How to Become a CBD Distributor
CBD and everything else hemp-related is only becoming more popular with time, and projections suggest that the domestic hemp market is about to explode into an unprecedented period of growth based on a variety of emerging factors. With demand for hemp products increasing across multiple channels, there’s never been a better time to buy CBD products wholesale and distribute them at retail prices.
Certain approaches to distributing CBD, however, have proven more effective over the last few years than others, and you can save yourself a significant portion of your time and capital investments by learning from the mistakes of those who came before you. In this guide, we’ll cover some of the key data supporting the continued viability and low barrier to entry of the CBD industry and thoroughly explain why becoming a Secret Nature CBD distributor is the best way to capitalize on everything that emerging hemp markets have to offer.
Why should you sell CBD?
The euphoric buzz surrounding the hemp market has largely dissipated in the last few years as the CBD industry’s vibe has come to more closely reflect the mild, non-intoxicating effects this cannabinoid provides. With increased competition and the legitimization brought about by legislation like the 2018 Farm Bill , bad actors have largely been competed out of the CBD market, and larger companies have begun cementing their footholds.
In many ways, CBD has taken on the attributes of a permanent fixture in American life, and while this transformation may be bad news for snake oil salesmen who simply want to make a quick buck, there’s never been a better time for legitimate entrepreneurs to enter the hemp market. Consumer awareness of CBD has reached new heights, and as self-imposed quality standards have become normalized, the CBD industry has also become significantly more trustworthy.
Beyond these general trends, there are also a few concrete factors that prove the ongoing viability of the CBD industry beyond a shadow of a doubt. Mainly, trustworthy market studies have demonstrated that (despite ongoing normalization) the hemp industry will continue to experience explosive growth, and the CBD market is rapidly evolving to accommodate more non-intoxicating hemp constituents than just cannabidiol.
CBD market expectations
According to the economic journal Market Research Future, the global CBD market is expected to grow by 125.58% per year over the next six years. The CBD industry was already valued at over $500 million in 2018, and the total size of this emerging market will grow at an exponential rate for the foreseeable future. What’s more, around 20% of Americans have already tried CBD, and over 60% of Americans trust that CBD has legitimate medical applications.
Considering these expectations and statistics, there is still plenty of room for growth within the hemp industry. While more than ⅔ of Americans are open to the benefits of CBD, less than ⅕ of the population has used this cannabinoid, indicating that more than 40% of people in the USA have yet to be reached by CBD brands and distributors. While an increasing number of consumers gravitate to online shopping every year, there is still plenty of room for growth in other sales channels as well, providing room for a practically limitless number of entrepreneurs to leave their mark within evolving and established segments of the hemp industry.
The future of cannabinoids
Many aspiring hemp entrepreneurs still can’t see beyond the allure of CBD. This cannabinoid seemingly solves all the traditional issues with THC by being non-intoxicating and non-addictive while still providing significant benefits. The people who are laser-focused on CBD today, however, are the same individuals who failed to foresee the rise of CBD a decade ago.
THC and CBD are hardly the only cannabinoids that Cannabis sativa expresses. All told, this plant produces more than 100 cannabinoids, but most of them are analogs or copies of a few main compounds including cannabigerol (CBG) , cannabinol (CBN), and cannabichromene (CBC). Each of these “minor cannabinoids” are each expressed in most cannabis strains in such small quantities that many entrepreneurs put them aside in their calculations, but all that is about to change.
Already, CBG is approaching the level of popularity that CBD has maintained for more than half a decade. This cannabinoid is very similar to CBD, but it’s different enough to be desired for its unique traits. The same goes for CBN and CBC, and further cannabinoids, such as CBDV and THCV, are also starting to enjoy their moments in the sun.
The future of the cannabinoid industry is not limited to CBD, THC, or any other single Cannabis sativa constituent. Instead, we’re currently witnessing the birth of an all-encompassing hemp industry composed of a greater number of distinct, profitable segments than anyone ever expected.
Becoming a CBD wholesale distributor: 7 easy steps
The hemp industry isn’t going anywhere, and this unique, highly profitable sector of the economy will only continue to grow in the coming years. Now that you understand the value of capitalizing on the opportunities available within the CBD industry, let’s go over the roadmap that every aspiring hemp distribution entrepreneur should follow on the way to greatness:
1. Study the market
First, take your time to fully understand the market that you are approaching. The information we’ve provided above is a good start, but you’ll need to invest a significant amount of time into your own research to avoid common pitfalls and capitalize on profitable ideas.
