other manufacturers and companies with high-quality CBD products and supplements, Maxvera now opened its door for small and medium-sized businesses. This means now you can get your wholesale CBD products right from the manufacturer, cutting out the middleman and thus save time and money.

Financing & Merchant Processing: Financing your CBD business can be difficult. As a newly legalized industry, CBD and Cannabis have their own challenges. But you know there is a high demand in the market for CBD. So facing those challenges is worth it. Your brand can advocate CBD in a way that abides by the regulatory framework and at the same time bring real value in the marketplace. You can seek financial help from private investors. Starting small and saving up should be the key here.

Post COVID-19 situation clearly showcases the growth in e-commerce sales. You can turn your website into an e-commerce site using platforms like WordPress and WooCommerce. This will enable you to sell your own branded CBD products to a large audience 24/7. But there is another missing puzzle here. You need a merchant processor to collect payment from your customers’ bank account to your bank account. There are not many providers out there in the USA that allow CBD merchant processing. But there are a few that do. Some of the banks we want to name here are Chase bank, Silicon Valley Bank, and North Bay Credit Union.

Marketing: Marketing your CBD products and your overall CBD business can be tricky. Although the 2018 Firm Bill legalized CBD products produced from industrial hemp, the rules and regulations vary from state to state. You can find CBD products on the shelves of country-wide retail chains like CVS and Walgreens. But you will also notice how hard it is to sell CBD products on platforms like Amazon and eBay. Paid advertising for CBD products is forbidden by Google and Facebook. The key here to gain a competitive advantage is to market your brand organically. Follow the guidelines of the marketing channels you are using. By producing good content you can organically rank on Google search result with your website. SEO aka Search Engine Optimization is the process of ranking a website on Google. You have to realize the fact that people are searching for what you have to offer. You have to place your offer to them in the right manner. Consider investing an amount of your marketing budget for SEO. You can utilize platforms like Youtube to convey your message to your target market. There simple words Market, Message, Media. You know there is demand in the market. You set your message following the regulations. Finally, you deliver your message to the market using your preferred media.

You have an unparalleled opportunity to grow your CBD business if done the right way. Cannabis as an industry is growing fast. CBD is going to be a big part of that equation. The CBD consumer market is going through a snowball effect. You can utilize it for the sake of your own business. Staying consistent with the gameplan can make it a million-dollar venture for you.

Remember you are not the only one on this journey. You will find a handful of other CBD companies just like yours making the big time. You can apply your growth hacking skills to translate the same for your upcoming CBD business.

Resources:

[1] Cannabidiol Market Size | CBD Industry Growth Report, 2019-2025

[2] U.S. CBD Market Anticipated to Reach $20 Billion in Sales by 2024

[3] What to Know About Products Containing Cannabis and CBD