CBD Business 101: Entering the CBD Industry
If you’re looking to start up a retail business, or just to expand one that you already have, CBD is an appealing prospect. Demand is still growing, and suppliers are coming up with an ever-increasing range of products for you to offer customers. But there are things you need to know when you get into the CBD business.
For one thing, CBD is under a legal regime that isn’t quite like anything else. You need a deep understanding of the laws to make sure you don’t run afoul of them. And secondly, there are a lot of places you can buy CBD wholesale, but many of those suppliers are new and – to not put too fine a point on it – sketchy.
So if you want to know how to start a CBD business, read on to learn how to navigate these minefields.
CBD Business and the Law
We’ve written a whole blog post elsewhere about the tangled legal history of CBD. The short version is that all products of cannabis plants were federally illegal until late 2018 when the latest Farm Bill formally legalized all products from industrial hemp.
Industrial hemp, though, is only one kind of cannabis: the kind that’s bred to have no more than 0.3 percent THC. Any cannabis plants with more THC than that are officially marijuana, and federally illegal. And while CBD is different from THC, from a legal standpoint that doesn’t matter – if you have pure CBD that was extracted from marijuana instead of hemp plants, it’s illegal.
Another issue is that the Food and Drug Administration considers CBD to be a drug, so technically you aren’t supposed to mix it with food. This might come as a surprise because you see CBD edibles all over the Internet, right? But the thing is that the FDA has no cops of its own, so it leaves enforcement to states. And some states have been more interested in enforcement than others.
Indeed, if you’re a brick-and-mortar retailer that’s only operating in one state, the state laws are what you really need to know, and the federal stuff is irrelevant. Your state might be either more lenient or more stringent than what we just described. If you’re in e-commerce, though, you should be fine so long as you stick to hemp-derived CBD products.
What if you’re a brick-and-mortar retailer in more than one state? One popular approach used by large chains is to sell only topical CBD products. Because CBD oils can’t get into the bloodstream through the skin, except via transdermal patch, products like CBD creams and lotions haven’t raised the hackles that ingestible products have.
Marketing CBD Products
Another important aspect of the CBD business is that you have to be fully aware of the restrictions on marketing the products that you will face. You see a lot of claims online about the amazing things that CBD can do, some of them backed by research. But here’s the key thing to remember: CBD is officially a drug, and you can only advertise drugs with claims that have been formally evaluated by the FDA.
So which claims have been formally evaluated? There are none! Well, almost none – there is one form of CBD called Epidiolex that has been FDA-approved for two rare forms of epilepsy. But only Epidiolex, not all CBD, was approved for the purpose – that is, only CBD made by that particular company in that particular way. There are actually multiple ways to extract CBD from hemp, and you’ll see different “spectrums” advertised that include different components. And none of those have received FDA evaluations.
Another point to make is that some outlets – including the major social media companies – forbid CBD advertising, or allow it only for topical products.
So how can you sell CBD products? Not easily! But when you’re constructing your marketing materials, the main thing to remember is to avoid language that indicates that CBD can treat any diseases or symptoms (including mental ones, like depression), and focus on wellness and subjective feelings. You can see our own page on CBD benefits to get an idea of what this looks like.
Sourcing CBD Wholesale
Once you’ve determined whether you can pass the legal hurdles to starting a CBD business, you need to find suppliers. This can be tough because the CBD industry has been around for such a short period of time that it’s still a wide-open field to choose from. But with that said, here are some things to look for.
- Stay domestic. As you’ve surely gathered from the previous section, American CBD laws are quite peculiar, so wholesale CBD products from a foreign country might not adhere to them. Even the laws on growing hemp are distinctive, so you’re best using a supplier who extracts CBD from U.S.-grown industrial hemp.
- Look for third-party testing. A responsible CBD wholesale supplier will send their batches of CBD extract out to an independent laboratory for analysis, and make the results freely available. Because of the CBD industry’s history of labeling problems, this is a crucial attribute of a good CBD company.
- Check for industry certifications. There are independent bodies who exist solely to evaluate the quality standards of private companies, and for the purposes of the CBD business the key one is NSF International. NSF has marks specific to the dietary supplement industry, and its Good Manufacturing Practice (GMP) certification as well as its Certified for Sport designation are coveted awards. If you’re interested in CBD pet products, the National Animal Supplement Council performs an equivalent function for products marketed to animals.
- Avoid companies that make illegal claims. You got an idea of what illegal claims are in the previous section – nothing about treating or curing any diseases or symptoms, even minor ones like headaches. Companies that deal in that type of thing are probably desperate, because the more reputable players don’t need to take those risks in order to compete.
What Products Should Your CBD Business Carry?
There are many different kinds of wholesale CBD oil products you can obtain, so you can’t buy them all. Which do you choose?
As we suggested earlier, the answer to this question might be dictated partly by your legal environment. You might decide to go only with topicals. And you also might want to consider what “spectrum” of CBD you choose because that also can have legal implications.
Broad Spectrum vs. Full Spectrum vs. Isolate
Pure CBD that has been cleansed of all other hemp extracts is called CBD isolate. It has its fans, especially among people who undergo drug testing, because THC is what drug tests are looking for. But the more popular CBD products have a “spectrum” of substances from the plant, including other cannabinoids, terpenes, and nutrients.
There are two types of spectrums you’ll see advertised. Full spectrum CBD includes the widest range of compounds, including some amount of THC. As with the plants themselves, the federal government draws the line at 0.3 percent of the total. But again, your state might have different standards, so you want to make sure that your full spectrum CBD products have the amount that suits your target customer.
Broad spectrum CBD is similar to full spectrum, but it’s THC-free. This can be a good compromise for customers who feel that a wider spectrum is more effective but don’t want the risks associated with THC.
Types of CBD Products
In addition to choosing the spectrum, you also have to sort through the myriad forms that CBD products can take. Here’s a quick rundown of major CBD product categories, and to whom they mainly appeal.
- CBD oil tinctures, CBD capsules, and CBD gummies are good general-purpose products for people looking for general wellness. If your focus is mainly on supplements, you can not only get pure CBD products, but also CBD-infused versions of popular supplements like apple cider vinegar gummies, herbal sleep aids, and that type of thing.
- CBD food and drinks are legally risky, as we mentioned earlier, but if you feel confident that your state isn’t going to pester you, they can be quite popular. If you like to create your food and drinks on site, getting water soluble CBD tinctures can be a good way to add CBD without dealing with the carrier oil.
- Medicated CBD topicals are CBD-ified versions of familiar pain treatments like menthol rubs and lidocaine sprays. These are good if you have customers who routinely get muscle and joint pain, like athletes and the elderly. A bonus of these types of products is that because they have FDA-approved medicines in them, you can advertise them for things like arthritis pain, so long as you stick to the label language.
- CBD skin care and bath products are more specialized items that work if you want to market to a female clientele that’s into beauty and personal care. As with the other product categories, you’ll find quite a product range because CBD oil can go into practically anything: cleansers, moisturizers, serums, body scrubs, bath bombs, you name it. CBD skin care is especially popular with customers who are into the natural/organic/alternative world, so you’ll want to find products that are non-GMO and vegan, and so on.
- CBD pet products are, of course, aimed at the pet-owning audience. You can get CBD oil tinctures similar to those for humans but in concentrations and flavors better suited to dogs and cats. You can also find things like dog treats, paw balms, and shampoos infused with CBD.
We hope these tips will help you start a world class CBD business. When it comes to CBD, the more the merrier!