Over four thousand years ago, Chinese Emperor Shen Nung, who is often referred to as the founder of Traditional Chinese Medicine, wrote in his book, The Great Herbal, that cannabis could be beneficial for treating conditions such as gout, rheumatism, and mental confusion, as well as several other illnesses.
In the digital era, CBD products can be purchased from an ever-increasing selection from a range of places, such as internet stores, convenience stores, and high-end shops owned by famous people, in the US and many other countries as well.
Despite its long tradition of being used and its current ubiquity, CBD and hemp, its source, remain largely unknown.
So What is CBD?
Cannabidiol, known as CBD for short, is a less active variation of the very reactive delta-8-tetrahydrocannabinol (THC). Cannabis has two components, together with roughly a hundred additional cannabinoids, that are discovered within the plant.
Unlike marijuana, CBD is obtained from a particular variety of cannabis plants that is grown with a license approved by the USDA. This variety of marijuana has to contain a THC level of below 0.3% on a dry-weight basis. This implies that it does not cause any intoxicating sensation, but instead is reported to have a variety of mental and therapeutic advantages.
Types of CBD.
Picking the right CBD product can be a challenging choice with all the varieties that are available.
We have narrowed down the number to three main types of ingredients that contain CBD, including:
CBD Isolate.
CBD isolate is usually viewed as the most concentrated type of CBD, meaning there are no other components present. It is extremely subtle, with no discernible flavor or smell.
Full-Spectrum Hemp.
The most notable difference between full-spectrum hemp and isolate is that full-spectrum hemp has all the constituents of the cannabis plant, including other cannabinoids and essential oils, while isolate does not.
All of these substances collaborate to improve strength, giving rise to the “entourage effect.”
Broad-Spectrum Hemp.
Broad-spectrum CBD is situated between the more concentrated isolate CBD, and the more comprehensive full-spectrum CBD. Full-spectrum CBD has been enriched with additional compounds found in the cannabis plant while containing minimal to no quantities of THC.
Broad-spectrum hemp can also provide the same positive collaboration of cannabinoids and other compounds that make up the so-called “entourage effect.”
CBD Industry by the Numbers
Because of the health advantages promoted and its connection to cannabis, consumer attention towards CBD products has been increasing steadily since 2016.
EAZE, a San Francisco-based cannabis delivery service, declared 2018 to be a “list-breaking year” for CBD.
In 2018, it was seen that the quantity of US CBD buyers increased by 100%, from 2.6 percent to 4.8 percent, with Baby Boomers being at the forefront.
EAZE’s information implies that female Boomers have a tendency to turn to CBD items to handle stress, sleeping problems, and relief from soreness.
An investigation performed by Consumer Review has found that more than one-fourth of individuals in America have used CBD in the last two years.
This is understandable given that many items, especially in health and hygiene, food and drink, and cosmetics, contain CBD oil. Consumers now have an abundance of CBD items to try, such as tinctures, lotions, gummies, and even coffees.
So what makes them tick the most? Brightfield Group discovered that those who take CBD frequently opt for vaping products over high-CBD flowers.
Growing interest? Checked. Overall consumer awareness? Rising! What about market growth prospects? Well, these seem to be solid too.
It is projected that in 2025, the U.S. retail market for CBD items will increase dramatically from the 2018 figure of $2 billion to $16 billion.
When you take into consideration that 80% of people who are aware of CBD endorse its use, even if they do not make use of it themselves, it is evident that starting a web-based business revolving around CBD is a very lucrative venture.
9 Steps for Starting a CBD Business Online
Hyped products often have a short shelf life. It appears as though CBD is going to be around for a while.
So if are interested in exploring this high-growth niche, here are the main steps for starting an online CBD business:
Identify Your CBD Niche and Products
A swift scan of the digital offering of any wellness store will reveal that products containing CBD are now widely available. When demand is high, many businesspeople attempt to take advantage of the popularity by offering creams, ointments, chewable products for both humans and animals, hemp-based apparel, and accessories.
