Cannabidiol (CBD), a compound found in hemp and cannabis plants, is increasingly popular in dietary supplements. The CBD industry is projected to reach $ 20 billion in sales by 2024. Hemp and CBD hemp are legal federal after the signing of the 2018 Agricultural Law. The industry still faces challenges in advertising, banking and insurance. Still relatively new in the mainstream, cannabidiol, better known as CBD, is already becoming a household name. The supposed therapeutic and health benefits of CBD, one of the many compounds found in cannabis and hemp plants, have created a stir. CBD oil has entered the market in the form of tinctures, infused foods, topicals and more. The growth of CBD oil products has been so immense, in fact, that the industry analyst BDS Analytics predicts that the US CBD market. UU. It will reach $ 20 billion in sales by 2024.
The potential of the CBD industry has led many people to ask how to start a CBD business. The industry is not without challenges, especially around the evolving legal landscape, but the opportunity is important anyway. If you want to get involved in the CBD industry, you will first have to understand a little about the cannabinoid and the products it enters.
What is CBD?
The CBD is one of the more than 100 cannabinoids, which are compounds found in all cannabis and hemp plants. The most famous cannabinoid is undoubtedly tetrahydrocannabinol (THC), which is responsible for the poisoning associated with cannabis use. CBD, however, does not produce an intoxicating effect; instead, it is often considered to offer therapeutic and health benefits, although the investigation of its possible medical applications is ongoing.
CBD products are generally created in several steps. First, the raw material needs to be cultivated and harvested. For example, if you plan to use industrial hemp to create your CBD products, you will need to grow or buy a large amount of the plant. From there, CBD oil is extracted from the plant by a variety of methods. Again, you can do it yourself or outsource the process to an extraction company. Once you have extracted CBD oil, it can be sold as a concentrate or used to infuse a variety of products. Some of the most common CBD products on the market today include sublingual, edible and topical infused tinctures, such as gels or creams.
Hemp CBD versus cannabis CBD
CBD is found in cannabis and hemp plants. CBD oil can be extracted from any of the plants and used to create products derived from CBD oil. However, there is a key difference between hemp CBD oil and cannabis-derived CBD products: THC. Because industrial hemp contains less than 0.3% THC, it is considered legal under federal law to grow, harvest and process finished products. Cannabis, on the other hand, contains more than 0.3% THC (often much higher levels) and remains illegal at the federal level.
Cannabis and Hemp are closely related to each other; In fact, industrial hemp is actually Cannabis sativa L. The difference in name is primarily a function of a legal definition, which sets the threshold for THC content. The flowers of a hemp plant contain little or no THC, while the flowers of a cannabis plant (commonly known as marijuana) contain much higher levels of THC. The federal government believes that marijuana is a drug in Schedule I under the Controlled Substances Act, making it illegal for interstate commerce, even when dozens of states legalize it for adult use. Industrial hemp, on the other hand, recently withdrew from the Controlled Substances Act, which opened the way for its cultivation and harvest in the US. UU.
Wide spectrum CBD isolation versus CBD isolation
If you have already researched the CBD market, you have probably found the terms “full-spectrum” or “isolation.” Depending on the extraction methods used, the CBD oil obtained from the plant may contain other cannabinoids and compounds found in the plant of origin. This is what is known as full-spectrum CBD. The full spectrum CBD contains not only other cannabinoids found in the source material but also the compounds known as terpenes, which are responsible for creating the flavour profile, aroma and specific effects of the plant.
The CBD isolate, as the name implies, is a concentrate that only contains CBD and does not contain other cannabinoids or terpenes. While the purity of the CBD isolates may seem desirable, there is some evidence to suggest that full-spectrum CBD promotes an “entourage effect,” that is, the compounds in a full-spectrum hemp extract work together to promote more effects. significant. Researchers studying CBD and other cannabinoids still investigate the effect of the entourage.
