CBD is big money. At one point, no one knew what Cannabidiol (CBD) was and now it’s an industry that everyone wants to capture. Everyone wants in, and they want it all.
The “health, wellness, and functional” concept of CBD is the primary reason why this compound is finding fame amongst civilians and tempting major Pharma brands. The plant-based business is projected to explode and become a widespread phenomenon.
Growth: The CBD market is expected to touch $1.91 billion by 2022. Analysts estimate the U.S. market for CBD beverages alone will reach $260 million by 2022. CBD is the next gold rush; this is the place to be. Some predict the annual revenue of CBD businesses to top $22 Billion by 2022.
So, that brings us to the question “What is CBD” and how is it different from the other varieties (pot included). Both CBD and THC come from the same plant Cannabis. Hemp has higher CBD and minimal THC. Whereas Marijuana is rich in THC - containing 18.7% of THC and negligible CBD.
CBD doesn’t get you high since it is a non-psychoactive compound and may hold therapeutic potential. But its legal status was disputed for a very long time and was legalized only in December 2018 as per the Agricultural Improvement Act (Farm Bill). Whereas, Marijuana is illegal due to its “psychotropic” effect.
Beyond this, if you are intrigued by “How to sell CBD online” and wish to resolve all your CBD concerns, then you’ve landed on the dead center of CBD knowledge. In this write-up we will study the legalities behind selling CBD products & understand what it’ll take when it comes to Starting a CBD business.
Federal Law
Each state is dealing with the rising CBD empire in different ways. The presence of CBD components in F&B has made the FDA take a good hard look at the booming Cannabis industry. Deciding which derivatives to ban & which ones to approve; is being studied under the watchful eye of the FDA experts.
Hemp extracts excluded from dietary supplement definition can be marketed in the USA, provided they comply with the regulations covering food and supplements. One way or another these products need to be free from THC, to become eligible for sale.
2018 Farm Bill removed hemp from the list of controlled substances. Thereby opening the doors for many hemp-derived products. The passage of this bill made CBD legal in all 50 states, which then ushered a flood of hemp-related businesses. The lack of clarity is keeping many companies at a distance.
Limit the THC in your CBD products to under 0.3%; anything beyond that is illegal. Avoid vague terms like “cure” and “prevent” while advertising. FDA research should be able to confirm any health claims. Either test the product yourself or send it to outside labs. Keep this in mind before you start to sell CBD online.
Misleading and false claims may lead consumers not to take proper diagnosis and supportive care. For this reason, the FDA seeks to implement a model that protects public health and doesn’t play with the well-being of patients. Anything claiming to treat/cure serious diseases still needs to be adequately investigated.
Further wholesalers should ensure that the supplier is a licensed cultivator. Sellers must ensure that the CBD products are from free from contaminants, such as the ones used in the CBD extraction/refinement process. Beyond this, the supplier must be growing their hemp in a clean environment.
Low-grade CBD will put you in trouble. Since CBD itself absorbs most constituents from the soil; making it prone to collecting any harmful pesticides. In which your CBD ends up dirty. Ensure the brand growing follows the best practices in CBD manufacturing and can provide a Certificate of Analysis (COA).
The FDA expressed explicit concern over the widespread use of CBD and raised critical questions about the extent of its safety. FDA admitted that the new era of CBD usage is here. However, its usage in food and dietary products remains doubtful. Thus, the CBD threshold levels will need to be adjusted.
The uncertainty has led to many portals/platforms/payment processors to demand that all CBD and hemp-based companies cease the sale of the same. Must comply and remove all such products immediately. To avoid any litigation, most companies cooperate at the earliest.
Brands and their CBD Products
CVS Health, Walgreens Boosts Alliance and Rite Aid have already jumped on the CBD bandwagon. Besides this, beauty retailer Ulta Beauty and a major wellness retailer GNC Holdings is also making its foray into the CBD side of things.
Pennsylvania based Healthy path CBD; is delivering the highest sales imaginable. The brand brings top quality CBD products from the Cannabis plants grown organically, tested to include the CBD component; plus removing any THC traces. A process that renders a pure-superior product, free from toxins.
Maine based Happee Spice is also generating a good number of orders every quarter. Thanks to their, range of CBD products that offer all the medicinal and therapeutic benefits, free from THC. Take all the benefits of CBD without the “high” to maintain a clear and active lifestyle.
