Hemp-derived CBD, better known simply as CBD or THC-free cannabidiol, is becoming an increasingly more popular industry to be a part of. CBD is the legal non-psychoactive cannabinoid found in cannabis plants that has a wide range of purported medical benefits.
We will be focusing on selling hemp-derived CBD online as it it’s statistically negligible amounts of THC make it legal in many countries under specific regulatory guidelines. So, how can you get into selling CBD products online to start your own CBD business? Keep reading to find out!
What Does CBD Stand For?
CBD is an acronym short for “cannabidiol” and can come from both hemp plants or marijuana plants. Hemp and traditional marijuana are both part of the cannabis family (Cannabaceae) and originate from Asia. When CBD comes from industrial hemp plants, it is derived from the plants’ fiber and seeds.
Extracted CBD also typically has less THC than marijuana-derived CBD. Most CBD from hemp will have less than 0.3% of THC in it, while CBD from marijuana will have anywhere from 3-15% of THC. 0.3% THC is the legal limit in most states in terms of how much THC may be contained in CBD sold legally without being classified as recreational or medical cannabis.
There are many dispensaries offering more balanced cannabis products containing 1:1 or 1:4 ratios of CBD to THC as this combination has been found most effective in treating medical conditions like chronic pain for example.
Once the CBD is derived from the hemp plants, it can be turned into a variety of products and businesses. From organic CBD oil to supplements, sprays, topical balms, tinctures, and capsules, there are plenty of products available to sell online CBD apart from whole CBD flower.
What is CBD Used For?
Since CBD from hemp plants does not typically have a psychoactive effect, it is mostly sold for medical uses. This is because CBD products are incredibly versatile to help a number of ailments.
CBD can also be used to treat mental health disorders such as anxiety, depression, and insomnia. As CBD can also be used to reduce nausea and vomiting, it can be used to help alleviate these symptoms in cancer patients undergoing chemotherapy.
CBD is not only used as a medicine but can be used in skincare as well as it has tons of antioxidants that are great for our skin. The anti-inflammatory component of CBD is also great for treating acne, rashes, sensitive skin, and skin conditions such as psoriasis and eczema.
Studies are ongoing and the exploration of the pragmatic health applications of CBD has only just begun. That said as illustrated by the mountain of positive evidence referenced above many are optimistic about the future growth of the CBD industry.
Is it Legal to Sell CBD Online?
As CBD is a drug, many potential business owners have wondered about the legality of selling CBD online or opening a CBD store. The good news is that CBD derived from hemp is legal in many parts of the world, especially compared to CBD derived from marijuana.
The biggest problem when considering whether or not it is legal to sell CBD online is that the laws differ everywhere, from nation to nation and even state to state.
In the United States alone, every state has different laws on the legality of CBD products. This means that if you want to get into the online CBD industry, you need to make sure it is legal where you are located, and the location you intend to sell to.
If you are seriously considering starting your own business you will inevitably need hard statistics on industry dollar size and growth trends to secure investment. We highly recommend investigating prominent cannabis market research publishers and data analysis companies that provide all the hard numbers you need to justify starting up a business that revolves around this controversial plant.
How to Start Selling CBD Products
So, you are already sold and are a true cannabidiol believer, now you’re ready to spread the good word and turn more people into believers.
Well, before you can start shipping product there are a few more steps you need to go through in terms of regulations and licensing to be fully above water, and trust us when we say, it is WELL worth the time to get all your ducks in a row as opposed to launching a half-baked fly-by-night operation as these tend to fail in catastrophic fashion.
It’s also worth investing in high quality products such as CBD that is derived naturally from organically grown hemp. The industry is already saturated with products that are made on the cheap that use more dangerous extraction methods like solvents and chemicals.
The companies that are growing the fastest today place an emphasis on sustainability, organic growing and solvent-less extraction. Brands providing certifiably organic, full-spectrum CBD products are not only easier to sell but also sell at a higher price point, making them the ideal type of product to start a business around.
Avoid important CBD oil from overseas as the quality is far less reliable and it is difficult verifying the organic status and claims of the manufacturers. There have also been multiple confirmed instances of tainted or dangerously diluted CBD products imported from abroad.
