How to Start a CBD Business: Best Practices, Insights, and Tips

The cannabis industry has been gathering a lot of attention in recent years, with growth charts breaking new records each year. The most prominent area of interest is the healthcare industry where legalization of hemp-derived CBD is a hot topic.

As per Statista records, the CBD market will be worth billions (nearly USD 400 billion by 2030-2034, driven by a 15-40% CAGR) in the upcoming years. Such numbers back up the fact that this is the right time to enter the Cannabis market. Starting your own Cannabis business can help you make substantial profits, enter a high-demand market, and contribute to consumer health and wellness.

But most of the beginners do not know that launching your CBD business is not like any other e-commerce business. To help you get started with your cannabis business, we are going to guide you on how to start a CBD business by following tried and tested methods. This guide will work out for both startup or existing CBD businesses alike in terms of growth projection.

What is Meant by CBD Business?

Before we start diving into launching your own business, let’s talk about what a successful CBD business looks like. A CBD business generally revolves around the production, distribution, and sale of products containing Cannabidiol. As for Cannabidiol, it is a non-psychoactive compound that comes from hemp-plants.

Important: Cannabis is NOT THC

New entrants in the market often mix Cannabis with THC (even though a similar compound). THC produces high-like effects while CBD gives similar therapeutic benefits as THC but without causing the high-like effects.

What are the Types of CBD Business: 5 Major Types

As for the CBD business, there are more than just a couple of ways to make profits and get into the sales charts. The cannabis business can take various forms, some of which are:

  1. Cultivation and Extraction

If you are more into farming stuff, then this is the right occupation to get into the CBD business. The cultivation and extraction of Cannabis is focused on growing the hemp plant and extracting CBD oil. It can be a lucrative opportunity since the hemp plant is the source/raw material for manufacturing CBD products.

  1. Manufacturing Products

The CBD manufacturing business is the next most popular choice for making your business bright and profitable. You can manufacture a wide range of products, including oils, tinctures, edibles, topicals, and capsules. The manufacturing business is often done closely with the cultivation and extraction business for a consistent supply chain.

  1. Become a Retailer

Another common yet easy way to get into the CBD business is by becoming a retailer. You can start with either a brick-and-mortar store, go for an eCommerce platform, or do both at the same time. As for the modern-day approach, it is recommended to partner with a CBD website development company to get your business started. Launching your website is a low-investment and high ROI option in the CBD business, which often works perfectly well for the cannabis retailers selling directly to consumers.

  1. Wholesale and Distribution

The wholesale CBD business works something like the in-between of manufacturers and retailers. Choosing this type of Cannabis business ensures that CBD reaches a broader market. Cannabis wholesale and distributing businesses handle a large quantity of products, which are responsible for logistics and supply chain management.

  1. Technical Support Services

This industry is a little different from the usual activities regarding the hemp plants. This type of business is dedicated to providing services for the CBD industry. CBD support services can include a variety of assistance, such as design & development, digital marketing, package solutions, legal advice, and payment processing.

How to Start Your CBD Business: Step-by-Step Process

Every type of CBD business has its own pros, cons, opportunities, and challenges. 

Based on the type of CBD business you choose, the roadmap will differ accordingly. To give you a more comprehensive overview, here is a step-by-step guide on starting your own CBD business:

Step #1: Perform R&D to Make Your Brand

The beginning of your CBD business should always be based on research and development. Entering any business without doing your research on competitors and opportunities will get you to a dead end. This is the point where you might think of choosing the right name for your company as well.

Based on your research and development, it is better to choose a meaningful name for your CBD business that is also memorable. Here are some key considerations:

  • Make sure the name is unique: The reason why the name of your CBD business has to be unique is not just about the fact that it is memorable, but it is also about the copyright. Make sure to verify your business name against the trademarks database online before registering it officially.
  • Make it Simple: Do not overcomplicate your business name. Your CBD business should be easy to remember and pronounce.
  • Keep Marketing in Mind: Choose a brand name for a CBD business that represents the Cannabis industry, your activity or your products. For example, Hemp Herbiotics or CBD Therapy.

Step #2: Define Your CBD Business Plan

One of the major steps in starting your own CBD business is developing the plan. 

The business plan defines your understanding of the CBD market and helps you develop the winning business strategy. Moreover, it provides you with a roadmap to follow for your business success, which commonly looks like this:

  • Executive Summary: The first section includes an executive summary of your full business plan. It includes concise details of your strategy, which can be read quickly.
  • Company Overview: Your business is your company, which provides a brief overview of what you have to offer as a CBD business owner. For example, a CBD producer, processor, retailer, wholesaler, or an online CBD business.
  • Analyze Industry: Document the key information about the cannabis industry to identify the gaps and opportunities. Make sure to perform market research, understand how big the industry is, and the trends that are followed throughout the industry.
  • Customer Analysis: Find the right opportunities and look at the opportunities available in the market. By performing proper research, you have to identify the public demand to sell the right products.
  • Competitor Analysis: Even though the CBD industry is restricted, it still has a lot of competition. Here you have to identify direct and indirect competitors as well. Based on the challenges and opportunities, you have to develop your business for a competitive advantage.
  • Marketing Plan: Your marketing plan for a CBD business should have the 4 Ps: Product, Price, Promotion, and Place. Identifying these factors will help you prepare the right strategy.

Step #3: Understand the Legal Landscape

Understanding the legal landscape is very important when we talk about selling CBD online or through physical retail stores. As per DEA and FDA regulations, CBD is still a controlled substance. The legal status of Cannabis consumption and distribution varies by region.

