After the passage of the 2018 Farm Bill, which rescheduled hemp products that do not contain significant amounts of THC and created a regulatory framework for their sale, the CBD market has exploded in popularity. If you’re not familiar, CBD (short for cannabidiol) is one of the cannabinoids found in the cannabis plant, though it doesn’t produce the intoxicating high that has become the signature of THC. Users have long reported beneficial side effects, but it’s only recently that science has begun to catch up. The FDA even recently approved its first CBD-based prescription medication, Epidiolex, to treat certain rare seizure disorders. If you were thinking about getting into the business, there’s no better time, so let’s discuss six basic tips for breaking into the CBD industry.
1. Learn about CBD.
If you haven’t used CBD products before or done research into how it’s grown, what its effects are, and how it can be beneficial for potential customers, you’re not ready to take the next steps with your business. CBD is a complex substance and there is still a lot of research ongoing into its specific effects. If you’re not prepared to put in the effort to educate yourself, this industry may not be the best fit for you.
2. Understand local laws and regulations.
Though the Farm Bill opened the door for a legal market for CBD products, there are still regulations and laws that you need to be aware of if you’re entering the business. Removing CBD from being subject to the Controlled Substances Act transferred enforcement from the DEA to the FDA, and regulations are still being worked on. Until more studies are completed, industry experts recommend staying away from marketing products based on medical benefits.
3. Focus on providing a high-quality product.
In all likelihood, you won’t be creating your product yourself, so you’ll need to look into CBD manufacturing if you intend to sell products like oils, supplements, and balms, which are popular with consumers. Research the differences between CBD isolate and full-spectrum CBD, and make sure the manufacturer you select uses the process you prefer. Quality assurance, diligent testing, and timely manufacture are some of the essential elements of a good CBD manufacturing company.
4. Don’t neglect the business side of your operation.
While it’s easy to get caught up in the big picture, success is the product of a lot of hard, granular work. Investing in technology like Work Board to track your objectives and key results, facilitate communication between employees, and training to improve the efficacy of your company can produce major dividends for new businesses. Managing these routines and processes is an essential part of running your business smoothly.
5. Advertise creatively.
Despite CBD’s legal status, many websites and social media platforms don’t host advertisements for CBD products. Building your own e-commerce store is necessary, and ideally, you’ll want to be able to get your products into brick & mortar stores as well. Focusing on strategies like SEO that organically place your products in front of customers is often the most productive way to market a CBD business.
6. Create repeat customers with excellent service.
Due to the challenges related to advertising, making sure that your customers come back again is crucial. Look into customer rewards programs or other promotions that incentivize a second purchase. Offer a discount for future use after someone’s first purchase, or create a rewards card that allows patrons to trade points for discounts or free products. It’s important to stay on top of communications with customers and to ensure your products ship on time and show up as expected. If you run into a hiccup or delay, it’s often worth it to take a slight financial loss to make sure a customer has a positive experience.
The CBD market seems like it’s here to stay, and industry leaders like BDS Analytics predict the market could reach $20 billion in sales annually before 2024. It’s no wonder so many entrepreneurs are ready to invest, but that doesn’t mean there aren’t significant obstacles to getting into the CBD business. The shifting legal landscape and restrictions on advertisements can make developing reaching a broader audience difficult, but making use of search engine optimization, customer loyalty programs, and getting your products stocked in brick & mortar stores can mitigate those difficulties. If you’re prepared to face the challenges ahead, there has never been a better time to break into the CBD industry, which is poised to be a profitable one for years to come.
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