The number of people demanding CBD is continuing to rise as people are beginning to realize the benefits of the cannabis plant. Many states are starting to legalize marijuana, but it is still prohibited at most workplaces. Therefore, people are turning to Cannabidiol due to its non-hallucinogenic properties. It is now an ingredient found infused in products for humans and pet consumption. As more retail stores jump on the bandwagon, entrepreneurs are trying to cash in on the moneymaker as well. Before investing in a start-up, you will want to know the best tactics to succeed in this growing industry.
What is CBD?
If you are considering selling CBD oil, you will want to make sure you know exactly what it is. You will need to explain it to your potential customers, who may not be informed of the product. While CBD is basically cannabis without THC, it is just one of the cannabinoids found in the cannabis product. Cannabidiol is the ingredient that has displayed abilities to alleviate pain and anxiety. THC is another cannabinol found in cannabis, but it has psychological effects that prohibit it from being used during work hours. However, because they are both found in the cannabis plant, extracting CBD will leave trace amounts of THC behind. Many states are slowly legalizing THC. However, most states have realized that CBD products are nothing more than supplements and safe.
Legalities of CBD
It is well-known that the market for CBD is continuing to grow, estimated in the billions. However, when things start making a lot of money, the government keeps its eyes on the products. Distributors know that if the shop can be filled with what consumers are looking for, the business will remain profitable. You are competing with other companies offering people the same product, so the keys to success lie within knowing the laws and the best methods to selling CBD.
Much to the delight of those in the CBD industry, the United States legalized the growth of industrial hemp. If the product removes most of the THC (0.3% or less remaining), it is legal to sell in the United States. The law makes the product easier to come by, so prices are lower than in the past. It is still controversial by many medical professionals and the working class. However, as far as the government is concerned, it is legal on the Federal level. With that said, you will want to check with your state and local laws to determine which types of CBD are allowed. In some states, you may only sell CBD from industrial hemp, and in others, you can also include CBD from marijuana plants. This means you will want to discuss your business with a local law firm to confirm you are abiding by all statutes in your area. Build a list of products you know you are allowed to sell and stay within that inventory.
Determining Your Market
Selling CBD can be done from a standard brick-and-mortar store or in an online shop. You will want to determine what the market is in your area. If you want a physical location, get to know the area and who frequents the district. However, when you consider eCommerce, your options expand. Many find it easier to get into digital retail stores and then progress to physical locations after they have income coming in. There are pros and cons to both methods, but they both require many of the same start-up needs. Virtual markets eliminate much of the overhead that comes with a physical store.
Starting Your Business
Step 1 – Obtain all necessary licenses
The first step in selling CBD is the same as with any business, obtaining the licenses allowing you to operate a business. Discuss your needs and business plans with the Small Business Association in your area. They will help you make sure you have the correct registration, what type of operation you should run (such as an LLC), and obtaining all the permits necessary. The rules will vary from state to state, and you will need to make sure you are licensed to sell products you have purchased from wholesalers. In addition, the SBA will guide you through the necessary steps to obtain a tax-exempt status for wholesale products.
Step 2 – Locate certified suppliers
Once you have created your business plan and licenses squared away, you are ready to start purchasing products. You will want to take your time with this step to ensure you are buying only high-quality items for your consumers. Look for transparent suppliers who state where the CBD comes from, the amount of CBD in each product, and the amount of THC that remains. You will also want to find out who does their third-party testing to obtain lab results on the wholesale CBD. You are investing in their brand, so they are representing your brand as well. If you sell CBD items (such as capsules, vape, or tinctures) in a brick-and-mortar location, ask the supplier if they have any marketing products they want to be displayed in your store. The more you know about your suppliers, the better you can inform your clientele.
Step 3 – Create a website
Whether you have a solely virtual business or decide to have a storefront, you will need a website. Branding is all about online presence and marketing. Therefore, consider your name and create a domain name that is easy to remember. When selecting web hosts, find one that has an eCommerce platform and integrates with social media. While there are many platforms available to create a website with, the most popular is WordPress. You will want to read through the terms and conditions of the theme you select, but most are open source and free to use.
Once you have your branding decided and the page built, you are ready to start creating your eCommerce store. It is best to have a professional developer assist who is well-versed in the requirements of CBD. You will want to make sure that consumers can purchase your products, but not all payment processors approve CBD purchases. In addition, you will want to make sure you know the credit card fees and transaction fees so you can factor that into your prices.
Step 4 – Market your products
Marketing is an area that requires time and effort. Many people believe if they have a product that is in high demand, it will be easy to sell. However, you will want to make sure you are working daily on keeping your name out with the saturated market. Consider hiring a marketing team that understands SEO practices and social media. You can create organic leads by creating a blog that posts to social media or creating ads that operate as pay-per-click. The most important aspect is making sure you use call-to-actions in every post.
With SEO, you will tailor your site using analytics to determine what audience is currently finding you. Professionals can then decide what changes need to be made to reach your ideal clientele and audit your site to make sure it is mobile-friendly. Outsourcing the content creation on the site will cost more but gives greater return rates, turning into more sales. Basically, to make money, you will need to spend some. Therefore, it is best to start with organic leads and build on those with discounts, informational videos, and referral bonus programs. This will allow you to spend less on marketing and allowing your satisfied customers to sell your business. Finally, consider partnering with your distributors and other companies that compliment your products to have your name displayed in other locations.
Step 5 – Keep up on orders
Having products to sell is the first step, but the second part is vital. You will need to make sure that you can fulfill and ship products in a timely fashion. Create a terms and conditions page that will give customers shipping information. When you are first starting, it is often best to keep a small stock in your home and determine how long it takes to order a product from your distributor and then send it out. This is the amount of time you should allow for shipping. Do not offer rush shipping on anything that you do not currently have on hand. After building your business, you can switch to a warehouse for more stock on hand. There is technology available that will assist in tracking the inventory, and hiring a fulfillment team will help keep up on the orders. Customers lose faith in businesses that require them to wait over a week for their product, so always keep an open line of communication if something is back-ordered or unavailable.
Starting a business takes a lot of time, effort, and initial money. It is essential to make sure that you have done the research and can handle the loss of money at the beginning. CBD is an industry that will make you profitable, but you will want to make sure you are doing everything you can to succeed.