Starting Your CBD Business

What is CBD?

With the ever popular legalization of marijuana, CBD has often been back burner conversation.

There’s a growing need in America for effective and safe healthcare alternatives–and Cannabis Sativa seems to be the answer. 

CBD, short for cannabidiol, is a chemical compound from the Cannabis Sativa plant, also known as marijuana or hemp, according to the US National Library of Medicine.

The foundation for CBD use is its ability to calm and relax. As it’s a naturally occurring compound that’s non-addictive, it’s a much more preferred alternative over prescription drugs, opiates, and even over the counter medications. Additionally, unlike it’s cousin THC, it’s not psychoactive.

Currently, studies about CB1 and CB2 receptors are helping doctors and practitioners alike understand how CBD provides so many benefits like supporting occasional anxiety, headaches, helping with more restful sleep, etc* with so few downsides. It’s likely that the simplicity of the compound and the natural derivatives help the body understand, process, and receive these benefits.

There’s so many benefits to CBD, and with licensed hemp growers up 27% in 2021, there’s no shortage of this, truly, miracle plant on the horizon. Which means, there’s never been a better time to set up shop, and build a booming business.

Why IS the CBD Industry Growing?

It doesn’t take much more than a glance to understand why CBD is on the rise. On top of an ever growing list of studies and research, personal medical benefits, and industry growth–selling CBD products isn’t regulated at the federal level. This means it’s the perfect breakthrough product to add to any online listing.

From startups, like InnerG, to classic sellers, like Lord Jones, the varieties, flavors, product width, and benefits are astounding–truly anyone can get in on the game. Many companies put in extra ingredients for added benefits, like Turmeric and Spirulina (classic super antioxidants). Business growth then comes down to flavors, customer service, and additional benefits. Why do you want the things you want?

This industry truly is catering to its user base–if you want it, you can probably find it. Vegan, sugar-free, gluten free, kosher, non-GMO–the list is endless. CBD doesn’t just come in edibles, but in oils, tinctures, bath soaks, lotions, skin care, chocolates, and more.

The low cost of materials make manufacturing simple, and customization easy. It’s easy, then, for your startup business to sink more money into your social media campaigns, better business ideas and development, quality of product, buyer metrics, and market size.

Is The CBD Business Profitable?

According to Medgadget, The Bureau of Labor Statistics, How To Start An LLC, and a market just shy of $1 Billion in 2020 (projected to hit $1.8 by 2022)–yes–it’s very profitable.

Typically once a buyer base is established (which, given the excessive demand of CBD in today’s market–shouldn’t be altogether difficult, as far as startups are concerned), it’s not unusual for the average product to be sold at $60 with a 50% markup (avg.).

By that standard, you’d need to move just 200 products a month in order to profit $6,000 (100 for $3,000, 50 for $1,500, etc. etc.).

Plus, white label manufacturers (like 5 Day Private Label) can help reduce startup costs, and keep overhead low, distribution easy, and branding simple. Meaning more of that six grand goes in your pocket, and not your product.

How To Start a CBD Business Online

First things first, you have to know what you’re getting into, and who you’re getting into it with. There are a few legal obligations you’re required to follow when selling CBD and starting an LLC. For starters, the difference between Hemp and Cannabis.

Hemp CBD vs Cannabis CBS

There are technically two classifications for the Cannabis Sativa plant–Hemp and Marijuana.. Hemp CBD is sourced from the industrial hemp plant itself, which is typically grown for its fiber and seeds. Traditionally hemp plants would differ from marijuana plants in appearance (skinny and scarce in foliage vs. bushy and full). However, genetics have played a role and hemp and marijuana now only differentiate based on a legal level by its levels of THC (the cannabinoid that possesses intoxicating properties)

Under U.S. law a hemp plant must contain no more than 0.3% THC meaning that:

  • HEMP-DERIVED CBD
    • Is legal at the federal level
    • Contains less than 0.3% THC
    • Is non-intoxicating (won’t get you high unless you are very sensitive to THC, or use excessively large quantities of CBD hemp extract)
    • Easily purchased online or in retail stores across the country
  • MARIJUANA-DERIVED CBD
    • Is illegal at the federal level
    • Contains higher amounts of THC (up to 30% or more with concentrates)
    • Intoxicating (it will get you high)
    • Only available for purchase in licensed medical or recreational marijuana dispensaries

1. Understand The Difference

Knowing the difference essentially keeps you in the clear. Most retailers, manufacturers, labelers, and warehouses won’t (and legally can’t) house, process, manufacture, or ship THC products without proper licensure and federal approval.

2. Study the Market Reports

While yes–The global CBD oil market was worth $967.2 million in 2020, and CBD market statistics estimate that by 2025 it will be worth $5.3 billion with a 40.4% CAGR growth for the 5-year period–you need to know exactly what chunk of the market you’re going to corner.

Know your business plan before diving into buying out a manufacturing contract. There’s nothing worse than jumping into a booming industry and then holding a warehouse of product with no one to sell it to.

A simple Google is all you need to get started and build out a solid year-to-year business plan. Visit sites like LoudCloud Health, How To Start an LLC, and 5 Day Private Label, to start getting quotes, building your business plan, and researching what you want to sell, where you’ll sell it, and who you want to sell it to.

3. Execute

The most important (and often the hardest part) of any entrepreneurship, is getting out and doing. Maybe you’ll want to go in with a few buddies to lighten the load and keep each other accountable, or maybe just dedicate a few hours here and there as a side hustle. Whatever you do, be consistent, and (with all of the luck we can wish you) actually do it, and SUCCEED!

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