The market for CBD businesses is booming, thanks to the increasing awareness of the molecule’s powerful wellness benefits. Being a relatively new industry in the United States, it can be tricky for potential business owners to know where to begin if they want to get involved in cannabidiol. This guide is here to help.
What is CBD?
In order to make sure a business is selling the best-quality products, is employing the most effective marketing strategies, and is aware of market potential, an understanding of what CBD is and how it works is essential. CBD is one of more than 100 cannabinoids that make up hemp plants, and although it is derived from an intoxicant (marijuana) the extract has no intoxicating effect. It is used as a supplement within a balanced diet for its potential health and therapeutic qualities.
Understand the Market
Leading cannabis researchers BDS Analytics and Arcview Market Research predict that the collective market for CBD sales in the United States will surpass $20 billion by 2024—a compound annual growth of 49%. With more than 40% of Americans expressing an interest in trying CBD, it is quickly entering the mainstream marketplace, moving from dispensaries to most general stores.
BDS Analytics cites the reason for this major growth to be twofold. Firstly, the history of the ingredient helps market the efficacy of the products. Secondly, it is one of the few natural remedies whose benefits can be scientifically demonstrated. These give CBD a unique position in the market of nutrition and supplements. Some of the most commonly found CBD products include sublingual tinctures, CBD-infused food, and topicals such as gels or creams.
Know the Legal Obligations
The 2018 Farm Bill saw the legalization of CBD products extracted from industrial hemp, as long as the active THC (the active ingredient in marijuana) threshold is no more than 0.3%. Before setting up a CBD business, either online or in store, it is essential that one understands the unique legal environment of the industry:
- A business license is required
- Understand exactly how the product is extracted
- Make sure you have up-to-date knowledge of both federal and state-specific laws
- Company terms need to be kept transparent
- Be aware of the legal limitations when marketing
Develop a Business Plan
Having a sound business plan is essential for the long-term growth and success of any company. It should include:
- Knowledge of the range of CBD products and their popularities
- A clearly defined target audience
- Budgets and financial sources
- A marketing strategy
- Predicted sales targets
- Long-term goals and growth plans
Create an Online Presence
There are some unique opportunities for potential CBD business owners, since this several e-commerce platforms have special assistance for newly established companies in this burgeoning industry. These include dedicated marketing support for this unique market. This is particularly important since there are federal limitations when it comes to advertising CBD as medicine. It is also currently very difficult for CBD businesses to use paid advertisement on large online platforms such as Amazon, Facebook, eBay, or Google. These two examples indicate how difficult it can be for a new CBD business to gain the visibility it needs to be able to succeed. However, just because it is more restricted, it does not mean that marketing CBD products is impossible.
Combining technical advertising methods with a little creativity is essential for a successful CBD marketing campaign. Using search engine optimization, for example, will help a new brand compete with more established companies and attract new customers. Combining this with unique marketing campaigns, both in-person and online, will help to capture the attention of a potential customer.
Establish the Brand
Since the CBD industry is still emerging, businesses need to always be ready for questions, so staying up to date on everything CBD related is vital. A company can embrace this by fostering a culture of open communication with its customers. This can be done by answering questions on social media, posting interesting research, or even showing videos about how the products are made. These efforts will help to increase trust and customer loyalty, too.
CBD has Huge Business Potential but Requires Work
The predicted growth of the CBD industry is unparalleled as it continues to grow rapidly ever since the 2018 Farm Bill, motivating many CBD start-ups. For those looking to establish a successful CBD business that will stand the test of time, both diligence and creativity are essential. One of the biggest challenges to a CBD business is marketing, but with help available and some creative muscles, a business can ensure that a brand retains its loyal customers long into the future.