How to surmount the challenges of launching a CBD business.
Starting a CBD company may seem unattainable. Yes, there are many i’s to dot and t’s to cross, but if you have a clear vision and plan, you can make a name for yourself in an industry that’s projected to hit $20 billion in sales by 2024.
In this post, we explain how to navigate the specific challenges of starting a CBD company: the evolving legal landscape, differentiating yourself from competitors, and payment processing restrictions.
With careful planning and due diligence, success is absolutely attainable!
Know your legal obligations from the get-go
Selling hemp-derived CBD doesn’t happen overnight. When the Farm Bill of 2018 legalized cannabis, a slew of regulations followed:
- CBD businesses can only sell products with no more than 0.3% THC.
- Although cannabis is legal at the federal level, each state has its own regulations. For example, in Wyoming, only CBD oil is legal. Furthermore, some states—like Texas and Florida—require licenses. LINK TO POSTS ON TX AND FLA
- The FDA has imposed strict rules when it comes to advertising. Promoting CBD as a dietary supplement and making medical claims is prohibited. Learn more here.
No matter how well-versed you may be on federal and state laws, we recommend consulting a lawyer to ensure your CBD company is compliant through and through.
Gain a competitive advantage
Market analysis is everything! The goal is to stand out from the thousands of CBD companies in the United States. Immerse yourself in research; see what your competitors are selling, as well as key markets, demographics, pricing, and more. With those insights, you can define your competitive advantage. Some tips:
- Find your niche. For instance, if you’re interested in catering to women, offer products that target their needs, such as CBD topicals for menstrual pain.
- Set strong core values, one being product quality. There are far too many “iffy” items on the market, so always lead with transparency! Obtain a certificate of analysis to show the purity and potency of your products. Also, source your CBD with sustainability top of mind. Work with small-scale hemp farms that focus on regenerative practices. In fact, a recent study found that consumers are willing to invest in sustainable products.
Restrictions on payment processing
Payment processing may be one of the biggest obstacles you’ll face. Whether you have a storefront, online shop, or both, finding a way to accept payments can be quite the ordeal. Major processors like PayPal don’t facilitate CBD-related sales, as CBD is still considered high risk. This is a real head-scratcher, given the legal status of the plant.
However, new options have emerged. Take Square; their CBD Program allows approved sellers to capture payments. But keep in mind, most processors require applications, and fees can be high. It may take some time to find “the one”.
CBD business opportunities are worth seizing if done correctly
We’re now four years into legalization, and business opportunities keep multiplying. Starting a CBD company is undeniably hard, but success is within reach if you’re well-prepared for the challenges ahead.
To learn more about starting a CBD business, join the oHHo community here!