Starting a Business / 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
Guest Writer
The WeedHead™ | Cannabis Executive, Business & Digital Strategist
8 min read
Opinions expressed by Green Entrepreneur contributors are their own.

Cannabis is big business and big news. The public is being inundated with information-- whether it’s about legalization in a new state or an entire country (Hey, Canada!), products or  investment opportunities - "green" is the new black.

When it comes to cannabis and its many benefits, THC [Tetrahydrocannabinol], the psychoactive component that gives cannabis its "elevated" qualities gets the bulk of the attention. But, industry insiders and, increasingly, consumers recognize that when it comes to beneficial cannabinoids, CBD [Cannabidiol] offers the best opportunity for mainstream users eager to experience the plant’s health and wellness properties.

Hemp, the low THC member of the Cannabis sativa family from which the bulk of CBD-only products are derived, has many uses such as clothing, paper, and even building materials. But CBD is truly the plant’s game changing product, particularly for people eager to join the green rush without the legal ramifications and financial hurdles associated with traditional marijuana products. While marijuana remains federally illegal, CBD extracted from industrial hemp is totally legit and growing.  If offers many of the benefits of a THC-focused cannabis business, with much less risk.

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 53 percent annual growth rate, there is ample opportunity for aspiring entrepreneurs to make a little green. Like many lucrative opportunities, there is a blueprint for success. Here are the five factors necessary for successfully launching and running your CBD business.

Related: The One Cannabis Investment You Can't Afford to Miss

1. Understand CBD, the law and comply with regulations.

Hemp-extracted CBD products are deemed legal by the federal government as long as they are produced using industrial hemp. If THC levels remain below the legal threshold of 0.3 percent, any oils, supplements and other CBD products are generally legally safe to sell. Most of the CBD extracted from marijuana, not hemp, exceeds this 0.3% threshold, which makes it federally illegal. If you’re trying to sell CBD products at a store or online, you will need to:

  • Obtain incorporation, business licenses and EIN/TIN for your new CBD business;

  • Build your real science knowledge base about the cannabis plant and the role of CBD;

  • Ensure your CBD products are hemp-derived, especially if you’re in a non-legal marijuana state;

  • Make sure your company policies, packaging and product dosing are transparent;

  • Above all, follow the laws set by your state government

Additionally, do not make claims that state your product will help consumers “prevent, treat, diagnose or cure” a disease. Such statements will put your business at risk of running afoul of the FDA since most CBD health claims lack federally-approved research to support their validity. Instead, use other descriptors to educate consumers and promote products. Consult a lawyer familiar with the industry to keep current.

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

2. Prepare a robust business plan.

Start your business right by creating a business plan, a roadmap that allows entrepreneurs to plan the growth of their ventures and communicate goals and strategies to financial backers and other stakeholders. It’s now easier than ever to produce a powerful business plan. There are guides, software and consultants available to facilitate the process. If you need funding, a business plan is non-negotiable. Key factors include:

Products and services: What does your CBD product assortment look like? What segment of the market will you service? (Beauty, Personal Care, Health & Wellness, Pet Care etc)

Customer and market analysis: Once decided on assortment, who will be your target customer and what does that customer look like?

Financing methods: Where else 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 and implementation: What are the channels for strategic 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 re-selling CBD products or creating your own, you’ll need to identify a quality supplier. Here’s what to look for:

CBD sources: Many reputable wholesalers source their CBD from Europe, where farmers have had many years of experience growing hemp. More recently, we’ve seen an increase in US-based hemp derived CBD. If a supplier grows their own hemp, be sure to research their farming practices to confirm that they utilize standard practices and their raw materials meet or exceed industry standards.

Certificate of analysis (COA): A COA is a report that confirms the levels of CBD, THC and other molecular compounds in cannabis products. This report should detail exact components in every batch (percentages, purity, etc.). If there’s any doubt, always obtain a third-party test to confirm the purity and potency of the product.

Claims: Manufacturers cannot make medical claims about CBD product. Be aware that the FDA does not support these claims. Therefore, we must treat CBD products as dietary supplements. The FDA’s disclaimer should be visible on the supplier website and any other outlets carrying its products.

4. Build and optimize your website.

Having a functional website up and running is essential to maximizing revenue opportunities. Make sure your website is attractive, easy to navigate and user friendly to encourage customers to purchase products safely and securely.

Choose a website building platform: Your website platform is just as important as the content you choose to share. Different platforms have different functionalities and yours should be dependent on the needs of your business. Note that selling CBD on certain platforms remains murky. Do your research to ensure that your chosen platform will suit your business and allow an online store for your hemp-derived CBD products, such as WordPress.

Generate original content: If you post compelling and useful articles on your website, customers will flock to it as a trusted resource. Good content helps build authority and generate traffic. Your target audience is looking for expertise and connection---not just products. Update your content frequently to keep them coming back. Pair good information with a strong SEO strategy to increase your visibility on Google and attract more customers. Be sure to generate original work, whether from you or paid copywriters, rather than copying others. Also, tap your audience for content. Customer success stories validate your product efficacy and influence purchase decisions.

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 your brand and let the world know who you are.

Customer service and re-education: You will encounter many questions in this industry. Be prepared by educating yourself on all things CBD. While you cannot make explicit claims about preventing or curing diseases and ailments, you can recommend information to your customers and showcase products that promote health and wellness.

Be very careful with your messaging. Be a consumer advocate. Sample the products yourself and encourage your staff to do the same. The best customer service usually comes from those who have firsthand experience with the product and can offer seasoned advice.

Be a social media guru: In addition to writing original content for your website, social media is now essential for reaching and connecting with customers. While use of paid social advertising is limited due to restrictions on terms like cannabis, weed, marijuana, and lack of distinction between CBD-only and marijuana-based products because of federal laws, you can still build a strong organic social following of customers and fans. A robust social media strategy will help build your brand, promote it and grow your customer base. Posting product photos and special promotions will encourage new visitors to try and returning customers to repeat purchases. Be sure to engage with and respond to followers as they connect with you. This creates a strong B2C bond.

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 with CBD products can be both lucrative and low-risk. Use this as a starting guide to help you navigate this new found source of green. It will not only help build wealth, but it builds up an informed and well-educated CBD consumer population for the greater good and growth of the industry.

By Javier Hasse
From retailers to growers, producers, and suppliers, there’s a seemingly never-ending list of startup opportunities in this emerging market. In Start Your Own Cannabis Business, marijuana, biotech, and entrepreneurship reporter Javier Hasse introduces forward-thinking entrepreneurs like you to the industry and shares hard-earned tips and success stories from pioneers and visionaries in the marijuana industry.
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