If you enter the hemp industry with your head full of principles that were applicable in 2018 but won’t be valid in 2022, you’ll end up fighting over scraps instead of enjoying the spoils of the hunt. Learn the history of the CBD market, understand its current form, and project your expectations into the future to understand where this emerging industry is heading and position yourself for the most benefit.
2. Create a business plan
After coming up with a general idea of how to approach the CBD market, take some time to develop a comprehensive business plan. Whether you’ll be shouldering all of the costs of your new business yourself or you plan to seek the assistance of investors, plotting a clear path toward success will help you get the most out of your new venture.
First, determine both the initial and ongoing costs of your enterprise. While marketing CBD products online costs less than operating a brick-and-mortar store, acquiring customers, managing inventory, and handling fulfillment aren’t free. Even the smallest CBD distribution businesses need at least $5,000 in startup capital and make sure to keep your monthly cost estimates realistic to avoid unexpected pitfalls.
Next, you’ll need to determine how long it will take for your business to become profitable. Investors will want to know this information more than anything else, and even if you’re going it alone, the first day you turn a profit is the first day you’ll get paid as a hemp entrepreneur. Leverage your expected costs against your projected revenue to get a clear idea of when your business will be in the black.
3. Determine your sales channels
Part of coming up with an effective sales plan is figuring out how you will sell your products. If you plan to open a brick-and-mortar store, you should also consider offering products online, and if your new distribution business will be strictly online, you’ll need to consider how you will acquire and retain customers.
Online businesses commonly advertise on social media, and you may also want to explore the potential of pay-per-click (PPC) advertising even though most PPC ad companies are traditionally averse to hemp-oriented enterprises. If you operate a website to distribute your CBD products, you’ll need to invest in search engine optimization (SEO) to compete with other sellers, and you’ll also need to take other factors into account like product pictures and site design.
4. Select the products you want to sell
Now that you’ve established a basic plan for how you’ll move product, you need to determine which segment of the hemp economy you want to target. Do you want to capitalize on emerging trends and offer CBG-rich products, or do you want to accept greater competition and offer products within traditional CBD product categories?
Even if you decide to solely offer CBD products, there are lots of different product categories to choose from. Tinctures, capsules, and topicals have become the norm within the CBD industry, but over the last couple of years, the CBD flower sector has experienced explosive growth, making this product category the primary target of savvy hemp entrepreneurs.
5. Pick a qualifying wholesale brand
Even the best-laid CBD distribution plans will go awry if you don’t pick the right products to sell. Your ideal brand partner will provide you with fair prices, offer consistent access to products, and operate reliably and professionally in every way that matters.
In general, it’s best to work with brands that have been around for a while. A CBD company that just came into existence may cease to exist just as quickly, leaving you in the lurch and forcing your customers to get used to new products. Since there’s more competition within the CBD industry these days, it’s also important to choose a company with high-quality products that stand out.
6. Choose a name and acquire licensing
Before your CBD distribution business can start legitimate operations, you’ll need to choose a name for your company and acquire a business license. You don’t need any special licensing to sell CBD products, but depending on the type of business you intend to operate, you might need to get in touch with your state, county, or local licensing office to get your hemp distribution operation off the ground.
7. Start selling
You’ve dotted your “i”s and crossed your “t”s, and now it’s time to get down to business. Remember that any distribution business can take a while to get going in full swing, and with online-only CBD distribution businesses, getting up to speed can take even longer since search engines will need to crawl and index your site before potential customers can find you.
Keep trying your best to build awareness of your company, and don’t be too disappointed by minor setbacks. The CBD industry will be around for a long time, so as long as you diligently pursue your goals, you’ll achieve success as a CBD distributor before you know it.
Become a successful Secret Nature distributor today
Secret Nature offers unique hemp distribution opportunities that take full advantage of the latest trends within the CBD industry. Hemp consumers are ditching capsules, gummies, and other ineffective products and embracing CBD flower at an unprecedented pace, so positioning yourself within this rapidly growing sector of the hemp economy is the best way to position yourself for long-term growth.
