Starting a CBD business requires numerous amounts of paperwork and logistics planning. Ever since weed legalization in the United States jumped from barely there to abundant within a quickening pace jumping off from the 2018 Farm Bill. Weed and CBD have become the forefront as an ingenious business opportunity. With 18 states having legalized weed it is no surprise that the CBD industry by extension has become all the more popular for business pioneers and even some mom-and-pop stores.
In fact, in 2021 the CBD market was booming with sales amounting to $5.3 billion. Now how do you fit into the picture? You’re into CBD. You want to bring it to the people— how can you turn your passion into a full-on venture and start a CBD business? Below are some tips and tricks to get you started.
[Also read Cannabis Farmers Market 101: Definitions, Do’s and Don’ts, and More]
What is CBD?
Let’s start with the basics. CBD is shorthand for Cannabidiol, a slightly milder version of the commonly known delta-8-tetrahydrocannabinol (THC). Both compounds are part of the makeup of Cannabis plants everywhere. This foliage also hosts 100 other kinds of cannabinoids.
CBD has its differences from THC. Cannabidiol is acquired from industrial hemp plants which is a variety of marijuana plants that has THC lower than 0.3%. These plants must also be bred with a USDA-approved license. Just because it does not get you high doesn’t mean there’s no market for it. CBD on its own has numerous therapeutic and wellness advantages.
What Do You Need to Do?
Here are the necessary steps to set you up for success.
Take Care of the Legal Side First.
Even with the 2018 Farm Bill that made industrial hemp legal you still have regulations surrounding CBD to consider. This might be the first part you want to work on since running a business illegally can be pretty dangerous.
After the 2018 Farm Bill erased CBD out of the federal Controlled Substances Act and placed this responsibility in the hands of the FDA. They are the group that is creating regulations for CBD. It is to be noted that the agency has communicated that marketing CBD in terms of its health benefits is not allowed. Restrictions on CBD-infused food and beverages are also plentiful. The more the laws and guidelines regarding CBD are improving and changing day by day encourages you to continue looking out for new updates about hemp and its legalization.
Look for Your Niche.
There is a wide selection of CBD materials that you can sift through to see what you best be able to promote and sell. From edibles to hemp clothes there are so many types of products you can potentially consider your niche. Whatever you choose it would be good to think about the profitability of your list of niches and see. You can focus on CBD-infused edibles, CBD cosmetics, CBD pet products, CBD supplements, and many others. Focusing on a niche can give customers a reason to come back and newbies to try a variety of your items. People will know what you sell and who to call if they need what you are selling. This also translates to the location of your business. Will you go big with a national clientele or try out how your business pans out in your state? These are some decisions you need to make to narrow down the profile you have for your CBD business.
Create a Solid CBD Business Plan.
Composing your business plan also has a process. Here are some steps you can follow:
- Analyze your market. Who are your customers? Your competitors? What are other market variables you have to consider? Gather information through surveys. Get to know what ballpark you are playing in. This can help you make informed decisions.
- Think about your brand. Come up with a profile of the brand that will get you the customers you are aiming to attract to your business. What is the name of your brand? What are the products that you want to sell? Position your products as the kind that your customers will be attracted to. What are your vision and mission? Sounds cheesy but it’s pretty standard. You might see it on every company website under the “Our Story” banner.
- Get financing. How much do you need to get started? Create an itemized list of the possible costs you will have just to get your business up and running. These expenditures can be divided into one-time expenses like starting your website as well as monthly expenditures such as for your inventory, taxes, marketing, and payroll. Make room for additional expenses. There are always going to be surprised and you want to be ready for them. Where will you get your funds? A loan? Already on hand? Investors can also help business owners in the early stages. Look for reliable sources, not ones that are too risky that you’ll be put into massive debt.
[Also read How To Get Cannabis Business Funding]
Process Your Business Documents.
For an online CBD business you will need two licenses:
- Regular Business License – Register as a business in your state to start operations. Request from the IRS an EIN/TIN for your new company.
- Reseller’s License – This could also be in the form of a certificate. If you will be buying from resellers then you will also need the paperwork to do this. The document will allow you to sell your products without paying sales tax. You can then also collect sales tax from your customers later on.
Create a Marketing Plan.
How will people get to know your CBD brand? Take the time to do your research on the best CBD businesses online and what has made them successful. How can you do the same within your niche and for your customers? What platforms will you use to market your brand and who will do the marketing? These are all questions you can brainstorm on and plan before launching.
Look for a Reliable Supplier.
The supply you get has to match what your brand says it will provide. These are some considerations you have to keep in mind while looking for a suitable supplier:
- Where do they source their hemp?
- How do they extract their hemp?
- What are their reviews from other entrepreneurs?
- Is their pricing worth it?
- Do they have any other services that make them more convenient or preferable over other suppliers (label, shipping, dropshipping, etc.)
Decide on Your Platform.
Will you be making a website? Starting on Instagram or Twitter? There are many ways to go about selling CBD products online nowadays and while websites are the go-to for businesses some smaller businesses might start with a home-based business or on an informal social media platform. What fits your budget, team, and goals?
Outline your shipping and payment terms.
How will customers pay and how will you ship their products? If you plan on launching a website this must go on your website so customers can access it easily.
Start Marketing.
Get your brand out there! Word of mouth might be the simplest but most effective way for a new and upcoming CBD business. Digital marketing strategies such as lead generation can be incredibly useful to drive people to your website or page. Social media also features the language of the new age and is a must when you are considering marketing today.
Final Thoughts
The CBD industry is growing every day and you don’t want to be too late to the party. Alongside planning and research, following the steps above might be the way you start your dream business.