What CBD products are available?
Now that you know a little more about CBD and how it is extracted from the hemp or cannabis plant, let’s see. A closer look at some of the products existing in the market. The CBD industry is diverse and evolving, so you are likely to find many more products with CBD oil beyond this list. However, these are some of the most common types of products available today:
Sublingual tinctures: A sublingual tincture is CBD oil that usually comes in a small bottle with a dropper. Sublingual products are ingested by placing them under the tongue and allowing the oil to absorb.
CBD Groceries: CBD groceries are a rapidly growing industry sector, which includes baked goods, candy and food. CBD edible products have faced significant regulatory control by the United States Food and Drug Administration, but they are still common products on the market today.
Vape concentrates: Vaporizer concentrates, such as CBD oils and waxes, are another common product. They can be used with an electronic device to vaporize and inhale the CBD product.
Topics of CBD: Topics of CBD include gels, creams and sprays for aches and pains. These products are placed directly on the skin to point to a localized region of the body.
There are many varieties of these products and others that you can find there and, as we learn more about the CBD, the industry is emerging new products all the time. If you are looking to start a CBD business, you will have a wide range of product types to consider selling.
How to start a CBD business
Starting a CBD related business includes all hard work and effort to start any other company in addition to the uncertainty of a changing regulatory landscape. However, in an incipient industry that is expected to experience explosive growth, today’s heavy work could be worth tomorrow.
Cory Slovik, founder of Core Roots CBD launched his company after experiencing firsthand what he said. They were the healing properties of the cannabinoid.
“I used to be a snowboard professional … and I was always sore, my muscles were constantly in agonizing pain. I tried CBD and it helped me a lot,” Slovik said. “Then, years later, cannabis … began to reach the forefront, and there were research and data that supported everything I felt on the mountain.”
Slovik soon started the Core Roots CBD, seeing a huge business opportunity and a way to help others. People treat their pain. He told starting a CBD business is like any other business, in addition to a lot of additional steps.
“It’s like any other business; there are steps and procedures that you must follow to get insurance and write a business plan,” Slovik said. said. “But in this space, you have to verify everything two and three times, know your market and jump through regulatory hoops.”
[If you are looking for more details on how to start a business and all the steps to follow, see our step-by-step guide to getting started.]
Understand your legal obligations
Just because the 2018 Farm Bill legally legalized industrial hemp and, by extension, hemp extract, such as CBD oils, does not mean that there are no significant regulatory considerations around the industrial hemp industry. The Agricultural Law of 2018 essentially eliminated the CBD from the Federal Controlled Substances Act and the supervision of the Drug Control Agency. Instead, he placed the government of the hemp and CBD oil industry in the hands of the Food and Drug Administration (FDA).
Currently, the FDA is still designing regulations, leaving the CBD industry in a kind of grey area. So far, the federal agency has indicated that the commercialization of CBD with health benefits will not be tolerated. It has also initiated an offensive against food and beverages infused with CBD in some cases.
To further complicate the regulatory landscape, there is the approval in 2017 of the pharmaceutical product Epidolex, a drug for epilepsy approved by the FDA. Since the CBD is a major ingredient of an FDA-approved drug, its use in food products without FDA approval could be illegal. A clearer guide is needed for CBD companies to operate in accordance with federal regulations.
“I think the FDA has to intervene, and it will,” Slovik said. “I expect a lot of changes in the labels; we are seeing many companies now using the term ‘hemp extract’ instead of CBD, or they don’t think so much about the health benefits. Many companies are doing different things. But nobody really knows [what the regulations will be] until it happens. ”
Understanding your legal obligations and safeguarding them is key in a highly analyzed industry. While CBD businesses everywhere expect a clearer regulatory orientation, it is important not to design their marketing strategy around the supposed benefits of CBD. It is also important to keep abreast of new developments as the FDA advances in the development of new regulations.
