As you may have noticed, CBD is an incredibly hot market right now. 1 in 7 Americans have used CBD, and that number seems to be increasing on a regular basis. Furthermore, the industry is rapidly exploding, and some estimates believe it will generate $22 billion in the next three years.
As a result of all of this activity, more and more people are getting into the CBD industry.
Some have likened the atmosphere to one that is similar to a gold-rush, and there’s a good reason for that, as many people are getting scammed or losing their money.CBD may be a hot market right now, but it’s one that requires legal expertise and business savvy to enter successfully.
Do you want to be the next major CBD mogul?
Here’s what you need to know before spending a dime of your own money.
Make A Business Plan
Any business needs a business plan. That goes doubly for a business that is centred around CBD, which has numerous additional complications. Thankfully, many resources already exist that can help you generate such a plan.
A CBD business plan should have many of the same portions that you would find in any other business plan, including market research, an analysis of competitors, financial projections and more.
However, there are additional sections requires, including an overview of local and state regulations, potential legal pitfalls and conversations about building secure supply chains.
Make sure you properly create a business plan. It will inform your next steps and give you an honest view of your strengths, weaknesses, and obstacles you will face.
What Are The Legal Regulations?
CBD was legalized at the federal level with the passage of the 2018 Farm Bill. However, that does not mean that you are free to sell CBD from your local corner shop.
Different states have established and are establishing a slew of local CBD regulations that may have an impact on your business plans.
Additionally, CBD hasn’t quite been legalized in all states and the ones that have legalized it have a slew of different inspection and licensure requirements.
Make sure you fully understand any legal restrictions in your state or locality and make sure you consult with a lawyer who is knowledgable about the CBD business.
How To Build Trust
Unfortunately, the CBD industry is rife with bad actors. A 2017 University of Pennsylvania study tested 81 CBD products and found that nearly 70% were mislabeled. Dishonest vendors within the CBD industry have made life more difficult for everyone involved in the process.
Your job, as someone creating a CBD business, must be to build trust. You can do that by adhering to all local regulations, but also making sure that any CBD you sell comes with a Certificate of Analysis.
A Certificate of Analysis is a test, performed by a third-party vendor, that shows a potential buyer all of the ingredients that can be found in the batch of CBD they are about to purchase. This Certificate ensures honesty, transparency, and accuracy of CBD labelling and allows your customers to buy their CBD with confidence.
What Products Will You Market?
Contrary to popular belief, CBD is not a “one-sized, fits all” compound. There are many different types of CBD, including Full Spectrum, Broad Spectrum, Isolate, and PCR CBD.
These forms of CBD all come with different compositions, potential side effects, interactions with your body and more. Additionally, CBD is available in numerous consumable forms, including tinctures, vaping juices, capsules, topicals, edibles and more.
Make sure you understand the differences of any product you sell (time to work, potential side effects, etc) before you begin to make sales of a product.
Don’t Make Medical Claims
In a November 2019 update, the U.S. Food & Drug Administration came down hard on CBD. While it said that further regulations would be forthcoming, the FDA said that CBD couldn’t be marketed as Generally Recognized as Safe and noted again that no one could sell CBD by making medical claims about potential diseases or ailments it could cure.
Indeed, the FDA has come down hard on companies that have made medical claims in their marketing with CBD, issuing cease and desist letters on a somewhat regular basis to companies that violate this rule.
Marketing CBD can be tricky, but one thing is clearcut: You may not market CBD by saying it will cure anyone of anything. Doing so risks running afoul of the federal government, and generating bad press for yourself along the way. You can discuss the potential benefits of CBD, but you must couch that marketing in a way that does not run afoul of FDA dictates.
Starting a new business is difficult in the best of circumstances. Starting one that is centred around a compound like CBD can be even more difficult, given some of the legal and regulatory challenges facing the compound.
However, CBD is still incredibly popular, and starting a CBD business now can be a great way of getting in on the ground floor of a substance that is more popular now than most other supplements every will be.
Indeed, the CBD is an area that is filled with opportunity. All you have to do is prepare for it and seize it.