Most brands offer a wide range of CBD SKU’s out of which a few are listed down:
CBD Edibles
The simplest of CBD products in gummies, hard candies, mints, chocolates, cookies, spreads and honey that bring the benefits of CBD in your tastiest treats. An easy snack with the goodness of CBD.
CBD Tinctures
The fastest way to consume CBD; add a few drops to your diet or take the same orally. Enjoy all the medicinal and therapeutic benefits of this concentrated extract, made by soaking herbs in alcohol.
CBD Capsules
A fast, convenient and tasteless way to ingest some CBD without the hassle of wasting time in vaping and preparing anything. Discreet and direct; pop one like any other multivitamin and get on with your day. A good start for the unfamiliar consumer.
CBD Topicals
Products that come in the form of lotions, creams, balms and gels made to be rubbed on the skin. These are ointment substitutes to be applied on the affected area and good for those who do not wish to take CBD orally.
Advantages of selling CBD online
Despite all the regulatory tussles, you can still manage to gain a whole lot of benefits by running your CBD shop online. Firstly, having an eCommerce website will give you the more than adequate push to drive your brand forward. For this, continue to read ahead and discover how to sell CBD online?
Aside from this, let’s explore the other merits of establishing your brand on the web:
- SEO your Brand – People are actively searching for CBD products. Which is why you must start interacting with those relevant searches and find a way to educate your qualified audience.
Publish relevant content for your potential customers. Use the power of SEO and rank higher for popular search terms on Google and Bing; which’ll help you to generate qualified leads. This helps to Boost Growth, increase sales, generate awareness and build trust, drive traffic to your site.
Most effective way to gain customers and bypass competition. Use Google Keyword planner and map high-volume words to derive your site content. Optimize your CBD eCommerce to this and enhance your CTR, conversions and lower bounce rates. Track along the KPI’s and better your visibility. - Email Marketing – Strategic emails dispatched from time to time will yield the best results. A marketing tactic used by most players in the CBD industry to lure prospects. Advertise all your inventory in one shot. People visit their inbox daily, which is why this reach is even more competent.
A good way to keep your customers informed and interested in your SKU’s via newsletters. An email campaign also helps you hand out personalized recommendations/offers; customized to their shopping habits. As per Statista, 49% of consumers would love promotional emails from their favorite brands.
New products, deals, product reviews, rewards, seasonal offer announcements can all be made through mails to drive CBD curious customers to your website. Besides, the fact that around 60% of emails are opened on mobile devices, which helps to connect with your audience on the go. - Affiliate Marketing – Word of mouth from a reliable source works wonders for any brand, and the same goes with CBD as well. Use influencers where possible to drive your brand name forward. This helps to up the engagement as well from outside users, who were otherwise unfamiliar with your brand.
Get others to promote the brand for you and turn it into an affiliate program. Run incentives for every lead acquired by them, which can then be redeemed on your store. They talk and create a buzz around your brand. In the long run, it helps to reduce the spend on marketing.
Create awareness and gain the edge in this competitive market; besides, helping to create a long-term sales funnel. The trust factor with your influencer means they are likely to jump the bandwagon and lap up your ideas and products - a new-age way to penetrate new territories and gain buyers.
- Customer Service – Being online means you’ll be able to address customer grievances with ease and speed. Issues and queries are natural when the CBD business is still in its nascent stages. As such, it is vital that you place someone (even an AI bot) to engage and respond to issues.
- Instagram – Most CBD brands look to place themselves on Instagram to further their brand value. Realizing that a good number of customers are here, means you can take advantage of the same and connect with them. Establish some social media presence and gather all the leads you want.
- Testimonials – A major advantage of running a CBD eCommerce store is it lets your customers leave valuable reviews, which will then serve as a reference point for the next buyer. Showcase this positive feedback to help future customers to get over any indecisive moments.
- Automation – Instead of manually processing back-end tasks, shift all the heavy load to software’s that will simplify your work. Use CRM/ERP/CPQ and other applications to ease the workload. A move that helps to streamline all the manual work
In the IoT age don’t rely on legacy systems, pick up advanced tools to streamline all the processes. Even use cloud-based eCommerce systems to help speed-up fulfillment and give your customers accurate and timely information about their orders.
What are the Key Challenges?
Due to the complicated legalities and unequal state regulations inherent with CBD related products, all products sold online are considered high-risk.
The CBD industry has its unique regulatory procedures, which make it difficult to hit the ground running. Without clearing these legal hurdles, companies cannot possibly succeed in this market. The FDA details specific guidelines/rules; which will serve as the base for many such aspiring companies.