Market and sell your products
Marketing and selling CBD products can be difficult. While the approval of the Agricultural Law of 2018 liberalized the industry a bit (for example, CVS and Walgreen’s now have CBD products) it is still difficult to sell CBD products on major online platforms such as Amazon or eBay. Similarly, social media advertising is virtually non-existent; Paid ads for CBD products put account suspensions or bans at risk, so all your growth should be driven through the organic content included in the guidelines of each platform.
“Currently, if someone is looking to sell a product, the” normal avenues are Amazon, eBay, Alibaba or paid ads on social networks, “Slovik said.” In this industry, it is very different. You can’t do any of that. ”
To successfully marketing and sell your CBD related products, you will have to be creative. Establishing your own e-commerce store or transporting your products in a brick and cement location is a must. Marketing your product with an organic search strategy and customer loyalty programs is always safer than participating in paid advertising. And of course, each market is a little different, so investigate and understand your local and state laws.
Obtaining a competitive advantage
The key to obtaining a competitive advantage with permanence power in the CBD industry is to develop a high-quality product that will withstand the next scrutiny of both regulators and educated consumers. If you want to differentiate yourself from other CBD businesses, it is key to provide third-party laboratory test results to validate the quality of your product, Slovik said.
“We want to be more transparent when placing QR codes on all our bottles, so anyone in the store can use their phone to get lab results at that time,” Slovik said.
In addition, Slovik said that seeking certifications such as organic USDA, Good Manufacturing Practices and FDA facility records are important steps to give consumers confidence in the quality of the product they are buying.
Overall, Slovik explained the formula of success is simple, even if the process is too complicated.
“I would recommend a double triple check.” Research as much as you can, and recognize what future opportunities are thinking outside the box, “he said.
Key challenges facing CBD companies
The CBD and cannabis industry faces the only Alleges that other industries do not. Most of these challenges relate to the regulatory environment and, as federal agencies such as the FDA detail specific rules and guidelines, things should stabilize. For now, however, if you want to start a CBD business, you must consider these important considerations:
Banking: Access to reliable banking services can be complicated due to the fluctuation of the regulatory landscape. Many banks hesitate to do business with CBD and cannabis companies, for fear of significant risk or burdensome supervision. Often, CBD businesses are forced to change banks or experience the abrupt closure of a merchant account, which can seriously disrupt operations.
Insurance: Finding affordable insurance for a CBD business is another important challenge. Prices remain high despite the legalization of industrial hemp, Slovik said, as the industry needs time to catch up with developments. Education remains a key obstacle.
Payment processing: Similarly, payment processors present high rates and other challenges for CBD companies. Slovik said Visa recently cut all CBD businesses, leaving it able to only accept MasterCard and Discover for payments.
Access to capital: Banks and other lenders are also reluctant to finance CBD companies, as they consider the industry too risky without clear regulatory requirements. So far, the CBD industry has relied on the outburst, external investors or alternative lenders to find the growth capital it needs.
Each of these challenges is likely to be resolved as more concrete regulation appears, but in the meantime, CBD companies must remain adaptable and well informed. Changes in the industry occur day by day, so preparing backup plans in advance could save you a great deal of time and money in case the worst happens.
The CBD is a great business opportunity, if you approach it correctly
The opportunity for growth in the CBD industry is unparalleled. The cannabis industry is one of the fastest-growing in the nation, and the CBD is one of the fastest-growing sectors of that industry. Especially after the approval of the Agricultural Law of 2018, hemp CBD products proliferate at high speed. If you want to start a CBD business, you are not alone.
“This industry has been more or less illegal during the last century,” Slovik said. “At this point, there is a big important momentum. Many people are trying to enter, so don’t follow the pack. You want to be a leader.”
A combination of due diligence and creativity will establish your business for success in the CBD industry. Now is the time to enter the ground floor and create a company that lasts, but differentiating with a quality product that stands out from the crowd.