To run your CBD business legally online or through the stores, you have to obtain the legal licensing and permits. Make sure your products meet the legal and quality standards. However, make sure to remain updated with the regulatory changes. We recommend consulting with a legal expert who specializes in CBD laws before applying for license registration.

Step #4: Source the Right CBD Products

If you are getting directly into the retail or wholesale market, then you should always consider the quality of the CBD products. If you are not planning to cultivate your own Cannabis or hemp plants, then it’s best to partner with reputable suppliers that provide third-party lab results. 

Make sure to verify the purity and potency of their products. In the wholesale or retail market, there are more than just a couple of products. You can sell oils, edibles, topicals, or even CBD gummies but make sure to source such products from organic and non-GMO hemp.

Step #5: Select Your Product Line

As a small business or a startup in the CBD business, you should start small by making a single product your iconic one. Whether you decide to go with a single product or a range of CBD items, make sure to present the best ones, as it would be the first impression.

On the other hand, diversifying your line of products can certainly attract more customers and increase sales. But it totally depends on your market and customer analysis.

Step #6: Build Your Online Presence

Whether you plan to launch a wholesale or retail business, having an online presence can increase your sales up to 25% at least. These numbers show how important it is to have an e-commerce website in this modern-day era. 

Therefore, develop a professional website with a modern interface that attracts customers. Invest in high-quality packaging, build a strong social media presence, and get the right website maintenance and support.

Step #7: Set Up Payment Gateway

Like the legality status of Cannabis, setting up the right payment gateway can be a challenging process. This is because the rest of the industries perceive CBD as an illegal substance in some cases. Therefore, finding the right payment integration or payment gateway is only possible if you contact CBD experts who understand the industry. Keeping the CBD transactions smooth and secure can make the operations delay-free.

Step #8: Set Up the Right Distribution Channels

Setting up the distribution channels is another important point in establishing your CBD business. At this step, you have to decide if you want to sell directly to customers, through a retail partnership or through both channels. Every distribution channel has its own pros and cons. If you have your own cultivation process, then it’s best to take the combination approach as it will maximize your reach plus profits.

Step #9: Apply Reliable Marketing Strategies

An effective digital marketing strategy is the key to attaining and maintaining customers in the long-term. By following techniques like search engine optimization, social media marketing, and collaboration with influencers, you can get quicker online recognition and higher reach. Through digital marketing, you can create influence about your products, their benefits, and educate customers to develop trust and loyalty.

Step #10: Analyze and Improve

Finally, when you have launched your website, invested in the products, and developed your channels, the next step is to focus on constant improvement. Focus on providing quality customer service. Stay updated with the CBD regulations and market trends to remain ahead of the competition.

Challenges of Starting a CBD Business: Key Considerations

The cannabis market is certainly lucrative but at the same time, it has a lot of challenges, limitations, and a lot of legal challenges that one should be aware of:

Legal Regulations

The biggest challenge in starting your CBD business is maintaining the legality status and complying with the regulations based on the region. Since the legal landscape of CBD products is continuously changing, hemp business owners should be aware of the local laws and regulations. To stay compliant with the legal regulations, business owners should always perform regular monitoring.

Quality Control

Maintaining quality and quantity is another major challenge in the CBD business. The market is flooded with a wide range of CBD products, with every brand presenting a new variety. Inconsistent potency and contamination can vary the quality of CBD products. Make sure to partner with suppliers that maintain the right safety standards and perform rigorous testing.

Payment Processing

Another major challenge is the payment processing method. Most of the traditional payment gateways avoid CBD transactions since Cannabis is mostly labelled with ‘nefarious’ activities. Due to these challenges, the payment gateways often require higher fees. Only specialized payment processing gateways familiar with the right knowledge of the CBD market can assist in this process.

Misleading Claims

CBD business owners getting into retail or wholesale business should avoid partnering with brands that make unsubstantiated claims. Similarly, as a responsible CBD business, you should avoid making healthcare, condition treatment, or any other sort of unrealistic claims regarding CBD products.

Copyrights

Finally, when your brand starts growing, handling the fame is the real challenge. Make sure that you are not copying any other brand or that some other brand is copying you. Protect your brand and innovations with trademarks and patents to avoid any new CBD business in future from copying your identity.

Final Words

Maintaining the CBD business is as challenging as launching the Cannabis business in this industry. With the legal challenges, a diverse range of products, and the competitiveness of the market, entrepreneurs should take all the right measures to enter the Cannabis market. Make sure to partner with the right technical partner to maintain the online presence that boosts your digital reach. By following the right steps and staying up to date with the local regulations, you can grow your CBD business from a startup to a recognized brand.

FAQs

Is CBD Business Profitable?

The CBD nutraceuticals market is projected to grow from roughly USD 9 billion in 2026 to over USD 29 billion by 2034. These numbers show the potential of the CBD business in the near future.

How is CBD different from THC?

CBD in its pure form is legal to consume and sell. However, if CBD contains more than 0.3% of THC, then it is considered illegal to consume as it will cause a high-like effect.

Which CBD product is the most popular one?

CBD tinctures are considered to be the most popular and high in demand product due to their fast absorption and easy to consume formation.

Is it legal to start a CBD business?

Yes, starting your CBD business is federally legal in the US only if the Cannabis products contain less than 0.3% THC. If any CBD product has more than 0.3% THC, it is considered as marijuana, which is considered illegal and classified under strict regulations.

Can a CBD business make claims about healthcare?

No, it is strictly prohibited by the FDA to make any medical claims regarding CBD or CBD products that diagnose, cure, treat, or prevent any disease.