At Secret Nature, we understand that CBD isn’t the be-all, end-all of the hemp industry, so we also offer CBG flower along with vape cartridges that contain other trending, non-intoxicating cannabinoids. As the hemp industry continues to evolve, Secret Nature will prove to be one of the only brands in the world that have the flexibility to evolve in response, so taking the steps to become a Secret Nature wholesaler today is an ideal way to enjoy short-term benefits that lead to long-term security.
Secret Nature offers unique hemp distribution opportunities that take full advantage of the latest trends within the CBD industry.
How to Start a CBD Business
The CBD sector of the cannabis and hemp industry is one of the fastest growing segments of the space. Here’s how you could start a CBD business and get involved.
- Cannabidiol (CBD), a compound found in hemp and cannabis plants, is becoming increasingly popular as a dietary supplement.
- The CBD industry is projected to hit $20 billion in sales by 2024.
- Hemp and hemp CBD are federally legal following the signing of the 2018 Farm Bill.
- The industry still faces challenges in advertising, banking and insurance.В
Still relatively new to the mainstream, cannabidiol, more commonly known as CBD, is becoming a household name. The purported therapeutic and health benefits of CBD, one of many compounds found in cannabis and hemp plants, has created a buzz. CBD oil has entered the marketplace in the form of tinctures, infused edibles, topicals and more. The growth of CBD oil products has been so immense, in fact, that industry analyst BDS Analytics predicts the U.S. CBD market will reach $20 billion in sales by 2024.В
The potential of the CBD industry has prompted many people to explore how they can launch a CBD business. The industry is not without its challenges, though, especially surrounding the evolving legal landscape, but the opportunity is significant.В
If you’re considering getting involved in the CBD industry, you first need to understand more about cannabinoids and the products that utilize them.В
What is CBD?
CBD is one of more than 100 cannabinoids, which are compounds found throughout the cannabis and hemp plants. The most famous cannabinoid is undoubtedly tetrahydrocannabinol (THC), which is responsible for the intoxication associated with the consumption of cannabis. CBD, however, does not produce an intoxicating effect; instead, it offers potential therapeutic and health benefits, though research into its potential medical applications is ongoing.В
CBD products are generally created in several steps. First, the raw material needs to be cultivated and harvested. For example, if you plan on using industrial hemp to create your CBD products, you will either need to cultivate or purchase a large amount of the plant. From there, CBD oil is extracted from the plant using a variety of methods. Again, you can do this yourself or outsource the process to an extraction company. Once you have extracted the 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 tinctures, infused edibles and topicals, like gels or creams.
Hemp CBD vs. cannabis CBD
CBD is found in both cannabis and hemp plants. CBD oil can be extracted from either plant and used to create CBD oil products. However, there is a key difference between hemp CBD oil and CBD products derived from cannabis: THC.В
Industrial hemp contains less than 0.3% THC, and as such, it is considered legal under federal law to cultivate, harvest and process into finished products. Cannabis, on the other hand, contains more than 0.3% THC (often much higher levels) and remains federally illegal.В
Hemp and cannabis are closely related; in fact, industrial hemp is actually Cannabis sativa L. The difference in name is mostly a function of a legal definition, which sets the threshold for THC content. The flowers of a hemp plant contain little to no THC, while the flowers of a cannabis plant (commonly referred to as marijuana) contain much higher levels of THC.В
The federal government considers marijuana a Schedule I drug under the Controlled Substances Act, making it illegal for interstate commerce, even as dozens of states legalize it for adult use. Industrial hemp, on the other hand, was recently removed from the Controlled Substances Act altogether, opening the way for its cultivation and harvest in the U.S. for the first time since 1937.
Full-spectrum CBD vs. CBD isolate
If you’ve done any research into the CBD market already, you’ve likely encountered the terms “full-spectrum” or “isolate.” Depending on the extraction methods used, the CBD oil obtained from the plant might contain other cannabinoids and compounds found in the source plant. This is what is known as full-spectrum CBD. Full-spectrum CBD not only contains other cannabinoids found in the source material, but compounds known as terpenes, which are responsible for creating the flavor profile, aroma and specific effects of the plant.В
CBD isolate, as the name suggests, is a concentrate that only contains CBD and no other cannabinoids or terpenes. While the purity of CBD isolate might sound 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 significant effects. The entourage effect is still under investigation by researchers studying CBD and other cannabinoids.
The CBD industry is projected to grow immensely
Industry analyst BDS Analytics predicts the U.S. CBD market will reach $20 billion in sales by 2024. This would be a major surge from $1.9 billion in 2018 (a 49% annual growth rate).
