If you’re still stuck with the process of how to start a CBD business, you’re not the only one. The CBD industry has reached its high boom in growth in recent years, sparking interest in entrepreneurs to get into the CBD business. Truthfully, the cannabis market is growing aggressively and rapidly in the market. Given this, now is a perfect time to start a CBD business. In this article, we’ll talk about what CBD is and take you through a step-by-step process to breaking out in the industry and making the most of CBD business chances or opportunities. Read on to see how to start a CBD business online.
How to Enter the CBD Business
According to BDSA, the market for CBD is supposed to grow to $20 billion in sales by 2024. That makes it one of the frequently growing areas in the cannabis and hemp industry. To get into CBD business opportunities, you must first know about cannabinoids. Learning what they are and how they’re used in products will help you sell them better to the market. Then, you must consider all of the business criteria that go into running a successful CBD business.
What is CBD?
CBD is one of the compounds found In cannabis and hemp plants. These compounds are named cannabinoids and there are a lot of them, more than 100 cannabinoids. Tetrahydrocannabinol (THC) is the best-known cannabinoid due to its intoxicating effects. CBD, however, does not have this psychoactive effect and offers multitudes of potentially therapeutic and health benefits. Research into its medical applications is still under process. To create CBD products, many steps must happen.
How it differs from hemp or cannabis
As you now know, CBD is one of the compounds in hemp and cannabis plants. You can get CBD oil from these plants to create CBD oil products. The difference is hemp has less than 0.3% THC, so it’s legal to produce, harvest, and process it to make products in the U.S. Cannabis has more than 0.3% THC and is illegal on a federal level.
What Forecasters Say About New CBD Business Opportunities
The CBD industry got popular in 2016. The number of US CBD consumers jumped from 2.6% to 4.8% in 2018. Many consider that these two years was a breakout year for CBD. Whether it be due to the pandemic and people were working from home or simply entrepreneurs trying to get a piece of the pie, the CBD industry was on hot sale.
Email us anytime!
Email customer service 24/7
Call us anytime!
Reach customer care 24/7 at +1 (888) 622 – 6875
Despite the modern CBD industry being comparatively young, it’s high gaining space. Grand View Research found that the industry as a whole was valued at $4.6 billion in 2018, and it’s only gone up from there. With loosening restrictions and new forms of consumption that CBD businesses can enlarge into, the industry has had an annual growth rate of about 22.2%. These figures just go to show how now is an ideal time to start a CBD business. But the question is from where do you start?
How to Start a CBD Business in 2022
With stats like the ones above, it’s no wonder that people are entering into the CBD and cannabis business. You can start your business in the CBD industry in just 10 steps.
Step 1: Invent your target audience
It’s not practical to reach every demographic, so you’ll need to determine to who you’re going to feed your products. That way you can construct your brand around their demand. Your target market will determine everything from your product’s packaging to the content you convey through it into your marketing campaigns.
Ask yourself some of the questions below to help you to know the target market analysis:
- What do they do?
- Where do they shop?
- What do they care about?
- What products are they show more interest in?
Step 2: Read up on all local and federal regulations for CBD businesses.
The production of hemp in the U.S. became legal with the passing of the Farm Bill in 2018. This has enabled the sale of products that contain hemp-derived CBD and allows people to grow industrial hemp without any hesitation.
There are some restrictions, too. For example, the hemp used to produce CBD must contain 0.3% THC or less. Unfortunately, state laws are different. So ensure that you have a clear understanding of the federal and state-level regulations that may affect your CBD product sales.
Do you need a license to sell CBD?
Some states have to take special business licenses to sell CBD. If you are thinking to purchase your product in bulk,re-check your state laws regarding resale licenses and permits. These laws may differ everywhere, so you’ll want to find out whether you need a resale license and how to get one.
Below are the most common states to sell CBD in and their regulation status:
Selling CBD in Florida. There is currently no bar on the amount of CBD products a business can sell in Florida. While marijuana is legal for medicinal purposes, CBD products must not exceed the 0.3% THC federal allotment.
Selling CBD in Texas. Currently, Texas’s Department of State Health Services is forming a registration process for retailers who specifically sell consumable CBD products. However, retailers must keep their suppliers in check as it is a crime to sell CBD products with more than 0.3% THC to the general public.
Selling CBD in California. CBD and marijuana are both legal to sell in California for enjoyment purposes.
When selling CBD products, retailers must ensure they follow the labeling requirements imposed by the California Department of Public Health.
Selling CBD in Oregon. Much like California, selling CBD in Oregon is legal and follows federal law about the amount of THC allowed. There are no licenses required for retailers but there are certain labeling requirements mandated by the Oregon Department of Agriculture.
Step 3: Form your business plan
A business plan is a legal document or a blueprint that details a business’s objectives and how it plans to achieve its goals. Think of it as a roadmap that tells you how to handle things like marketing, operations, and financials. Writing a business plan can help you strategize, secure funding, and a great human resource team to set yourself up for long-term success. Having a formal plan is especially important in the cannabis business because investors are looking for legal organizations.
