How to Start a CBD Business from Scratch

Not Worth the Hustle or a Cash-Cow Waiting for You?

If you are looking to start a CBD business, we won’t judge you since it is quite a good idea now that it isn’t only legal (with its limitations) but also a way to provide the much-needed medicine to patients and those who need it.

However, you will need to consider several factors before making the decision and getting started.

To begin with, you must understand the legal requirements in your country and state since not all places allow opening a business locally. Still, you could consider an online option if you’re limited or forbidden.

Of course, starting a CBD business is more than just regulations to meet but also the simple fact of diving into the world of entrepreneurship.

We love sharing ideas and ways to simplify your life and bring new opportunities. Thus, we decided to share the essential steps to get your CBD business started, and you only need to consider that starting this business involves relying on the online method.

But First, Do You Truly Know What Is CBD?

It can be dumb of us to ask this, but many people believe CBD is just the same as cannabis in raw (the plant), which isn’t really accurate.

To make it simple, CBD or Cannabidiol is one of the many cannabinoids that can be found in the cannabis plant or hemp plants overall.

Among them, tetrahydrocannabinol, or just THC to keep it simple, is the most popular one of the hundreds available and causes the intoxication we all know from the consumption of cannabis.

Now, how is CBD different if it is like a cousin of this popular yet very reactive cannabinoid? Well, surprisingly, it doesn’t produce an intoxicating effect like the previous one. Instead, it offers therapeutic and health benefits that help people with pain, anxiety, and other diseases.

Unlike marijuana, CBD can only be obtained from industrial hemp since it isn’t like the traditional and illegal products we know.

The raw material to extract the component is cultivated and harvested for professionals, or it can be accessed through licensed farmers who are allowed to cultivate and harvest the plant.

From this plant, CBD oil is extracted with different methods and equipment to maintain its purity.

The product itself can be sold as a concentrate, which is the regular oil you will see in stores and obtain with sellers, but it is often used to infuse several products that are quite popular as pain relievers (most of them).

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With this clear, we need to mention something important: You can obtain CBD from cannabis, but it isn’t the same to extract it from the plant compared to industrial hemp companies or sellers have to rely on.

The reason? The oil must have less than 0.3% THC per gram dry weight to be grown under a USDA-approved license and sold as a concentrate or used in other products.

When you get the cannabinoid from cannabis, you will only get a product that has over 0.3% THC, and it is impossible to reduce its level.

Steps to Start Your Business: Make Your CBD Dream Come True

Don’t think we forgot about the crucial part: Learning how you can start your business.

One step we will skip from this process is the research part and learn about the product itself.

We know we just spent some time explaining what CBD is, but this is just for you to know that it isn’t as simple as thinking in cannabis if you are here without looking for previous information that answers questions like “What is it?” “Is it really legal?” and so on.

Thus, we are just going to leave this obvious part here and move on: Do your research and learn about the product you will sell before even considering starting.

If you already did or will do along with this article, you’re welcome to continue reading and plan how you will start.

Don’t worry; we will do our best to keep it simple yet include everything needed.

  1. Know your legal obligations.

When hemp extract and industrial hemp were legalized back in 2018, many people thought it would be easy and simple to start a business, acquire the products, and just handle this CBD market like any other thank.

Although this booming CBD industry and the hemp-derived CBD products are great, it is a big mistake to think it will be easy because something you need to remember about CBD is the important regulatory considerations surrounding this industry, and you have to work around them.

The 2018 Farm Bill effectively removed CBD from federal Controlled Substances Acts and the oversight of the Drug Enforcement Agency.

As a result, the FDA was given the responsibility for managing the CBD industry and CBD oil to include it in the market as a legal product by following certain regulations.

Most of the regulations are still under development, but this doesn’t mean you can sell the products.

In a highly scrutinized industry, it is important to understand your legal obligations and play safe.

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Every CBD business around the world is still waiting for clearer regulatory guidance. However, it is important not to base your marketing strategy on CBD’s supposed benefits.

Why? Because the FDA doesn’t allow to market it by mentioning any health benefits. Although people know about them for the sellers themselves, it isn’t publically disclosed or mentioned during the marketing campaigns.

You should also keep up to date with any developments as the FDA continues to craft new regulations.

  1. You need a business plan… a legit one. 

It’s essential to establish your business goals and create a business plan before you decide to spend money or even think about a name for your store and the elements most new entrepreneurs consider.

Remember this: Without a business plan, you are bound to fail before starting.

It is very common to see people rush to get started without taking the time to evaluate their purpose, their target market, their products, their financing plan, and their long-term goals, and we could just continue mentioning more factors and elements.

But how can a business plan truly change your probabilities of success? It helps to ensure stability, growth, and profit since you will have a “map” that will allow you to avoid common mistakes or be prepared for them and have a path you can follow in order to prevent any deviations or unnecessary expenses and waste of time.