We HIGHLY recommend you source local and you source organic. The upfront cost will be higher but you will be able to charge more because of the quality and safety of the product, not to mention the added effect of supporting your local economy which is kind of a big deal for many CBD shoppers.
The rough process from start to finish to setting up a CBD brand from scratch looks something like this:
1. Set Up an LLC & Create a Brand
The first step to starting any business is to obtain the necessary licenses. You will first need a business license relevant to your location, in the United States, for example, you will need an LLC. There are no specific requirements to be allowed to sell CBD derived from hemp as long as it contains less than 0.3% THC.
Depending on your location, you will also need a resale license if you will be buying your product to sell from wholesalers.
2. Find a Reputable Wholesaler or Supplier
Whether you want to work with a wholesaler or directly with a supplier, you will need to find a reputable one. There are a wide variety of wholesalers and bulk suppliers these days, with offerings ranging from tinctures and flower to balms, cosmeceuticals, and even cat and dog treats, there is a turnkey solution out there for you.
If you buy poor-quality items, you will not get repeat customers. It is important that you find high-quality items that have been certified to sell in order to draw in more customers.
You could also grow your own CBD which would allow for the highest quality control possible from seed to sale however this avenue will require significantly more investment capital as setting up commercial grow operations as well as purchasing the extraction machinery will present significant up-front costs.
3. Create a Store & Find a Payment Processor
Other than drugstores, selling products with CBD from an online store is the number one way to break into the industry and start your own business. The most crucial aspect of your business will be your store. Use a domain name that is easy to remember and create an easy to navigate website to keep customers happy and coming back.
As CBD is not legal everywhere, being able to collect payment for your products can be complicated. Popular payment processors such as Paypal do not allow merchants to use their services to sell CBD.
Thus, you will need to work with a high-risk processor such as Square or Merchant X instead. They will be able to work with CBD merchants, but will take a bigger percentage of your earnings.
Investing in a 420-friendly point of sale partner is also a smart option as they already know how to navigate the state and federal financial and regulatory minefield. Many big national POS providers are still shying away from cannabis-related businesses to their own detriment.
4. Develop a Marketing & Advertising Strategy
Unfortunately, as CBD is not legal everywhere, there are stricter laws on advertising. Since the best way to market a new business is to advertise, we need to look into other legal ways to do that outside of traditional advertising.
The best way to promote your online store is by utilizing search engine optimization (SEO) throughout. SEO can help garner organic traffic to your website by using target keywords and phrases to ensure your website will appear higher in search engine results.
To utilize SEO, however, you need to have content. Starting a blog related to your products that link to your store will help garner more attention as well.
Another great way to market is by hiring a social media influencer. The role of an influencer is becoming more popular, especially on Youtube, as many of us use social media regularly throughout the day.
Influencers will first gain a large following in order to partner with companies, typically to advertise their products in a natural way. The aim is that the influencer’s followers will then buy the company’s product, earning money for both the company and the influencer.
As influencers work independently, there are fewer legal issues in advertising through them compared to traditional advertising.
The CBD industry has become quite competitive so you will have to think outside of the box and potentially niche down to find a market with share still available such as CBD for dogs, CBD tea, CBD lotion, heck there are even CBD-infused blankets. The world is your CBD oyster, just get creative!
5. Fulfill Orders & Scale Up
The final step to starting your new CBD business is to fulfill your orders. Depending on the size of your new operation, you may begin by fulfilling orders at home by packaging your orders and shipping them out.
It is important to keep on top of processing your orders to keep customers happy. If the process becomes too much to handle as you gain a larger customer base, consider expanding to a fulfillment center.
There are many obstacles to successfully launching a CBD brand in todays market and it will only continue to grow in competitiveness as the world wakes up to all the exciting benefits of CBD. The competition is so tight, and established players are so entrenched, it may be hard to differentiate in this rapidly maturing market without some legitimate innovation in product.
So be prepared to think outside the box in terms of what your final product may look like. CBD is being channelled into so many different types of products and for both humans and pets that there is definitely still opportunity if you are willing to do some solid market research to find an underserved market.
It’s also much easier to launch a brand with an existing audience. The number of wholesaler and white-labelling CBD companies out there make it easy to craft a reliable product for your loyal audience without the cost of creating an entire farming, extraction, and packaging business from scratch.