What types of CBD products will you be selling?
In your business plan, you will also show what products you will be selling. There are a variety of different CBD products. For example, you may get into the CBD oil business and focus narrowly on those products. Other CBD products include:
- Tinctures and sprays
- Pills and capsules
- CBD vapes and cartridges
- CBD edibles
Step 4: Record your CBD business
Concerning selling CBD in a store or online, you will need to legally register your business. LLCs are a popular structure for small businesses but consider the other business types. You must also ask an EIN/TIN with the IRS for your new business. Once you are done with the business license, you can begin sourcing and selling your products immediately.
Step 5: Secure reliable merchant services
To sell CBD online, you should have a payment processor that grants permission to you to accept different payment methods. It’s necessary to choose a merchant service provider that not only accepts CBD merchants but is also familiar with the industry. You’ll want to find a processor that meets your business’s different needs.
Step 6: Find your CBD supplier
There are two ways that you can take with your CBD or cannabis business. The first is to create your CBD products. This gives you more rules on your business and you’ll have more control over creating brand loyalty.
The second option is to partner with an existing brand or drop shipper. This is a perfect path if you want to start a CBD business without having too many advance costs. You can purchase products wholesale without needing to have inventory on hand. If you take this route, be sure to do your diligence by searching for a well-known brand to partner with.
Step 7: Establish your pricing strategy
To create a pricing strategy, you must know how much your costs are for operating your business. A few questions that are important to consider are:
How much can you ask for your products?
What are your continuous expenses?
How much profit do you aim to make on each product?
How can you become more profitable?
Step 8: Make your Legs Stable in shipping and handling strategy
Shipping and handling are very crucial to an Ecommerce business. You always want to confirm that you are meeting your customer’s expectations. Here are a few questions to ask yourself when planning your shipping policy:
What should be the threshold for free shipping?
Should I offer a fluctuating fee? Destination-based or weight-based shipping fees can lower the logistics costs.
What is an achievable delivery timeline?
What logistics carrier should I work with?
Based on these answers, you can then choose supporting shipping and fulfilment software. This enables you to set shipping rates, print labels, auto-send updates to customers, and manage logistics.
Step 9: Advertise your CBD business
Once you have a good plan for your operations, you can then focus on acquiring customers. Just because you have a website and CBD is famous doesn’t mean that customers will come running. You need a good marketing plan, one that draws the right audience to your offerings.
Unfortunately, CBD products are often misunderstood by many people. However, this allows space to build your customer base by educating interested buyers with proper information. This can include content on different product types, potential benefits, and the hemp industry as a whole. Publishing regular, informational content will also help you with search engine results. Learn and ease out the latest in SEO to help you find good customers for your CBD business.
Do Something Out Of The Box of other CBD businesses
With more and more business owners joining the industry every day, it becomes that tough to stay competitive and top-of-mind for your audience. But by differentiating yourself from the competition, you make your products more rememberable for your current and good customers. With that in mind, do some deep diving to find what sets you apart from your competition.
Does your manufacturing process result in a product that’s more influencing?
Are you behind in the race by industry experts or influencers?
Do you serve a cream crowd?
Does your branding or online marketing efforts leave an effective and long-lasting impression on viewers?
Step 10: Prevent yourself from industry risks
The CBD industry is a high-risk business. The landscape of legislation and the acceptance of CBD in everyday life have both been tough factors to argue with. There are just so many sectors to keep track of.
Regulations and laws change like a chameleon, and it’s up to you, the business owner, to ensure that your company is updated regularly. It is not an easy task. Make sure you’re aware of the business legal requirements you need to start or uphold your company’s status as legitimate.
With so much riding on how the laws progress, the amount of capital you have, and the ability to secure emergency funds for your CBD business should be your priority. Also, consider securing backups for each of your vendors and create plans of action for potential future scenarios. In addition to this, certain types of products, such as CBD beverages and other ingestible, are treated differently than lotions and creams. Purely due to how these items are used, can mean the difference between high risk and low risk.
As your company expands, you’ll want to consider adding a financial advisor and a lawyer to your team. They can assist you to smell changes, act upon legislation, and mitigate issues before they happen.
Do It Today: Start Your CBD Business with Merchant Stronghold
It takes a lot of sweat and determination to grow a successful CBD small business. From searching out a supplier to protect high-risk merchant services, you may feel a little speechless. However, don’t let that stop you from pursuing your aims of starting your CBD business. Every day regulations and local legislation are making it increasingly easier for businesses to offer safe and reliable CBD products to consumers. On top of that, consumer trends keep pointing to the expansion of this gainful industry. Fortunately, the Merchant stronghold provides an excellent staff and members who can guide you through your thick and thin. Merchant stronghold gives an amazing merchant account, especially for high-risk business owners with a proper payment processor suitable for your business.