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Now, we know you are wondering what a business plan for your CBD company should contain. You don’t have to make it complicate and instead, just focus on the essentials like:

  • What will be the name of your company?
  • Do you have a reliable CBD supplier? Where will you find it?
  • How is the market? Perform an analysis.
  • Include your finances.
  • Set a marketing plan in addition to the main business plan.

And the list continues based on the ideas you will have and the rest of the steps we will be including.

Finally, a business plan will basically help you to stay focused, overcome obstacles and achieve your long-term goals by knowing your short-term ones.

  1. You must find your CBD niche and decide what products you’ll sell. 

You can buy any product that contains CBD or more like, there are way too many available in the market that people don’t even know about, including those that are involved in the market or consume it.

If you don’t believe us, it only takes a look at the shelves in any wellness shop (online store, of course).

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If you need us to mention a few, many entrepreneurs are trying to capitalize on this consumer interest by selling creams and ointments as well as hemp clothing and accessories.

Thus, the question of “Which should I sell?” is much more than just valid, and we are sure you didn’t know it wasn’t a silly doubt.

To answer it, we would recommend you start by identifying whether you want to stick to the classic like the concentrate CBD oils or go for “modern” options like the ointments and creams we mentioned.

Look at the market opportunities in the specific niches first when assessing the options, and we are sure you will come up with a decision in no time.

To lend you a hand in which ones you should consider, these are the most in-demand niches in the market:

  • CBD-infused beverages and CBD-infused food.
  • Supplements and wellness products.
  • CBD-based cosmetics.
  • CBD products for pets.

The product type in the CBD industry also matters and will change the CBD niche you choose as well.

After all, you can have oils and infused beverages (for example), but not all of them come in the same presentation:

  • Drops or sprays: CBD oil is the key ingredient in both, which you should consider when choosing the niche.
  • Capsules and pills: By wrapping a dose in gelatin or soft gel capsules, it makes it easier to digest. This form of CBD may also be more appealing to people who use it as an alternative to prescription medicine.
  • Vapes and cartridges for CBD: Inhalation products are popular with recreational users and those looking for pain relief.
  • Tinctures: CBD-based tinctures are made by mixing cannabinoids and alcohol or another strong solvent.
  • Topicals and patches: Designed for targeted action like joint, back, or menstrual pains, CBD patches, and topical ointments are best suited to those who don’t enjoy hemp flavor or prefer external applications.
  • CBD edibles: Candy, chocolate, and honey sticks are just a few of the many CBD edibles on offer. They make hemp seem less medicinal and more like food to enjoy.

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  1. Organize your business documents. 

If you thought an online business didn’t need any type of documentation, you thought wrong.

Since cannabis isn’t like selling shirts or starting a random store of random items, you will need to follow all the regulations many online businesses avoid.

Thus, licenses are needed for selling CBD online and, in the USA, there are two required:

  • Regular business license: Register a business in your state and get an EIN/TIN
  • Reseller license: To purchase CBD wholesale from retailers, you will need a reseller’s certificate (if it is the way you are planning to get the plants and products). This license is vital because it allows wholesalers to purchase CBD without having to pay sales tax. You can also collect these taxes from customers with the license.

Depending on the state you are in or country, different licenses might be needed that differ from the regular ones.

Some countries in Europe request CBD sellers to have a CBD certification that shows they are capable of manage and distribute the products and their suppliers or if they are the ones cultivating and harvesting the plants and capacitated for it.

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  1. Find your supplier or make it from scratch. 

As we mentioned before, you will need a reseller license if you plan to purchase the products from a supplier. Still, if you are thinking about getting everything done from scratch (literally), you will need to think about whether it is a good idea or not.

However, we won’t dive too deep into that decision since we are more interested in remembering to find your product source or turn it into one.

Most CBD businesses have two options (leaving creating their own products) to sell CBD:

  • Rely on CBD brands products and purchase them at lower prices.
  • Private label an existing product.

To explain it briefly and ensure you are making a good decision, let’s focus on all the options for a bit.

If you choose to rely on CBD suppliers from other companies or just retails, you can sell the products by simply contacting the manufacturer to inquire if they are willing to wholesale their products.

This is a simple and inexpensive way to start, but remember it is important to select high-quality wholesale CBD oil and other products when choosing the brand.

The best way to determine if the supplier is worth your time and reliability is to look for reviews from customers and inquire about return and refund policies and if the products met their expectations or are quite poor in standards.

Choose a transparent company that has up-to-date COAs, and uses third-party-tested products.

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On the other hand, if you choose a private label, it can be a bit easier to sell without dealing with additional regulations established from those buying products from retailers.

Private labeling is more about selling your own product with your business name and all, but you don’t have to make it alone either because you don’t have the knowledge or skills to make your product, or you prefer to leave the hard task to someone else.

However, for this, you will need to contact the best manufacturers and ask them if they are willing to “private label” their stock formulas or maybe produce yours.

This is the simplest way to create your own product line without having to worry about custom formulations.

However, this route is subject to more liability than regular wholesale. If someone claims that your product caused harm to them, they can sue you, and although insurance can handle this, it will be a great deal of an expense for your business investment.

