How to start and maintain a CBD Business in 2023
1 January 2021
Technically, what is cannabidiol or CBD?
Before delving into some tips on how to start and maintain your successful CBD business in 2023, let’s look at a few facts. CBD is a more widely used term for cannabidiol. Although it is a new product that is rapidly gaining traction for its popular health benefits. Growing evidence suggests that CBD products help with epilepsy, anxiety, insomnia, alleviating different types of chronic pain, easing symptoms related to cancer, and much more.
As more people are becoming interested in the health benefits of CBD, more business opportunities are opening up. To successfully navigate your business, it is important to have a good understanding of the properties of CBD products and their uses.
CBD refers to just one out of 113 cannabinoids that have been discovered in cannabis plants. CBD is different from tetrahydrocannabinol (THC), more commonly known as “weed”, which is used for its intoxicating properties. However, CBD does not cause intoxication, rather, it offers many therapeutic benefits. Hemp plants are used for CBD products since the THC it contains is less than 0.3% making its CBD oil legal.
However, the CBD oil extracted from cannabis is considered to contain a much higher THC and is, therefore, illegal. Medical research is still underway to prove the advantages of using CBD, but there are thousands of testimonials from consumers who have experienced the relief associated with its consumption.
There are different forms of CBD products including Cannabis tinctures and infused products such as edibles and topical creams or gels. When making your CBD products, there are steps that you need to follow. You start by establishing a supply of raw materials, such as growing or purchasing industrial hemp plants. Then you’ll need to extract the oil from the plant, either on your own or by outsourcing the skills of someone else, like an extraction company or a skilled individual. You can then use the extracted CBD oil to create a variety of CBD products.
Something else to consider is the difference between full-spectrum CBD products and isolate CBD products. Full-spectrum refers to CBD oil or products that contain all the cannabinoids that are naturally occurring in the cannabis plant including terpenes, flavonoids, and more. Whereas, CBD isolate contains only CBD and no other cannabinoids, terpenes, or flavonoids. It is believed that full-spectrum products may have a more significant effect compared to isolate products. However, this is still under investigation.
Now that we have some ground knowledge about the product, let’s talk about business strategies
It is important to remember that the startup required for a CBD business is the same as any other business. It will take hours of hard work and dedication to be successful.
The reason that this is a great business opportunity, however, is because the CBD industry is growing rapidly. With more and more people becoming open-minded about the health properties surrounding CBD products, there is an immense opportunity for business growth. Let’s take a look at some factors that you need to consider when starting your CBD business.
Understanding the legalities of the 2018 Farm Bill
So, the cultivation of industrial hemp and CBD products extracted from hemp have been legalized. There are still limitations, however. The 2018 Farm Bill Removed it from the federal Controlled Substances Act and the oversight of the Drug Enforcement Agency to the hands of the FDA. The FDA is still in the process of devising regulations.
It is clear, though, that CBD products may not be advertised as having definitive health benefits and some CBD infused foods and drinks have been prohibited. Furthermore, as mentioned earlier, these products must have a TCH level that is under 0.3%. It should be a priority to become familiar with the legalities of running your CBD business, to stay on top of the changing regulations, and avoid run-ins with the law.
Marketing your CBD products can be difficult to navigate. Although the cannabis market has been somewhat legalized, many of the major platforms used for successful advertising still impose restrictions and limitations regarding paid advertising of CBD products. This is why you need to be creative and informed when it comes to advertising your CBD business.
It is also imperative to establish an online CBD store, a brick-and-mortar location, or both to be successful. Looking into marketing your product with an organic search strategy is a safer marketing approach. However, there are ways to navigate advertisements on online platforms, advertising agencies can help you since they are aware of the litigation of CBD advertising and know-how to bypass some of these to improve marketing outcomes.
Gaining a competitive advantage
With the expected exponential growth expected in the CBD business, it is important to ensure that your CBD business has a competitive advantage. There are some ways to do this, such as, developing CBD products that are of high quality. Your products should meet regulations and withstand scrutiny from educated customers. You need to establish sound extraction methods and outsource skills where you need them. It is advantageous to have a third party lab to test your products to validate their quality.
Another method to ensure the quality of your CBD products is to use certifications, such as USDA organic. By using these various methods, you will earn the trust of your customers and they are likely to choose your product over a competitor with little or no regulative practices. The key lies in taking pride in the CBD products that you are making and selling and keeping an open mind to growing research, practices, and methods regarding the CBD business industry.
Challenges that are unique to the CBD industry
The CBD business industry faces many challenges that other industries face. However, there are some challenges that are unique and it is important for you to be aware of these to be successful. Some of these include:
- Banking limitations: because the laws surrounding the sales of CBD products are still on the fence with the FDA. Many banks are hesitant or refuse to do work with CBD businesses. Sometimes CBD businesses are forced to switch banks abruptly or are at the risk of account closures. Therefore, it is important to be well informed regarding the banks you deal with and have a sound understanding regarding their policies. Banks are also known to be hesitant for providing funding for CBD businesses, leaving business owners with the task of finding capital elsewhere.
- Processing payments: payment processing options are limited, with some refusing to process payments associated with CBD businesses and others charging high fees for payment processing.
- Finding affordable insurance: This proves to be a difficult task for CBD businesses. Since legalization is a relatively new development, education surrounding CBD businesses is still outdated leaving insurance policy prices elevated.
It is obvious that the CBD business industry is growing quickly and if you have a passion for CBD products then this is the perfect opportunity for you. To navigate a successful CBD business, it is important to become familiar with legalities and policies regarding the cultivating, creating, selling, marketing, and financial management of your CBD business. You need to be creative and well informed and outsource the relevant skills where necessary. If you are able to do this, you will have a booming CBD business