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cbd oil business

Cbd oil business

In the last few years, CBD oil has grown from a niche alternative treatment to a multimillion-dollar market. The growth rate suggests that by 2022 the CBD market will expand to over $2.5 billion. As more people discover the benefits of CBD, the medical community and legislators alike are taking notice. CBD is used on a daily basis by millions of people, and because of the credibility given to it by doctors, researchers, and lawmakers who support it, more people are trying CBD for the first time every day.

Whether you use CBD yourself or you’re just interested in the industry, now is a fantastic time to enter the market and open your own online CBD store. Shift4Shop has everything you need to handle this unique industry and tap into the huge opportunities offered by the CBD market. You’ll have access to the most powerful eCommerce tools available for starting your store, reaching your customers, and getting the brand recognition that leads to a successful business.

Sell CBD Online

Understanding CBD and CBD Products

There is a lot of confusion around CBD products due to its relationship with marijuana, so let’s go over the facts. CBD is short for cannabidiol, a compound found in all cannabis plants. What makes CBD oils different is that they do not contain THC (tetrahydrocannabinol) which is the compound responsible for the “high” associated with marijuana. CBD itself is completely non-psychoactive, meaning it does not affect the brain like THC does. Instead, CBD provides several positive health effects that have been thoroughly documented, although the FDA has not yet evaluated these claims.

Misunderstandings about CBD have led to legal problems for various companies in some states, but fortunately the difficult times have passed as CBD is now understood and valued throughout the US. Today, it is legal to sell CBD nationwide as long as it remains within the minimum THC limit of 0.3%, which is a negligible amount that does not affect the brain. If you want to sell CBD online, you can start your business without issues as long as you follow a few simple rules (like getting any required licensing and not making direct medical claims on your website).

People take CBD for a variety of reasons including severe or painful conditions and anxiety relief. Everyone who uses CBD also has their own preferred method of taking it, which can be anything from vaping it to swallowing a pill. As a CBD seller, it’s important for you to understand the types of CBD products available and how they are used, as well as which types of customers the different products appeal to.

how to sell CBD

CBD Tinctures

A tincture is a concentrated extract made by soaking herbs in very strong alcohol for long periods of time, or in the case of CBD tinctures, by combining natural hemp oil with alcohol or another solvent. Tinctures are administered by placing a few drops of the liquid under the tongue. Only a small amount is needed for a dose because they are so highly concentrated. This method of administering CBD appeals to people who want the fastest way to take CBD and feel its effects quickly.

CBD Edibles

Edibles are all types of food containing CBD, and can include gummies or chews, hard candies, chocolate, cookies, and even beverages. Edibles are popular among customers who like to take their CBD in the form of a tasty treat. Since edibles are food products, they’re subject to additional regulations that vary by state. These include food safety regulations as well as packaging requirements like childproof containers.

CBD Isolates

An isolate is a pure substance that has been extracted from its source and refined into a powder. CBD isolate has been processed to remove all the other natural plant substances such as chlorophyll and wax and leave only pure CBD behind. Isolates are colorless and flavorless and can be used in a similar way to tinctures, or can be added as an ingredient to infuse CBD into a variety of foods and beverages. Isolates are popular with customers who like to mix their own CBD products at home.

CBD Capsules

CBD capsules are just like any other gelatin capsule or softgel: a fast, convenient way to administer a dose of its ingredients. Capsules are quicker to use than tinctures and isolates, and are often favored by customers who want to avoid edibles or just want to take CBD in a familiar way. Many people are used to taking multivitamins or medications in capsule form, so capsules are often a natural starting point for customers new to CBD.

CBD Vaporizers and Vape Concentrates

Inhalation is a popular method for CBD delivery because, much like with tinctures, the CBD is absorbed directly into the bloodstream and so provides immediate effects. CBD concentrates can be vaped similarly to nicotine e-liquids, so vape supply stores often expand into CBD or vice versa (learn more about selling vape online). Traditional smoking methods like water pipes are also popular, but some CBD retailers find these products troublesome due to drug paraphernalia laws (regardless of their use with legal CBD) and the difficulty of shipping complicated glass items.

CBD Topical Formulations

A CBD topical formulation is a cream, salve, lotion, gel, or other preparation made to be rubbed into the skin. These products can be applied directly to inflamed or painful areas similar to other pain relief ointments. They also provide an alternative for customers who don’t like to take CBD orally. These treatments can also include other ingredients like menthol to provide a cooling sensation. CBD can also be used in massage oils.

CBD Patches

Patches are another method for absorbing CBD through the skin. Similar to nicotine patches and various types of pain relief patches, CBD patches gradually release their ingredients into the body over the course of the day. Customers prefer CBD patches when they need to maintain a low, consistent dosage throughout many hours, or just for the convenience of patches over other methods. Patches are also useful when a person won’t have access to other CBD products during the day or won’t have a chance to take them.

CBD for Pets

CBD has been shown to have similar effects on animals as it has on humans, so it’s popular with people who have pets that suffer from pain or anxiety — even if the customer doesn’t use any CBD themselves. Since animals can have much more sensitive systems than humans, CBD oils for pets should be specially formulated to ensure their safety. CBD for pets can also come in flavors like fish and bacon to make it more appealing to cats and dogs.

