Know The Law
CBD products are deemed legal by the federal government only if they are produced from hemp that contains no more than 0.3 percent THC. (Most of the CBD extracted from marijuana, not hemp, exceeds this legal threshold.)
To date, only one CBD product has made it through the rigorous research and regulatory gymnastics necessary to earn FDA approval—GW Pharmaceuticals’ Epidiolex, for severe forms of epilepsy. Without getting FDA approval, the agency says a CBD product cannot claim that it will prevent, treat, diagnose, or cure a disease. So you’ve got to be careful with how you describe the benefits of your CBD products on your packaging and in promotion. Use other descriptors like “promotes balance” or “enhances wellness.” Inclusion of a printed insert or a separate website with more general information about cannabinoids to educate consumers is also a smart way to avoid making false claims while promoting your product’s healing potential. More recently, the FDA has made noises about making CBD-infused ingestible unlawful without approval. Despite this stance, CBD products proliferate, from pet care to personal care. Because federal and state regulations keep changing, consult a lawyer familiar with the industry to stay on the right side of the law.
- Determine your business structure: Sole proprietorship, LLC, Corporation
- Employer or tax Identification Numbers (EIN/TIN).
- Resale permit from a local city your business operating.
Start on the right foot by creating a business plan that allows you to map the growth of your venture—and to communicate goals and strategies to financial backers and other stakeholders. (There are guides, consultants, and online tools like ours at entrepreneur.com/businessplan to help.) Key factors include:
Products and services. What does your CBD product assortment look like? What segment of the market will you serve? (Beauty, personal care, health and wellness, pet care?)
Customer and market analysis. Who will be your target customer, and what does that customer look like?
Financing methods. Where is the money coming from to fund the business?
Marketing plan. What is your brand or product name? What strategies will drive awareness and sales within your target demographic?
Strategy. What are the channels for implementation and execution? What digital channels? In-person or in-store events and promotion?
Sales forecasts. What is a realistic sales benchmark, and how will you stay on track to meet this goal?
Whether you are interested in distributing and reselling CBD products or creating your own, you’ll need to identify a high-quality supplier. If you intend to offer products under a supplier brand such as Sedona Herb or CBDistillery, then you should try to purchase at or above their minimum order quantity (MOQ) to get better pricing. If money is not an issue for you, then consider building your own brand and this company BeOn CBD can do it all. Remember, your CBD products must be from hemp if you’re not in a legal-marijuana state. Many reputable wholesalers currently source their CBD from Europe, where farmers have had many years of experience growing hemp. But with the legalization of hemp here, expect a large increase in American-derived CBD. How do you vet the quality? Ask for these two documents.
Current Good Manufacturing Practice. The cGMP generally indicates that the business operates using the processes and procedures that conform to state and FDA guidelines. Given the proliferation of CBD companies, this certification should be a baseline requirement for determining your shortlist of potential partners.
Certification and a Certificate of Analysis. The COA is a report that confirms the plant species and levels of CBD and THC (Tetrahydrocannabinol) and provides a detailed analysis of other components, like heavy metals, pesticides, and terpenes, in every batch (percentages, purity, etc.). More important, this report can verify that your sourced hemp extract doesn’t exceed the 0.3 percent THC legal threshold.
Both documents should be readily available to you as a potential customer of a reputable wholesaler or supplier. If there’s any doubt, always obtain a third-party test to confirm the purity and potency of the product.
Get a Website
Having a fast, attractive, user-friendly website is essential to maximizing revenue opportunities. Users will continue on with your website if it loads less than 4 seconds.
Choose the right web platform such as WordPress. The platform is just as important as the content you share. Different platforms have different functionalities, and yours should answer the needs of your business. Selling CBD on specific online market place, such as Shopify, is still murky, but doable if you use certain payment processors. Talk to other CBD operators in the space and establish a relationship with the website platforms to ensure the one you go with suits your business and allows an online store for your CBD products.
Create original content. Your target audience is looking for expertise—not just products. To keep them coming back, give them a steady diet of compelling and educational content. And to attract new users, implement a strong SEO strategy. It’s best to generate original work (rather than repost from other sites), whether you write it or pay writers, and don’t be afraid to tap your audience for their content. Customer success stories validate your product.