Cannabidiol (CBD) is rapidly gaining traction in the supplement industry and is expected to grow by 700% in 2020 – which is $2.1 billion.
Despite the controversy surrounding CBD oil, and the confusing government oversight, people are still interested in its benefits, and more research is being conducted to discover the full spectrum.
And owning a CBD oil business can be profitable. In 2015 the hemp industry produced $573 million in sales.
If you’re looking to start a CBD oil business, now is the time. Read on to begin mapping out your steps for success.
What Is CBD Oil?
Cannabidiols or CBD oil is derived from the cannabis plant. This is where the waters start to get murky on the safety of CBD oil.
There are two types of cannabis plants, marijuana, and hemp. The species of plant is similar, but the chemical makeup differs.
Difference Between Hemp and Marijuana
Marijuana carries higher levels of a chemical compound called tetrahydrocannabinol (THC), and this has psychoactive properties which give you the feeling of being high.
Hemp-seed oil has extremely low levels of THC, and cannot get you high. The levels of THC must be lower than 0.3% for it to be legally sold in the United States.
Because marijuana’s levels of THC exceed the 0.3%, this makes it illegal.
Start Your CBD Oil Business – 5 Questions to Ask Yourself First
The potential profits for a CBD oil business may be enticing, but do you know what you’re signing up for? Ask yourself these five questions before stocking your shelves with CBD oil.
Is the business right for you?
Are you interested in cannabidiols and how it helps people? Educate yourself on the plant, how it works, and different ways to treat certain ailments.
Understanding the stigma surrounding CBD oil and learning as much about it as possible helps to address fears and concerns for customers.
Online or in-store?
Would you like to have a brick-and-mortar store or website only? Most businesses that sell CBD oil do so online, but others own a physical location.
What’s a typical day like?
As a CBD oil business owner, what will your day consist of? Visiting farms and suppliers? Managing staff or filling orders? Tap into other people in the market and see how they run their business to get a feel for the industry.
Define your target market
Who will you be selling to? CBD oil is therapeutic specifically for those suffering from anxiety, and chronic pain, so conduct some research to see how to market to those in your area effectively. Children and pets can also safely use CBD oil.
How much will it cost?
Growing your own hemp is more of a low-cost start-up than purchasing from a distributor or third-party seller. Consider partnering up with a local farmer and compare costs.
Planning Your CBD Oil Business
You’ve decided that CBD oil business is right for you! Now start planning your business.
Here are some ideas to get you started.
Plan Your Business
Even with CBD oil in high demand, every business needs a blueprint for success. A professional writer or business planning software can prove to be an invaluable resource at this stage. When you pitch your business to investors, they expect to see a solid business plan.
Include these fundamental elements in your business plan:
- Financial arrangements: how do you plan to fund your business?
- Analysis of your target market: who are your potential customers and why?
- Products to offer: provide a range of products and prices.
- Sales outlook: What’s your business going to look like several years from now?
Remember to build your business plan thoroughly. A successful business depends on it, so take your time.
Understand The Business
If you have zero experience with CBD oil and the industry, and with all the legalities surrounding it, your success may wane. It’s vital to understand it inside and out. Meet with other business owners, sample products, ask lots of questions until you become an expert.
Keep in mind even with all the knowledge you have; this may not stop authorities from investigating your business.
Read Up on The Legalities
From a federal standpoint, CBD oil that is derived from marijuana is illegal. When CBD oil is extracted from the hemp plant and is compliant with 0.3% or below levels of THC, it is legal to sell throughout the United States, though the area is still gray.
However, each state holds a different set of laws towards the distribution of CBD oil, so reading these thoroughly and understanding them could save you in the long run.
Be sure to create a legal entity should someone try to sue you.
Cultivate Your Brand
Establishing your brand is an important part of any business because customers need to understand your mission. Why are you in this business and what do you hope to achieve? Developing a strong brand is essential, so don’t rush it!
Secure A High-Risk Payment Processor
A payment processor handles business transactions. A CBD oil business may be deemed risky for some companies, so be on the lookout for a high-risk payment processor.
The more information that arises about CBD oil and THC, the more companies are relaxing and accepting merchants who sell CBD oil. It’s much easier than it has been years previous.
Products to Carry
Not every store carries one type of product! Decide which CBD products you’d like to offer. There’s the oil itself, CBD lotion, sprays, capsules, and much more.
The products you chose should align with your brand and mission of your business.
Learn more here about product options.
A general range of prices for oils are $60 for 30 mL and upwards depending on the size, at a 50% markup.
Visit The Bank
Set up your bank accounts to maintain organization. Choosing a business bank account gives a professional impression.
Set Up Accounting
Accounting allows you to track sales, expenses, and understand the financial health of your business. It also keeps everything organized for taxes.
Build A Website
Even if you decide to open a physical store, having a website is crucial in any market today. Customers will likely Google you before stepping foot in the store, so invest in a website design that’s easy to navigate with a clean design.
Optimize SEO on Your Website
Understand the ins and outs of SEO optimization. This helps you achieve higher ranks in Google and gain more visibility for your business.
Write A Blog
Stay current with CBD oil trends and research by writing frequent blog posts on your website. Websites with blogs often fare better than those without.
Start A Social Media Presence
Being on social media can help you gain traction and credibility in the CBD oil market. It also lets people know where to find you.
Some platforms to consider are Facebook, Google +, and Instagram. Pinterest is also evolving to cater to more business owners, so it may be an option.
Obtain a Business License, Permits, And Insurance
Skipping over tasks like not obtaining a business license or permit could cost you fines or your business itself. If you want a sustainable business, don’t overlook this step! Do this at your local city’s or town’s office.
Acquiring business insurance is advisable for all business owners especially if the business staffs employees. Find out what the insurance requirements are for your state to be safe.
If you’re planning to open a storefront, you will need to obtain a Certificate of Occupancy. A Certificate of Occupancy shows that the building is up to code and meets government requirements.
Register for Taxes
State and federal taxes must be registered before you can open your business.
Consider Ongoing Expenses
Things like farming, staffing salaries, marketing costs, or even hiring a lawyer to keep up with the changing landscape of CBD oil are all possible expenses to consider.
Write A Disclaimer
Acknowledge that CBD oil is not regulated by the FDA and be honest about your business! Despite the studies done showing the effectiveness and safety of CBD oil, it’s not recognized as a medical treatment by the government and the public needs to be educated.
Marketing
Gaining visibility for your brand is the key to success. How can you solidify yourself in the market? Explore your options for marketing. Will you advertise online, collaborate with other businesses, or run ads in the newspaper or on billboards?
There are numerous ways to market your business, so choose one that works well for your brand, budget, and speaks to your target market.
Marketing your product as hemp-seed oil could help you avoid a brush with the government or other authorities.
Green Clean Certification
Going for a Green Clean Certification lets customers know the purity and rigorous testing that goes into your product. They help make sure your product is safe and will not harm anyone. It’s similar to seeing an organic label at a grocery store.
Ready to be in Business?
Starting any business takes time, patience, and knowledge. A CBD oil business is no different.
But with the growing popularity and research surfacing about CBD oil, the industry could explode quickly. Decide which steps you want to take today to begin building and growing your CBD oil business.
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