If you haven’t heard about CBD and its long list of benefits by now, you must be leading a very isolated, disconnected life. Just a year or two ago, maybe it was understandable. But ever since the 2018 United States Farm Bill was passed, the Green Rush in America was officially kicked off and every type of product imaginable – from food to drinks to lotions and creams to even pet products – was all of sudden infiltrated by CBD.
CBD, or Cannabidiol, is a compound found in the cannabis plant. It is hailed for carrying virtually all of the plant’s medicinal benefits – from stress relief to pain relief to anti-inflammatory properties to powers that help users sleep to even aid in fighting cancer. The fact that it has this powerful punch of medicinal benefits minus the often unwanted side effect of getting high is why this compound is so sought after at the moment. But consumers aren’t the only ones after it – entrepreneurs have long had their eyes set on this product. Now that it is federally legal, so long as it is hemp derived and has under a specific percentage of THC, all bets are off and all hands are on deck.
The CBD movement has gained traction during an interesting era – the internet has made it to where if you want to get in on this market, you don’t have to ever grow the hemp yourself or even carry inventory! E-commerce and private labeling have made a seamless CBD business possible. If you are interested in getting in on this exciting new vertical, here’s how to go about private labeling your CBD products and starting your own CBD Company!
Do Your Research and Familiarize Yourself with the Law
Every good entrepreneur knows that researching the legality of the business you are looking to enter is the starting point and the #1 most important part of it all. You don’t want to build on a flawed foundation of information, setting you up to be in legal troubles later on. First of all, know that CBD products are considered legal on a federal level only if they are derived from hemp that has no more than 0.3% THC. Also, it is important to know that the FDA has, to date, only approved one CBD product – and it is Epidiolex, for severe cases of epilepsy. What this means for business owners is that they must practice caution with how they label their products. Without FDA approval, a CBD product can’t claim that it will prevent, treat, diagnose or cure a disease. Use terminology that refrains from doing this such as “enhances balance” or “promotes wellness.”
Since this is a continually growing industry with many clinical studies ahead, you must submit yourself to constant research to stay ahead of new information about the compound as well as new applications, uses, and developments.
Identify Uses and What You’ll Be Selling as well as Target Market
The list of uses for CBD isolate is very long; some are cosmetic, others therapeutic, others are supplemental…also, the types of products they can be added to are endless. You’ll need to research the types of products you want to sell the CBD in if you’re not already familiar. Or, if you’re looking to sell a wide variety of items, decide if you’re selling the CBD isolate for a specific purpose or if you’re keeping it general. This will help you hone in on a target market. Do you want to sell it in a lotion and cream form? Your target market might line up with beauty and wellness product users. Do you want to sell it in pet treats? Your market will line up with pet owners, and so on and so forth. This is a key part of the market research phase that any business, regardless of what type of business it is, must do as a starting point.
Form a Killer Business Plan
Like we mentioned before, this is no longer a nascent industry. It has plenty of growth ahead of it, but it doesn’t mean it hasn’t already skyrocketed. So that means your competition is stiff. If you’re looking for financial backers and stakeholders, you’ll need to make sure your plan can clearly map the growth of the venture. Answer questions like:
- What types of CBD products will you offer?
- Which segment of the market will you serve?
- Who is your customer?
- What is the financing model?
- What do your marketing plan and budget consist of?
- What are the methods for implementation and for execution?
- What are your sales forecasts?
Make sure you cross your t’s and dot your I’s as far as legal entity, tax ID’s, etc.
Just like any business, you’ll need to get incorporated, obtain a business license and an employer/tax ID.
Secure Solid Private Label Suppliers
If you’re going the private labeling route, you’ll be selecting existing products from a supplier’s catalog. Be sure to do your research on the supplier. They need to be an established supplier with certifications and certificates of analysis displayed on their website. This is to ensure you’re getting the product you are paying for and that it adheres to the law. Since the CBD needs to be hemp derived, especially in states where marijuana is not legal, this is a very important step. Certificates of analysis also help confirm the quality of the product you’re going to sell.
Choosing a private label supplier that is transparent and responsive to your communications is also highly important. They need to have contact information readily available for you. You need to be able to create a reliable supply chain or else you’ll start receiving negative feedback and publicity from unsatisfied customers very quickly. This is strong enough to shut your business down before it even gets a chance to develop, so make sure you take the time to choose a credible supplier first.
Invest in your Website
In this day and age, you can’t get away with a mediocre or lackluster website. It’s the first impression your potential customers will see; it is also what will house your sales funnel – especially if your business is solely e-commerce. Build an attractive, user-friendly website to have the best chances at revenue.
Choosing the right website platform is a big part of this process. Different website platforms have different advantages and disadvantages and of course the one you choose should be based on what it is you need it to do for your particular business model. There are sites like Teachable, Shopify, Squarespace and many others. Do your research and find out which one is the best one for your CBD isolate business.
Committing to creating quality, original content is also key. It is a huge factor in SEO which is a huge factor when it comes to growing your business and giving it the exposure it needs to grow its customer base. Everything else you do in the way of marketing stems from a solid website, so make sure you set it up correctly, have a clear sales funnel that you can track, and a fully optimized presence.
Marketing your CBD Company
Once you have your website ready as well as your logistics worked out, your inventory (if any) or your drop shipping model in place, and your sales tracking set up, you can start spreading the gospel of your company. Figure out what will be the best platforms for marketing. This depends on many factors including your budget and your target market. Depending on those factors, Youtube advertising might be your best bet. Or perhaps influencer campaigns on Instagram might make more sense. Your competitors will already be advertising and marketing via paid blogs, social media, social media and search engine advertising, and other ways, so you’ll need to step up to bat with a strong marketing plan in place in order to give your business the best chance at success.