CBD

How to Start and Market Your CBD Company

An immense market is developing quickly for CBD health and beauty products, including in states that have not legalized marijuana.
How to Start and Market Your CBD Company
Image credit: PHILIPPE HUGUEN | Getty Images
Magazine Contributor
The WeedHead™ | Cannabis Executive, Business & Digital Strategist
7 min read

This story appears in the May 2019 issue of Green Entrepreneur. Subscribe »

When people talk about cannabis, they’re often focused on THC—the psychoactive component that gives marijuana its “elevated” qualities. But industry insiders and, increasingly, consumers recognize that the real opportunities are in the plant’s CBD. It opens a door for those eager to join the Green Rush without the legal ramifications and financial hurdles associated with the traditional marijuana product. That’s because while marijuana remains federally against the law, hemp (the low-THC member of the sativa family), from which many CBD products are derived, is now legal, thanks to the 2018 Farm Bill.

America’s legal hemp market is projected to grow from $688 million in 2016 to $1.8 billion by 2020, with hemp-derived CBD products forecasted at a 55 percent annual growth rate. That means ample opportunity for aspiring entrepreneurs to make a little green with a CBD business. Here are the nuts and bolts of getting launched.

Related: Move Aside, CBD: New Data Finds THC Is the Real Medicine in Medical Marijuana

1. Know the law.

The most essential law to understand is this: 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.)  

The second important legal point: 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 ingestibles 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. Other legal musts: 

  • Obtain incorporation, business licenses, and employer or tax identification numbers (EIN/TIN).
  • Have transparent company policies, packaging, and product dosing.

Related: The Cannabis Industry Is Going Global Without Waiting for America to Legalize

2. Prepare a powerful business plan.

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?

Related: Navigating the Top 3 Post-Startup Challenges for Cannabis Businesses

3. Find the good suppliers.

Whether you are interested in distributing and reselling CBD products or creating your own, you’ll need to identify a high-quality supplier. It’s a vital no-brainer to learn everything you can about the science of the plant, and the role of CBD, so you know what to look for. 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 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.   

4. Build and optimize your website.

Having an attractive, user-friendly website is essential to maximizing revenue opportunities.  

  • Choose the right web platform. 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. For example, if your brand has fewer than five products and you’re looking to engage customers through education, Teachable is a great platform. Squarespace, on the other hand, can be used to quickly build an online presence with a large assortment of products. Note that selling CBD on specific platforms, such as Shopify, is still murky, but doable if you use certain payment processors. Do your research. 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.

Related: Why These Teenage Girls Started a CBD Lifestyle Brand

5. Build your brand.

Once you’ve taken care of the business planning and built a website, it’s time to focus on telling the world who you are.

  • Learn and educate. Sample CBD products yourself and encourage your staff to do the same. The best customer service usually comes from those who have firsthand experience with the offerings and can give seasoned advice. While you can’t make explicit claims about preventing or curing medical ailments, you can recommend information to your customers and showcase products that promote health and wellness. 
  • Be a social media guru. In addition to writing original content for your website, social media is essential for connecting with customers. While the use of paid social advertising is limited due to restrictions on terms like cannabis, weed, and marijuana, you can advertise your CBD products on three alternative ad networks: Mantis, Traffic Roots, and Ad Loop. And on Facebook, you can advertise your brand’s business page if it focuses only on education and advocacy. Meanwhile, there are many ways to build a strong organic social following. Posting product photos and special promotions will encourage new visitors to make a first purchase and returning customers to repeat previous ones. And be sure to respond to followers as they connect with you. This creates a robust bond with your new fans.

Succeeding in any industry can be a challenge. But with a little bit of planning and lots of elbow grease, getting in on the ground floor of the Green Rush can be lucrative—and contribute to the greater growth of this new and exciting industry. 

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