Needless to say, society is growing more open-minded and accepting of CBD. Many individuals are turning to it for pain relief, stress management, better sleep, and more; and many gas stations, restaurants, and local CVS stores now sell it.В
Some trends the CBD market might experience in 2020 are increased potency of products, more brick-and-mortar CBD shops, more pharmaceutical CBD products, and more access to products online through CBD websites and e-commerce shops. In fact, CBD online sales currently account for 60% of the sales channels.В
The CBD industry is introducing new products all the time. If you’re looking to start a CBD business, you will have a wide range of product types to consider selling. Here are the most popular types of CBD on the market right now:В
- Sublingual tinctures: A sublingual tincture is CBD oil that generally comes in a small bottle with a dropper. Sublingual products are ingested by placing them under your tongue and allowing the oil to absorb.В
- CBD edibles: CBD edibles are a rapidly growing sector of the industry, including baked goods, candies and foods. CBD edibles have faced significant regulatory scrutiny from the U.S. Food and Drug Administration (FDA) but remain as commonly found products.В
- Vape concentrates: Vaporizer concentrates, such as CBD oils and waxes, are another common product. These can be used with an electronic device to vaporize and inhale the CBD product.В
- CBD topicals: CBD topicals include gels, creams and sprays for aches and pains. These products are placed directly on the skin to target a localized region of the body.
- Capsules and pills: Many patients who experience seizures or digestive issues take CBD capsules or pills to treat their conditions.В
Additionally, CBD isnвЂ™t just for humans. Animals also experience calming effects when given small doses, and many businesses offer CBD products for pets, like dogs or cats.
How to start a CBD business
There are countless unique opportunities for new businesses to sell CBD. Starting a CBD business includes all the hard work and effort of launching any other company in addition to the uncertainty of a shifting regulatory landscape (and all the issues that accompany it). However, in a fledgling industry projected to undergo explosive growth, the heavy lifting today might be well worth it tomorrow.В
Cory Slovik, owner of Core Roots CBD, started his company after experiencing firsthand what he said were the healing properties of the cannabinoid.В
“I used to be a pro snowboarder вЂ¦ and I was always sore, my muscles were constantly in agonizing pain. I tried CBD, and it helped me tremendously,” said Slovik. “Then, years later, cannabis вЂ¦ started coming to the forefront, and there was research and data backing up everything I felt on the mountain.”В
Slovik soon launched Core Roots CBD, seeing a business opportunity and a way to help other people treat their pain. He said starting a CBD company is like any other business, plus a bunch of added steps.В
“It’s like any other business; there are steps and procedures you need to go through like getting insurance and writing a business plan,” Slovik said. “But in this space, you have got to double- and triple-check everything, know your market and jump through regulatory hoops.”
[If you’re looking for more details on how to start a business and all the steps you need to take, see our step-by-step guide to get started.]
Understand your legal obligations
Just because the 2018 Farm Bill federally legalized industrial hemp and, by extension, hemp extract, like CBD oils, doesn’t mean there aren’t significant regulatory considerations surrounding the industrial hemp industry.В
The 2018 Farm Bill essentially removed CBD from the federal Controlled Substances Act and the oversight of the Drug Enforcement Agency. Instead, it placed governance of the hemp industry and CBD oil in the hands of the FDA.В
Currently, the FDA is still devising regulations, leaving the CBD industry in a sort of gray area. So far, the federal agency has signaled that marketing CBD as having health benefits will not be tolerated. It has also initiated a crackdown against CBD-infused foods and beverages in some instances.В
Further complicating the regulatory landscape is the 2017 approval of the CBD-based pharmaceutical Epidolex, an epilepsy medication that was approved by the FDA. Since CBD is a main ingredient in an FDA-approved drug, using it in food products without FDA approval could be illegal. Clearer guidance is sorely needed for CBD businesses to operate in compliance with federal regulations.В
“I think the FDA does have to step in, and they will,” said Slovik. “I expect a lot of changes to labels; we’re seeing a lot of businesses out there now using the term ‘hemp extract’ instead of CBD, or they’re not thinking of health benefits so much. Many companies are doing different things, but no one really knows [what the regulations will be] until it happens.”В
Understanding your legal obligations and playing it safe is key in a highly scrutinized industry. While CBD businesses everywhere await clearer regulatory guidance, it is important not to craft your marketing strategy around the supposed benefits of CBD. It’s also important to stay apprised of new developments as the FDA moves forward on crafting new regulations.
