Have you been watching the booming CBD industry and trying to decide where to dive in? If so, its important to keep in mind that, while undoubtedly, there is great potential and the outlook will continue to be bright, the industry is rapidly growing, rules and regulations around CBD are currently in a dynamic state of flux. Knowing as much as you can about the industry before you apply for your business permit and start filling orders will help ensure that your business will be set up to survive and thrive through the boom times and the challenging ones. Here are some savvy business tips that can help you make your CBD business a success right out of the starting blocks.
Study the Industry
- Know your demographics – find out who is purchasing CBD and what purposes are they using CBD for, which companies have the biggest market share and who are your nearest competitors in the market you have your eye on.
- Study the laws that pertain to CBD – The 2018 Farm Bill made it federally legal to grow and sell industrial hemp and its extracts, including CBD. However, the hemp you grow or source must contain less than 0.3% THC, the psychoactive substance in cannabis, which is still federally illegal. Also be prepared to show proof of your CBD’s THC content.
- Register your business and obtain all necessary licenses required by your state. You’re going to need an EIN or TIN for IRS purposes in order to do business in the US. Your wholesaler will ask for your resale license to make sure that you are legally entitled to re-sell whatever you purchase from them.
Things to Consider If You Plan to Grow Hemp
Hemp is a remarkably resilient, fast-growing, and pest-resistant plant. Its easy to harvest with simple machinery and you don’t need a lot of acreage to have a viable business – a couple of acres is plenty, if you want to start small.
You’ll need to research all of the hemp varieties out there to find the one/s that are most suitable for your climate and growing conditions. Acquaint yourself with the laws in your state regarding growing hemp. Have a plan in place for ensuring that your THC levels stay within the legal limit for hemp of less than 0.3% and enact your plan on a frequent and regular basis.
If you will be seeking a business loan or other funding sources be prepared to answer questions about the inherent high-risk nature of being in the hemp business at this time, i.e. rapidly changing laws and societal perceptions that make the CBD business risky for banks and other business support entities.
There’s nothing better than being in business for yourself. There are no conflicts with partners wanting to do things differently and you get to reap 100% of the profits from your hard work.
You are also free to use your business data to further advantage. For example, with the consent of your customers you can collect data on what they are using CBD for and then sell that data for an additional profit stream.
Advantages of Embarking on a Partnership Venture
Partnering with a reputable white label distributor i.e. one that provides custom labelling, is the fastest and easiest way to get your products on the market with a brand that is uniquely your own. Quality control is built in with a large, reputable distributor. Your products will be lab tested for purity, potency and safety. And, warehousing, packing and shipping headaches are handled by the distributor. At UBIX, we offer exclusive White Label or Private Label manufacturing services.
Have an online presence
Selling through a website instantly expands your reach to customers in all 50 states as well as overseas, if you wish. Just make sure that whomever you sell your CBD products to are legally entitled to purchase from you.
Avoid Making Medical Claims
It can hardly be stated often or emphatically enough that making medical claims about any type of nutritional supplement is a red flag for an FDA warning or possible punitive action. With the spotlight squarely on CBD and with both the supplement and pharmaceutical industries actively seeking claims to CBD it is simply not worth risking the future of your business. For example, while CBD is widely being proclaimed as being completely safe, in higher doses that are often used for therapeutic purposes, it has been known to be toxic to the liver.
Precisely because of the uncertain legal environment that industrial hemp and CBD exist in currently, even your if you are judiciously following the laws that apply to your business, you may inherently be at risk because the entire industry is rapidly shifting. A good preventive measure is to feature clearly worded disclaimers on your website and in your marketing materials.
Crossing the I’s and Dotting the T’s
If you are planning to go into the CBD business but not the hemp growing business, it behooves you to find a supplier you can trust and who can provide proof of their supply chain and growing practices. Any CBD oils or other extracts must be guaranteed to be sourced legally and organically grown to avoid pesticide residues. Your supplier’s facility should operate within and ideally exceed generally recognized manufacturing standards. Third party independent testing is the gold standard for insuring purity and potency. Lastly, retain a lawyer and use them to review your contracts before you sign them.