For the time being, you’ll need to know about some struggles before undertaking a CBD mission:
- Payment – Your regular payment processors (PayPal, Stripe, Square) won’t run in this sector. They are not willing to risk it with such a complicated business. As such, you end up with limited payment gateways. Zodaka/PayKings/goEmerchant are allowing such CBD transactions.
Users sign-up by connecting their bank accounts to their system, then the payment goes from the user’s to the merchant’s bank account. A streamlined transfer process like no other. In the absence of a regular payment brand for this high-risk sector; there are still quite a few options for collecting money.
Charging a fair rate for their services, with no chargebacks and maintaining a highly secure encryption channel. Grow your business, ease your payment methods, protect your store & sustain your revenue stream with these reliable substitutes. Losing payment means losing business.
However, there are certain payment processors that charge a hefty cut of the transaction, due to which startups are hit bad. The bigger brands can still manage somehow. Choose wisely!!!
- Platforms - Not all platforms will let you trade in Cannabis derivatives. Big brands like Wix, SquareSpace, BigCommerce are preventing many store owners who use their service to sell any CBD related products. Your Store will be Shutdown. Plain and simple. No second chances.
Thus, you need to do a proper analysis; before arriving at a suitable platform/hosting company and setting up your first CBD online store. An open-source WooCommerce, being a little lenient on their CBD laws, means so you can opt for them. With the freedom to host wherever you want.
Once deemed high risk by the banks; the payment gateways will become unsupportive, and Shopify will close your shop. The federal risk factor makes it easier for most mainstream platforms to bring down your store. They will not burn their reputation for some “plant based medicinal product” venture.
Which means you’ll have to select the one; that streamlines your business activities, offers the lowest processing fees. Brings dependable shipping/payment options, SEO functions, tech support & does not run the risk of closing your business in the future. Do a thorough analysis before committing.
- Advertisement Limitation - Due to the legality constraints, you cannot sell CBD through traditional means. Google Ads will not allow any CBD content and so wont Facebook. Most likely it will be taken down as soon as the campaign goes live. In such a scenario you won't see any PPC ads.
Such limitations mean, your company cannot gain any visitors from these sources. A major drawback of this industry is how it restricts your SEO work to more of less your own website. Facebook prohibits any CBD centric product, which will cut your social media side as well.
A large chunk of your consumer base that resides on these social portals won’t be able to access your inventory. Leading to you looking for other ways to market your products.
- Shipping Challenges - The growing uncertainty in the CBD industry is causing many providers to look the other way. The complex nature of the CBD laws and due to not gaining a widespread acceptance, many Logistics brands are shying away from accepting this item.
Being Farm Bill compliant is the first criteria for you. Besides, other requirements include; holding a valid license from the Department of Agriculture, following specific shipping rules & having a Certificate of Analysis to prove the extent of THC (<0.3%) in your product. No one wants a trafficking offence.
DHL and FedEx currently have this on their banned substance list, but Eurosender, USPS and UPS don’t have any objections so far. Getting caught up in “Misuse of Drugs” is the last thing any brand wants. Making Shipping a problem to navigate for anyone looking to get into the CBD sector. Most 3rd Party Logistics are too distrustful of the CBD business.
- Other challenges – Banking is another concern, as most of them are hesitant to do business fearing risks and defaults. The fluctuating landscape keeps them off. Then the Insurance companies don't want a piece of this and are likely to quote higher rates and refuse affordable prices. Investment and finding Capital is a major hurdle for all CBD brands. Most CBD businesses risk abrupt closures.
Banks & insurance companies are aloof of the ongoing changes in the CBD sector. Due to which they are more than willing to cut ties with CBD companies. As such, these CBD companies may end up losing essential professional services.
A new bill, the SAFE Banking Act could provide federal security for institutions that serve authorized CBD businesses and improve their access to financial services. If this becomes law, it could revolutionize the CBD industry.
FAQ
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Disclaimer: The statements made regarding these products have not been evaluated by the Food and Drug Administration. The efficacy of these products has not been confirmed by FDA-approved research. These products are not intended to diagnose, treat, cure or prevent any disease. All information presented here is not meant as a substitute for or alternative to information from health care practitioners. Please consult your health care professional about potential interactions or other possible complications before using any product. The Federal Food, Drug and Cosmetic Act requires this notice.
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