Should you offer fashionable items or the “timeless” pieces? Well, that’s for you to decide. Examine the general fields initially when evaluating the total market potential. Here are the most popular ones:
- CBD-infused foods/beverages.
- Supplements/wellness products.
- CBD-based cosmetics.
- CBD pet products.
Next, you should zoom in on your product types. Most of these differ, based on the CBD consumption method:
- Drops and sprays
- Pills and capsules
- CBD vapes and cartridges
- Tinctures
- Topicals and patches
- CBD edibles
Understand the Laws and Regulations Around CBD
The end of 2018 saw the passage of the Farm Bill, which enabled the commercial cultivation of hemp in the United States. You can cultivate industrial hemp and legally trade commodities that contain hemp-derived CBD in any part of the USA.
But there are some restrictions too:
- The hemp you are using to produce CBD cannot contain more than 0.3% of THC. Any cannabis plant with a higher concentration of THC is automatically considered a marijuana plant and stronger regulations kick in.
- CBD, produced from marijuana plants, is legal in 15 states for recreational cannabis usage and in 36 states for medical use.
When it comes to regulating cannabinoids as a substance, the matter becomes complex. So far, only one drug based on CBD has been given the seal of approval by the FDA – Epidiolex. This implies that no other businesses that sell CBD items can state that their products have any kind of health benefits. The FDA does not permit the inclusion of cannabinoids in food, nor does it allow the promotion of anything containing them as dietary supplements.
The FDA does not permit the incorporation of CBD into foods, however, there have not been any corrective measures taken against CBD vendors, other than delivering warning letters for wrong health assertions.
Create a Thorough CBD Business Plan
Stepping into an enterprise without a comprehensive strategy is like driving a car without a rearview mirror: it’s possible, but you may miss a large impediment coming towards you.
When discussing the field of CBD, having a business plan is the key to success, as it will guide you in adapting to frequently changing regulations, deciding what operational tasks are most important, and capitalizing on new ventures driven by market demands. In addition, it is the form your benefactors and other persons who have an interest in the matter will expect to review.
Here’s what should go into your business plan for ecommerce CBD operations:
- Start with market analysis: The goal of a market analysis is to supply you with sufficient information about your industry size, customers, competitors, and other market variables.
- Pick your brand name and confirm product range: Explain how your brand name, along with other brand assets, differentiates you from the competition.
- Determine your financing: Estimate how much cash you’ll need to launch your operations. Break them down as one-time pre-launch investments.
- Include a realistic marketing plan: A marketing plan details your strategy for growing awareness around your CBD brand, acquiring new customers, and fostering repeat purchases.
Get Your Business Documents in Order
To sell CBD online you need to obtain two types of licenses:
- A regular business license: get incorporated and register a business with your state to start operations. Also, request an EIN/TIN for your newly created company from the IRS.
- Reseller license: If you plan to purchase CBD from wholesalers, you may also need to get a Reseller’s license (certificate) from your state. This document is hugely important because it allows you to buy products wholesale without paying sales tax.
- CBD distributor license, retailer license, and/or product registration:
Find Your CBD Supplier.
Finding a dependable supplier of CBD products is likely the most important aspect of operating an ecommerce business. There are a few reasons for that.
First, you must make certain that you are offering CBD sourced from hemp plants, not marijuana plants. These latter products have a greater concentration of THC, meaning they are only allowed in certain states if manufactured and sold through government-controlled cannabis markets. US federal and state regulations necessitate that all hemp produced in America be examined for the amount of THC it contains.
Secondly, the level of excellence in the items you offer will determine how pleased your customers will be and how well your cannabis brand is perceived. A total of 24% of people buying CBD products chose to do so primarily because it is capable of delivering the specific desired results.
As a CBD business just getting started, you should strive to avoid any fraudulent behavior. Once more, it is essential to perform careful research into different CBD suppliers before deciding which ones to use. Beyond requesting or performing independent product testing, also evaluate a potential wholesaler based on the following criteria:
- Hemp sourcing method and origin.
- Required licenses and certifications.
- Use of current Good Manufacturing Practices (cGMP)
- Extraction method.
- Reviews from other entrepreneurs.