Market and sell your products
Marketing and selling CBD products is tricky. While the passage of the 2018 Farm Bill liberalized the industry a little bit (CVS and Walgreen’s now carry CBD products, for example), it is still difficult to sell CBD products on major online platforms like Amazon or eBay. Likewise, social media advertising is virtually nonexistent; paid ads for CBD products risk account suspensions or bans. All your growth must be driven through organic content that falls under the guidelines of each platform.В
“In today’s day and age, if someone is looking to sell a product, the normal avenues are Amazon, eBay, Alibaba or paid ads on social media,” Slovik said. “In this industry, it’s way, way, way different. You can’t do any of those things.”В
To successfully advertise and sell your CBD products, you will have to be creative. Establishing your own e-commerce store or carrying your products in a brick-and-mortar location is a must. Marketing your product with an organic search strategy and customer loyalty programs is always safer than engaging in paid advertising. And, of course, every market is a bit different, so do your research and understand your local and state laws.
How to gain a competitive advantage
The key to gaining a competitive advantage with staying power in the CBD industry is to develop a high-quality product that will withstand the coming scrutiny of both regulators and educated consumers. If you want to differentiate yourself from other CBD businesses, it’s key to provide third-party lab testing results to validate the quality of your product, Slovik said.
“We want to be more transparent by putting QR codes on all our bottles so anyone in the store can use their phone to get lab results right then and there,” Slovik said.В
In addition, Slovik said pursuing certifications like USDA organic, Good Manufacturing Practices and FDA facility registrations are important moves to instill confidence in consumers about the quality of the product they are buying.В
Overall, Slovik said, the formula for success is simple, even if the process is complicated.
“I would recommend double-, triple-checking everything. Know there will be changes. Research as much as you can, and recognize what the future opportunities are by thinking outside the box,” he said.
Key challenges facing CBD businesses
The CBD and cannabis industry faces unique challenges that other industries don’t. Most of these challenges relate to the regulatory environment and, as federal agencies like the FDA detail specific rules and guidelines, things should stabilize. For now, though, if you want to start a CBD business, you should be aware of these major considerations:В
- Banking: Access to reliable banking services can be complicated due to the fluctuating regulatory landscape. Many banks are hesitant to do business with CBD and cannabis companies, fearing significant risk or burdensome oversight. Frequently, CBD businesses are forced to switch banks or experience the abrupt closure of a merchant account, which can seriously disrupt operations.В
- Insurance: Finding affordable insurance for a CBD business is another major challenge. Prices remain elevated despite the legalization of industrial hemp, Slovik said, as the industry takes time to catch up to the developments. Education remains a key obstacle.В
- Payment processing: Similarly, payment processors present high fees and other challenges to CBD businesses. Slovik said Visa recently cut off all CBD businesses, leaving him capable of only accepting MasterCard and Discover for payments.В
- Access to capital: Banks and other lenders are reluctant to fund CBD companies, viewing the industry as too risky without clear regulatory requirements. So far, the CBD industry has relied on bootstrapping, outside investors or alternative lenders to find the growth capital it needs.В
Each of these challenges will likely be cleared up as more concrete regulation appears, but in the meantime, CBD businesses must remain adaptable and well-informed. Changes in the industry come on a day-to-day basis, so preparing backup plans ahead of time could save you a great deal of time and money should the worst come to pass.
CBD is a huge business opportunity, if it’s approached correctly
The growth opportunity in the CBD industry is unparalleled. The cannabis industry is one of the fastest growing in the nation, and CBD is one of the quickest growing sectors of that industry. Especially following the passage of the 2018 Farm Bill, hemp CBD products are proliferating at a fast rate. If you want to start a CBD business, you’re not alone.В
“This industry has been more or less illegal for the past century,” said Slovik. “At this point, there’s major, major momentum. Many people are trying to break in, so don’t follow the herd. You want to be a leader.”В
A combination of due diligence and creativity will set your business up for success in the CBD industry. Now is the time to get in on the ground floor and build a company that will last, but differentiate yourself with a quality product that stands out from the crowd.В
Additional reporting by Sammi Caramela. Source interviews were conducted for a previous version of this article.
The CBD industry is experiencing booming growth. Here is how to start a CBD business and enter the industry.