You Grow, Girlfriend: A Guide To Setting Up A CBD Oil Business in the United States

Larry Ostrovsky is a passionate natural health advocate, coach, author, journalist, and entrepreneur.

If you’re more concerned with growing the herb than smoking it, then now is the time to launch your own CBD oil business.

As the laws surrounding marijuana are loosened and the world wakes up to the health benefits of cannabidiol, the CBD oil business is becoming an increasingly lucrative niche.

If you’re after a slice of the (cannabutter-infused) pie, then there are a few things you should know first. Read on to discover the essentials of setting up a CBD oil business.

Know the law (and follow it to the letter)

Firstly, it’s important that you know the laws around what you can and can’t sell. Each state has its own laws and restrictions regarding the sale and purchase of cannabis products — it can get complicated, so bear with me.

The 2018 Farm Bill ensures that hemp is legal in all 50 states. However, this doesn’t necessarily mean that CBD oil is legal — the law hinges on how the CBD is sourced.

Hemp is classed as any plant of the cannabis genus contains less than 0.3% THC. Marijuana, on the other hand, is any plant that contains more than that.

Your standard weed plant contains a much lower percentage of CBD than hemp, making it better for sourcing CBD in general. This is compounded by the fact that marijuana also contains more THC, which can be introduced into the CBD during processing — not ideal for those chasing a more chilled high.

Consequently, CBD sourced from hemp is legal at a federal level, while CBD sourced from marijuana is not. Got it? 

In the same vein, you should make it clear throughout your website and marketing that CBD is not an FDA-approved medicine. While research has shown CBD oil to carry a range of benefits, the FDA has not sanctioned its use as a medicine. Instead, it can be sold in low doses as a health supplement — make this clear on your website to cover your back.

Find a safe, reliable hemp supplier

If you’re setting up a CBD oil business, you need to decide whether you’re creating your own oil from scratch or distributing and reselling from a third-party supplier.

Whichever option you choose, you’ll need to find a reliable, professional supplier who can deliver the goods. While it’s entirely possible to grow your own at home, this requires a lot more red tape and jumping through legal hoops to get going.

Thankfully, there is a growing number of hemp farmers in the United States, a number of wholesalers look to Europe for a high-quality product, thanks to the year of experience their farmers have.

Regardless of the country of origin, US-based CBD oil businesses should keep an eye out for the following certifications:

●      Current Good Manufacturing Practice (cGMP): this documentation confirms that the provider adheres to the legally required manufacturing standards expected of their industry. In short: it means that their goods are good.

●      Certificate of Analysis (COA): this basically confirms exactly what is inside the hemp you’re buying. It matters to you because it legally confirms that your hemp doesn’t contain more than the 0.3% THC allowed by law.

Don’t be afraid to ask for this documentation from your prospective supplier. The CBD business can be a litigious one, so it’s always worth covering your back wherever possible.

Go niche to drive sales for your CBD oil business

CBD products are a dime a dozen right now. Consumers have a staggering amount of choice when it comes to choosing a CBD brand, and it’s a buyer’s market.

Consequently, you need your business to stand out. How? By finding a specific customer type and tailor your business and marketing towards them. Rather than selling to every stoner under the sun, narrow down your target market — go niche.

Are you selling to the 45-year-old mom who’s never touched cannabis in her life but wants to try? Or are you going for the high-powered businesswoman who just needs to unwind after a long day? The more specific you go, the better you’ll corner your market.

Struggling to find your niche? Check out some other businesses for inspiration.

Sol CBD, for example, targets the health-conscious, promising “radiant skin” and “luxury and rejuvenation” to its customers.

On the other hand, King Kanine markets its products exclusively to pet owners concerned that Fido is feeling the pressures of pup life.

Once you’ve found your niche, reflect it throughout your marketing. Blog regularly to discuss and highlight the things your target customer cares about and use language that they relate to. In short: treat your customers as your friends, and they’ll be your friends.

Find a high-risk payment processor

One of the main issues facing entrepreneurs starting a CBD business is finding a payment processor. Many in the commercial cannabis industry (and that includes CBD) struggle to find a financial handler willing to take on their business.

Despite the relaxation of laws surrounding cannabis products, many financial institutions are unwilling to work with clients in the industry. This is often due to the difficulty they have discerning whether a business sells hemp- or weed-sourced CBD.

But there are resolutions to this issue. There are a number of established high-risk payment processors with experience working with CBD clients. You can find a comprehensive review of the best CBD payment processors here.

That said, these processors often come with high costs to account for their potentially risky involvement. Unfortunately, this is a fact of life for CBD brands, and it’s unavoidable. However, as the laws around the sale of CBD and cannabis-related products develop, it should become easier for brands to sell their cannabidiol wares.

Starting a CBD oil business is not without its challenges. Between sourcing a reliable product and finding a payment processor, it’s a steep hill to climb — but it’s not impossible.

Use the tips above to guide your journey. Do your research, find a good product and craft a distinct brand, and your CBD oil business will be off to a flying start. My final tip? Maybe lay off the indica until your new business has found its footing...