Cannabidiol, or mostly referred to as CBD, is fast becoming a household name. As more and more research is conducted to uncover the benefits of CBD, the more ways companies and brands are looking to include CBD’s therapeutic and health benefits into various products and in different forms.
CBD oil can now be found in the form of infused edibles, tinctures, and topical ointments. Economic analysts predict that in the US alone, the CBD market will reach the $20 billion sales mark by 2024.
This growth has ignited the entrepreneurial spirit among people who want to launch a CBD business, but just like any other business, the CBD market and industry comes with its challenges. Among the most concerning factors are the shifting and evolving regulatory landscape. Plenty of opportunities exist as the CBD industry is still unchartered territory. The work you put in today will be well worth it in the future when the CBD industry becomes more and more stable.
Here’s a brief, but comprehensive guideline for helping you start a CBD business.
- Know the legal obligations of the business.
To begin your venture into the CBD industry, you need to know the significant regulations that exist within your country, region, and state. In the USA, the 2018 Farm Bill removed CBD from the Controlled Substances Act, as well as from regulations of the Drug Enforcement Agency, and placed it under the governance of the FDA. The FDA, as we know, comes with its own set of standards and regulations you need to abide by.
At present, the CBD industry is still in a gray area as regulations are still being devised. Adding more complications to the CBD industry is the 2017 approval of Epidolex, a CBD-based pharmaceutical company responsible for the epilepsy medication that was FDA-approved. It contains CBD as the main ingredient and according to FDA regulations, using it in food products without FDA approval is illegal. This is why clear guidance is imperative in the CBD business to ensure that when you venture into this industry, you do so in full compliance with federal regulations to avoid getting banned.
Being aware and understanding your legal obligations in the CBD industry is crucial. While waiting for clearer regulations, you can develop and hone your business strategy, marketing initiatives, and other aspects of your business, such as branding, design, and website.
2. Marketing strategy
In developing your business strategy, your marketing strategy runs in tandem with your business needs. However, where the CBD industry is concerned, it’s still a tricky business. Retailers risk bans and suspensions if you market your products via Amazon, eBay, or use social media advertising.
Driving the awareness and growth of your business must be done organically under the guidelines of each platform. This is why you need to create your own e-commerce store, or use the conventional brick-and-mortar way of selling your CBD oil. In many ways, this can be a good and safer way to start accumulating a customer base that you can connect with via email marketing and customer loyalty programs. As always, make sure to also check the state and local laws concerning digital marketing and advertising.
3. Working with a reliable CBD manufacturer
The key to staying on top of this evolving CBD industry is to produce high-quality products. In an unregulated industry, there will be plenty of scams. If you’re a business that values your customers, and you want to do right by the CBD industry, then producing high-quality products is the way to go as it’s sustainable and strong in the face of scrutiny among regulators and educated customers.
Differentiate yourself by:
- Enabling third-party testing results to validate your product.
- Sticking to a code of conduct to produce and sell high-quality CBD oil.
- Obtaining the necessary certifications and licenses relevant to your state and country.
- Working with reliable and trustworthy Private Label CBD manufacturers.
The above strategies take some time and effort, but it produces the desired results in your bottom line. You’ll attract an educated customer base that will prove to be loyal and sustainable, you’ll instill confidence in new customers, and you’ll be a leader and set the benchmark for quality within the CBD industry.
4. Financing challenges
Another major challenge CBD entrepreneurs face is the financing aspect. Here’s a breakdown:
- Banking- Due to the fluctuating governing landscape of the CBD industry, it’s a little tricky to obtain reliable banking services to finance a business. Banks are indecisive when it comes to providing loans to CBD entrepreneurs, fearing significant risk.
- Insurance- Insurance is crucial for any business, but for a CBD business, insurance can be extremely expensive since education regarding the hemp industry is still low, and the industry itself requires some catching up to do in terms of financing/insuring a CBD business.
- Payment- There are high fees associated with CBD business and not many payment options for customers. Some businesses only end up having Mastercard as a payment option, while some can only offer PayPal.
- Capital funds- While getting bank loans is hard, it may be difficult for lenders to fund your capital growth. However, reaching out to investors who know about CBD and are willing to fund you may take time, but will prove to be profitable in the long run.
It’s all not bad with the CBD industry. As it’s new and the industry is developing, this is your chance to be a pioneer. As time goes by, more and more issues will be cleared up, and concrete regulations will take place.
Part of starting a CBD business is to keep an open mind. Be flexible and adaptable to the growing changes and needs of the industry. Above all, it’s also good to keep yourself well-informed.
Prepare business strategies and plans to adapt to these changes and mitigate issues along the way, as this can save you time and plenty of costs.
Starting on the right foot in terms of adhering to regulations is by far your best approach. The CBD industry is a fast-growing one, and there will be more and more entrepreneurs eager to join the herd. You want to be a leader, and the CBD industry is a great place to start to learn the ropes, make mistakes, and come out stronger. Now is your time to build a company with quality products, that follows the regulations, and has the certificates and licenses to prove the quality assurance.