Summary of CBD Products and Accessories You Can Sell:

  • CBD tinctures
  • CBD vaporizers and concentrates
  • CBD edibles
  • CBD topical formulations
  • CBD isolates
  • CBD patches
  • CBD capsules
  • CBD for pets

This list is a summary of hundreds of individual products which can all be sold quite successfully through an online CBD store. Customers will also need to restock their CBD products, including their preferred concentrates and delivery methods which could include numerous types of vaping accessories. If you build your CBD eCommerce website with advanced software like Shift4Shop, you can make the reordering process much easier for your customers by implementing a subscription service for needed products. You can also offer product bundles, like edible variety packs, CBD vape starter sets, and more.

CBD Products You can sell online

How to Choose a CBD Supplier

Choosing a CBD supplier is a very important decision that will affect the quality of your products, the satisfaction of your customers, and the reputation of your brand. Because of the famous health benefits of CBD, “fake” CBD oils are found in stores everywhere. These oils are considered not to be true CBD because they’re derived from hemp seeds, which contain very little CBD, rather than from the stalks and leaves of the plant where the most CBD is found. It’s crucial for your business that you choose a manufacturer that makes genuine CBD that will have the health effects your customers want — this way, you can immediately differentiate your business from the brands that provide no benefit and only seek to cash in on a trend.

When evaluating a CBD supplier, find out as much as you can about their manufacturing process. Remember that you want to sell CBD oil products derived from industrial hemp with a THC content of less than 0.3%, processed from the plant itself and not the seeds. Here are some other considerations to keep in mind when looking at suppliers.

How to Choose a CBD Supplier

Medical Claims

CBD retailers are not allowed to make medical claims on their websites, and neither are suppliers. Even though research has shown many potential benefits and most people who use CBD report positive effects from it, the FDA hasn’t yet evaluated these statements. CBD suppliers, including both wholesalers and consumer-level retailers, are required to display the FDA’s disclaimer on their website. If you’re looking at a supplier who makes medical claims about their CBD products, be aware that these statements have no FDA backing. Don’t choose a supplier based on medical claims — and if the supplier has particularly bold claims on their website (e.g. “cures cancer,”) you may wish to avoid that supplier entirely, as breaking this rule means the supplier may be breaking others as well.

Pricing

As a business owner, you should always look for ways to lower your costs as long as you don’t compromise on the quality of your merchandise. CBD suppliers’ pricing can vary greatly, and sometimes this is reflected in the quality of the product. For example, higher-priced CBD products are often more pure and potent — but this isn’t always the case. Make sure you learn as much as possible about the supplier so you can learn whether the quality of their products justifies the pricing. Likewise, stay away from suppliers who sell at abnormally cheap prices. These rock-bottom prices are almost always a sign of cutting corners and producing an inferior product.

Hemp Sourcing

Europe and the United States both have long histories of hemp farming due to the quality of products made from hemp, such as rope and textiles, even before CBD was understood. Today, the US and Europe are home to some of the best hemp farmers in the world, although not all European countries that grow hemp do so for CBD extraction. Other countries throughout the world also grow hemp for various uses that may not permit usage for CBD. Hemp farming was also banned in the US for over 50 years and is still illegal in some states. It is important that your CBD supplier obtains hemp from a reputable farm that produces high-quality crops such as those found in the US and Europe. If your supplier grows their own hemp, investigate to ensure they’re following industry best practices.

Extraction Method and CoA

There are a variety of processes that are used to extract CBD from industrial hemp, and the process used has an effect on the quality of the product. The best of these processes is CO2 extraction because it results in CBD oils that are free of contaminants, unlike other methods that can leave chemicals behind in the oil. Choose a manufacturer that uses CO2 extraction if at all possible. You should also be able to access a CoA (certificate of analysis) from the supplier that lists the exact levels of CBD, THC, and any other substances in the product. Different suppliers’ CoAs might look different, but always check for results from pesticide testing, microbiological testing (for mold and bacteria), and residual solvents testing (to identify any remaining chemicals from the extraction process). If the CoA isn’t posted on the supplier’s website, always request a copy before purchasing inventory.

Extra Services

Some CBD suppliers offer additional services like dropshipping and private labeling. While the quality of the product should come first, it’s also very helpful to know if a supplier can provide these services. If you’re planning on dropshipping your CBD products, this option is crucial to your business model. In addition, private labeling allows you to sell fully branded products with your own business name and logo, which helps you become established in the industry and start earning the trust of your customers.

High-Quality CBD Wholesalers

Whether you plan to stock inventory or sell by dropshipping, the quality of your supply chain makes all the difference. It’s also vital to choose a supplier that’s right for your business and can get your products to you in a timely fashion. Since the CBD industry is growing, it’s becoming easier to find good suppliers that will work well with you.

Looking to start an online CBD store? Our website builder can help you start your online CBD business and start selling CBD products online

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 isn’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 … 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 … 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.