- Pricing.
- Extra services (e.g., labeling, dropshipping).
Discover the Perfect Ecommerce Platform.
Aside from determining which CBD supplier you can trust, you must also determine which ecommerce platform will be the optimal choice for your business. The quality of your tech infrastructure has the potential to enhance customers’ satisfaction with your brand, similar to how quality products do.
Despite this, not all ecommerce systems are able to establish an online store for CBD due to its current regulations. Still, you have some outstanding options.
BigCommerce.
BigCommerce has a wide variety of ecommerce tools for shops, wholesalers, and producers who specialize in CBD items. We offer global CBD businesses everything they need to get their business on track quickly and expand without restraints. This encompasses features such as drop-and-drag page builders, customizability without limits, no transaction fees, and close-to-perfect uptime.
Shopify.
If you satisfy the requirements, you will get to experience a great selection of integrated functions for getting your online business up and running, including design layouts, combined delivery services, promotional strategies, and transaction handling.
3dcart.
A different ecommerce platform, 3dcart, can host stores that sell digital CBD and vape products. They provide comparable ecommerce services – shopping cart applications, embedded “buy” button, and an all-inclusive ecommerce site builder, with templates, unrestricted bandwidth, payment processor support, and additional features.
Build Your Website.
Choosing an ecommerce platform instead of open-source ecommerce tools or custom development shortens the amount of time it takes to construct a website.
The company that will provide the solution will take care of hosting and infrastructure, so you only need to focus on the design of your CBD store and make a list of the products available.
Customize your design.
When it comes to CBD ecommerce store design, make sure that:
- Key product information has a prominent spot.
- Mind the navigation
- Accurate and fact-based.
- Devoid of any health or drug claims.
- Cliché and jargon-free.
Shoot and upload product photos.
Ecommerce photos do two important things:
- Act as an extension of your brand.
- Help sway customers’ purchase decisions.
Determine Shipping and Payment Terms.
Once you have designed the layout of your shop and arranged your product inventory, you must then figure out how your merchandise will be delivered to its purchasers.
Determine your shipping policy.
Delivery is indispensable to buyers of online commerce – you do not want to disappoint them there. To work out the optimal shipping policy for your CBD business, ask yourself these questions:
- What’s the threshold I set for ‘free shipping’?
- Do you plan to offer a variable fee?
- What delivery timeline is feasible?
- Which logistics carrier works best?
- Are there legalities around shipping hemp/CBD-based products across state lines that you should be worried about?
Select an ecommerce shipping solution.
Choose an appropriate shipping and fulfillment software program to help you decide shipping charges, control supply networks, generate labels, and send automatic notifications to clients.
Choose a payment processor that works with CBD.
The CBD sector is considered to be a risky business due to the ongoing lack of clear regulations. As a result, a lot of payment processors decide to not work with CBD merchants in order to reduce their potential problems.
You may enlist the help of an experienced payment processor to collect money from patrons if your business is considered high-risk.
9. Market Your CBD Company.
Once you are successfully running, your next aim should be to gain customers. At this time, the CBD industry is a popular trend, but customers will not come to you without you having an effective marketing approach in place.
Focus on content.
CBD items are still generally not comprehended, as a rule, because of deceptive advertising from other organizations or unfounded therapeutic cases made by so-called experts. Build your initial customer base by seeding accurate content.
Educate interested, but cautious, buyers about:
- Different product types.
- CBD extraction methods.
- Potential side-effects.
- Correct usage/dosage.
- The hemp industry as a whole.
Leverage SEO.
Creating and releasing researched material is critical to obtaining a strong position in the search engine rankings. Google has recently introduced an update called “passage indexing” to enhance the abilities of its AI algorithms. The update allows Google to index particular sections within a web page, instead of the entire web page, to help people locate smaller pieces of information that would otherwise be difficult to find.
Partner with influencers.
The widespread acceptance of CBD products is largely due to patients speaking up and advocating for them. Testimonies from individuals who utilized CBD to manage persistent pain and seizures originally caused widespread curiosity in the plant, both for treatment and health reasons.
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