• Setting Up CBD Oil Business

February 03, 2020

Setting Up CBD Oil Business: An All Encompassing Guide


We all have heard about the term CBD oil catching the trend fire among fitness instructors, social media influencers and mental health societies.

It is lucrative since it’s a new business and many of you would consider it a great business opportunity to dive into this niche.

Before you indulge in starting your own CBD oil business, it is in your best interests to understand all there is to know about this product along with how to go about building your company.

Cannabidiol has gained quick popularity among households and fitness enthusiasts.

Still on the list of the up and coming mainstream health supplements, this compound extracted from hemp and cannabis has made waves with its purported therapeutic products.

CBD is sold in the form of topicals, infused edibles, tonics and more. According to BDS Analytics, the CBD industry will reach sales of $20 Billion till the year 2024.

Though the market for CBD is a rapidly booming one, it is not without any challenges. The law for sale of cannabis and hemp products and its compounds are stringent in several countries.

Given the restrictions and difficulties along with the profitability in this industry, several wonder the best route to run a business.

This article will discuss everything you need to know about setting up your CBD oil business.

Explaining CBD

One of the 100 cannabinoids, which are compounds found in cannabis and hemp plants. The most prominent cannabinoid is Tetrahydrocannabinol or THC, which attributes to causing intoxication upon consumption.

However, CBD is different. Rather than causing an intoxicating effect, CBD has gathered a lot of appreciation and attention for its therapeutic qualities. Even though medical research is pending about the medical applications of CBD, the alternative medicine industry is quickly gaining popularity for its use.

The process of producing CBD requires taking several steps. These are:

  1. 1. Cultivating a hemp or cannabis on a large scale, this requires a lot of temperature monitoring and agricultural techniques to maintain optimum quality.
  2. 2. One can also purchase harvested crops to put into processing.
  3. 3. The processing unit extracts the oil of CBD to infuse into gels, creams or edibles.
  4. 4. CBD oil is also sold in its concentrated or diluted form.

As a CBD business dealer, you can either manufacture the product yourself by setting up a unit, but it is common for several entrepreneurs to purchase their stocks from established producers.

Hemp CBD Vs. Cannabis CBD

Since CBD is necessary to be found in both hemp and cannabis, it is important to know the difference in their composition and effectiveness.

The key difference between hemp and cannabis CBD is the content of THC in the both. Since hemp CBD oil consists of less than 0.3 percent THC it comes under the purview of federal law to produce, manufacture and sell.

But cannabis CBD’s THC content goes way above 0.3 percent, making it federally illegal to manufacture or sell in the US.

Under the federal law, marijuana is a Schedule I drug under the Controlled Substances Act. This makes the component illegal for sale in the US even though several states have legalized its use in adults.

However, industrial hemp was eliminated from the Controlled Substances Act recently, making it available for commercial sale and the use of adults.

Full-Spectrum CBD Vs. CBD Isolate

In the CBD oil industry, the product is available in two forms, which are Full-Spectrum CBD and CBD Isolate.

But what are they and how do you distinguish between them?

Full-Spectrum CBD: Depending on what kind of extraction process the CBD oil is produced from, there can be the presence of other compounds from the cannabis or hemp plant. Full-Spectrum not only consists of CBD, but also another substance called terpenes derived from the source plant. It attributes to the aroma, taste and flavour profile along with any particular effects from the plant.

CBD Isolate: On the other hand, CBD Isolate consists of only CBD without the mix of any other compounds such as terpenes. Even though this concept might sound shiny to buyers, it is observed that Full-Spectrum CBD extracted from hemp plants contributes more effectively to achieve the desired effects in the users. This theory is under research for clinical confirmation but still influences the demand of the two extracts.

Saleable CBD Products

Since, you’re now aware about what CBD is, how it is extracted and the two different forms it comes in, it is time to understand the types of products it can be used in.

CBD oil is infused in several products to be sold to the general public. The application and benefit of each is specific or general, depending on the usage and dose taken.

The CBD market is still experimenting and expanding its scope, so you wouldn’t be surprised to find a growing list of products infused with CBD. Here are a few examples:

  1. 1. CBD Topicals: These consist of CBD infused in creams, sprays and gels to be used as pain relievers.
  2. 2. Vape Concentrates: CBD concentrates are used in vaporizer concentrates like oils and waxes to be put into diffusers.
  3. 3. Sublinguals Tinctures: Sublingual tinctures are the most popular CBD product that comes in an oil form that needs to be consumed with a dropper to be absorbed by the tongue.
  4. 4. CBD Edibles: Baked goods, chocolates and candies also consist of CBD in regulated amounts as they are under the scrutiny of the Food and Drug Administration.

Challenges While Running A CBD Oil Business

The CBD products industry has its own set of unique challenges because of the regulatory laws set upon the usage and production.

Unlike other businesses, opening and running a CBD industry needs approvals and regular checks from the FDA. Following are the challenges you need to prepare for:

  1. 1. Banking: Opening merchant accounts and doing business with banks in terms of loans is tricky due to their apprehension of the business.
  2. 2. Insurance: The costs of insuring your CBD business are rarely cheap.
  3. 3. Payment Processing: Payment processors charge a very high percentage of your income in the CBD business.

10 Step Guide to Forming Your CBD Oil Business

Now that you know all the aspects of the CBD business, here are the steps for starting your own CBD business:

  1. 1. Incorporating Your CBD Business: The process of incorporating your CBD business involves choosing a brand name, creating a logo and registering them both.
  2. 2. Bank Account: Once your LLC and logo are established, open a bank account based off the same details in the category of health and wellness industry.
  3. 3. Create A Merchant Account: With the bank account opened and EIN number, open a special CBD merchant processor account by choosing a bank that specifically caters to hemp related business.
  4. 4. Choose A Supply Partner: Since production is tricky, it is advised to choose a supplier that sells high quality and reliable CBD oil in the form you desire.
  5. 5. Marketing: Once the technical aspects are looked after, you can start the marketing procedures by creating a website and social media handles for your business with the appropriate tools to spread the word for publicity.
  6. 6. Bring In a Logistics Fulfilment Company: Production, packaging and marketing aside, it is important to have a logistics partner to fulfil your order delivery to the customers on time.
  7. 7. Form An Effective Brand Marketing Strategy: Set clear goals for your business and use the right marketing tools to find your target audience and sell them your product. Make sure you use tools such as facebook and Instagram analytics to check engagement of the audience. Use educational blogs, videos and testimonials to garner the attention you need to convert.

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