The CBD market is expanding fast as consumers learn more about the benefits of non-intoxicating cannabis. With so much popularity and continued growth, you must want to enter the CBD market. Though it seems easy, building a successful brand in a crowded marketplace is tough. But, there are countless unique opportunities for you to sell your products.
Other than all the hard work of launching a new brand, this business exclusively adds to the uncertainty of a shifting regulatory landscape. However, in a fledgling industry projected to undergo explosive growth, today’s heavy lifting might be tomorrow’s wealth. Cory Slovik, owner of a CBD company says this is like any other business, and you need to follow steps & procedures.
Understand the legal obligations
Although 2018’s Farm Bill federally legalized industrial hemp and, by extension, hemp extract, like CBDistillery oils, there aren’t many regulatory considerations. The Farm Bill removed the oil from the federal Controlled Substances Act and the oversight of the Drug Enforcement Agency. But, it gave governance of the hemp industry and CBD oil in the hands of the FDA.
Currently, this industry is in a grey area, as FDA is still devising regulations, and has banned the marketing of CBD claiming health benefits. It has also suppressed this drug-infused food and beverages in some instances. More complications arose after the approval of this drug-based epilepsy medicine Epidolex by the FDA in 2017.
Since hemp oil is the main ingredient of this drug, you can’t use it in food products without FDA approval. It’s very important to understand the legal obligations and play safely in a highly scrutinized industry like this.
Marketing and selling of products
To sell these products is a little tricky. Though the Farm Bill liberalized the industry a little bit, it’s still difficult to sell these products on major online sites. Moreover, social media advertising on these is almost nonexistent, and paid ads have the risk of account suspensions or bans. So all your advertising must be through organic content that falls under the guidelines of each platform.
On this date, people generally sell through Amazon, eBay, Alibaba, or paid ads on social media, but this industry is way different. You will have to be creative to sell your products, you need to establish your e-commerce store. Furthermore, you must carry your products to a brick-and-mortar store.
You can market via organic search strategy or customer loyalty programs, which are safer than paid advertising. And as every market is a bit different, you must do your research to understand your local and state laws.
It’s the process of gaining a link from one website to yours. Suppose there’s a backlink to the supplier and creating this backlink to the supplier will help improve its ranking on search engines. Backlinks are essential as Google signals this as the strength and quality of your website.
A strong site link is a sign of confidence in your brand and more backlinks will make your website rank higher. Also, you can hire a cannabis link building agency to get the best quality links for your website as not all backlinks are equal, a backlink from a well renowned trusted site holds more value.
The growth opportunities in this industry are unparalleled, all you need is diligence and creativity for success. So, build a company whose products are different from the crowd.
Key challenges faced
This industry has its unique set of challenges, that relates to the regulatory environment and the FDA’s specific rules and guidelines. But there are some major considerations.
You can have a tough time getting access to reliable banking services because of the fluctuating regulatory landscape. Most banks don’t want to do business with the cannabis business, cause of risk and burdensome oversight. That’s why most businesses often switch banks or experience abrupt closure of a merchant account, which disturbs the company’s operations.
It is tough to find affordable insurance in this business, as prices are high despite the legalization.
- Payment processing:
Processors demand high fees and other challenges to CBD businesses, and recently VISA broke off from this business. So now only MasterCard and Discover are available.
- Access to capital:
Banks and other financial institutions find it too risky to fund this business. So you need to generally rely on bootstrapping, outside investors, or alternative lenders to collect the growth capital it needs.