Finally, if you prefer to create the products yourself, you will still need to find authorized industrial hemp farmers who can provide you with the material.

Or you will have to go through a troublesome process to get this done and be your own raw material supplier.

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  1. Choose your eCommerce platform and build the site. 

Since this business will be online (there’s truly no other way), you will need to decide what platform you can use to design your tech infrastructure and guarantee it is properly optimized, operates well, and can make it easy for future customers to buy your CBD products.

This step is essential, unlike what many entrepreneurs think regardless of the niche since your online store is your local place, and it should look stunning but also be comfortable and fast.

Although there are many eCommerce platforms available, you cannot create CBD shops in all of them since some are under regulations due to their countries and who created them or the company handling their operations.

Thus, CBD entrepreneurs who want to start their businesses will need to rely on BigCommerce, Shift4Shop, and Shopify.

Going in order, BigCommerce provides a variety of B2C and B2B eCommerce features to CBD sellers, wholesalers, and manufacturers, making it easy to set the store and optimize it for customers.

The drag-and-drop page builders, unlimited customization options, 0% transaction fees, and 99.9% uptime are some of the benefits of choosing this platform.

Shift4Shop allows you to host digital CBD and vape-related businesses and offers common yet essential features: Shopping cart software, embedded “buy” button, and full-scale website builder.

They also offer themes, unlimited bandwidth, and payment processor support. The issue with this option is that it isn’t beginner-friendly, and those without knowledge in web development and design will have a hard time.

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If you ask us which platform we would choose, Shopify is definitely the one we would mention and go for every single time, and although this turned to be a bit biased, you are free to research a bit more about each to make your decision.

But focusing on Shopify, allows only US-based merchants to sell CBD and hemp-derived products on their platform.

You can access a number of core commerce features to launch your digital business, including design templates, integrated shipping, and marketing tools, as well as payment processing.

The main issue isn’t the fact it isn’t only available for US-based merchants but rather that the Shopify payment method is not available for CBD products, and you have to rely on a third-party payment processor.

So, what makes us choose it despite the previous cons? Simple: It is much more optimized, and most online stores or eCommerce are built on the platform.

It is cleaner, operates better, and you can use the rest of the features either way.

Once you’ve decided which platform you will use, you can just start building your website.

  1. Start promoting your CBD business: Marketing. 

Once you have your business up and running with all the documents clear, business plan, and additional capital for extra expenses, it is time to start looking for customers.

Although CBD is a hot industry right now, it won’t be able to attract customers that easily. Why? Because certain platforms like social media don’t allow you to advertise CBD products.

This means you’re usually left with organic options that can help you generate leads, yet they are a bit slower than paid ones you usually use to complement the rest of your efforts and build a solid marketing plan.

This doesn’t mean it is your doom or impossible to market it, but you will need to put lots of effort since the beginning to make the business have a good start in the market.

Here are some recommendations of the methods you should include in your marketing plan:

  • Quality content.

Due to the misinformation from brands and false medical claims of self-proclaimed gurus, CBD products remain largely misunderstood.

Seeding quality content will help you build your first customer base and bring organic traffic to your eCommerce.

Educating is always a good option to have more customers, and since your website is the key, you will have to include it in a different section.

If you don’t have an idea of what you can share or write about, here are some ideas:

  • Different product types.
  • CBD extraction methods.
  • Potential benefits and outcomes.
  • Possible side effects.
  • Correct usage/dosage.
  • The entire hemp or cannabis industry.

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  • Don’t miss SEO. 

To dominate the search engine results, publishing well-researched content is crucial. No, it isn’t about writing content and posting it only. 

You need to work with the popular ‘keywords’ and follow other search engine parameters that will help your eCommerce rank high in Google and Bing. 

If you aren’t familiar with SEO, it is all about having enough elements that meet the search engines’ parameters, so your store is considered useful for users. 

A great example is to take a very common question, “What are CBD and its benefits?”

Although you’re a store, your additional content as a blog section or informational one should provide the answers to this question by including it in the content so users searching for it can find your site and, thus, your eCommerce.

This SEO change can be a huge opportunity for CBD businesses to attract top-of-the-funnel clients and convert them with educational content.

Because there is a lot of SEO competition around CBD-related keywords, you can target long-tail keywords that are less searched to help you get the initial traffic. At the same time, you work on further optimizations.

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Creative marketing is the best way to sell CBD products, and if you want your own CBD business to work out, you can’t just skip marketing and wait for the best. 

Other organic marketing strategies we can mention are uploading informative YouTube videos, creating your social media to have a presence, working on methods that don’t include paid ads, and having a newsletter. 

Advertising CBD online can be difficult and restrictive because it is still classified as a grey area under many laws and regulations. 

But you still can find some platforms that allow ads of the products, so you can also focus on their research. 

It takes time to build an online presence. A startup with limited capital should start small with just one channel of marketing but make sure to include more whenever you get the chance to expand your reach. 

Just make sure you are investing your capital smart, and you will be successful in starting your CBD business from scratch. We’re wishing you the best!

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Written by Dame Cash

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