Coloradans can grow marijuana in their homes for personal use. Up to six plants are allowed per Colorado resident over age 21, with as many as three plants flowering at one time. Before you start selling CBD online, read our guide on CBD regulations and how to grow your CBD brand over time. In this article, you will get to know all about how to start the best CBD home business, ways to navigate through legal obstacles, including a step-by-step guide to launching your business.
Home grow laws
Coloradans can grow marijuana in their homes for personal use.
Up to six plants are allowed per Colorado resident over age 21, with as many as three plants flowering at one time.
Don’t forget that counties and municipalities can pass stricter laws. For example, Denver limits a home grow to 12 plants, even if there are three or more adults over age 21 in the residence. Be sure to check your local laws for specific details.
The laws are different for medical marijuana consumers.
Marijuana plants must be kept in an enclosed, locked area that can’t be viewed openly. This means the plants can’t be outside.
At homes with residents under 21, any marijuana grow area must be enclosed and locked in a separate space that minors can’t access.
At homes without residents under 21, extra precautions must be taken to make sure any visiting youth don’t have access to marijuana plants.
How to Legally Sell CBD Online (and Grow Your Brand)
Disclaimer: While we’ve done substantial research for this post, but we do not claim to be experts on CBD regulations or selling CBD products. We always recommend that you do additional research before making decisions for your business. Laws and regulations are subject to change.
With new technology and evolving regulations, CBD oil products are now mainstream in the consumer market. An estimated 64 million people in the US have tried CBD in the past two years.
Before you start selling your own CBD products online though, there’s a few things you should know about.
What CBD products are legal to sell? How do you comply with your eCommerce platform’s rules? How do you finance a CBD business?
Keep reading to get the answers you need to ensure you legally sell CBD and create a brand that lasts.
What is CBD?
CBD (cannabidiol) is one of more than 100 active chemical compounds found in cannabis, or marijuana plants. It doesn’t contain any of the compound THC (tetrahydrocannabinol), which is what produces the “high” associated with marijuana use.
CBD is what is thought to help alleviate symptoms like pain and anxiety. With these benefits and no effects of getting “high,” CBD is growing in everyday use among consumers.
Common CBD oil or CBD-infused products include:
- Topical formulations
- Pet products
Without traces of THC, CBD is considered legal to sell – in most cases.
How to Comply with CBD Regulations
As CBD becomes a high-demand product, regulations around selling it are evolving. It’s your responsibility to understand the latest laws and what it means for your online business.
Federal Regulations for CBD
For decades before, federal law did not differentiate hemp (where CBD comes from) from other cannabis plants like marijuana. Therefore, CBD was still classified as illegal.
However, the recent 2018 Farm Bill changed all that. It legalized hemp production across the US, which is why you can now sell CBD products.
While this bill is a significant step for CBD sellers, there’s still serious restrictions on how hemp is produced.
- Any cannabis plant must contain less than 0.3% THC, otherwise it’s considered marijuana under federal law.
- A state’s ability to license and regulate cannabis must be approved by the Secretary of USDA.
- Producers can face violations if their actions don’t follow the laws
So, is it legal to sell CBD? Yes, CBD with less than 0.3% THC is legal nationally in the United States.
But, keep in mind that CBD is not generally legal.
Any hemp-derived products must comply with regulations set forth in the 2018 Farm Bill. Any non-compliant CBD can be considered a Schedule 1 substance under federal law, just like marijuana, heroin, and LSD.
Beyond federal law, CBD sellers also must consider that the FDA will call out brands who market products that contain cannabis in ways that violate the Federal Food Drug and Cosmetic Act (FD&C Act) and could put consumer health at risk. This means you can’t add CBD to food or label it as a dietary supplement.
The reality is that research on CBD in consumer products is in its early stages. So, the FDA is on the lookout for sellers marketing their CBD products with unproven medical claims and unknown quality.
Statewide Regulations for CBD
While legal on a national level (with restrictions), you also need to be aware of CBD laws that vary by state. Some states:
- Prohibit the sale and consumption of CBD
- Limit the types of CBD products allowed or require licensing
- Allow marijuana-produced CBD and/or only industrial hemp-produced CBD
Due to the evolving nature of CBD regulations, it’s best to connect with local representatives and keep up on statewide laws of where you sell.
How to Source CBD Products
Finding a CBD supplier is crucial to quality products and meeting current regulations. As pointed out above, there’s still restrictions on what makes CBD legal or not.
When evaluating CBD suppliers consider the following.
High-quality CBD oil products will be:
- Derived from industrial hemp that meets federal compliance
- THC content of less than 0.3%
- Processed from the plant’s stalks and leaves
- Free of any unnecessary chemicals or contaminants (affected by the CBD extraction process)
Avoid CBD products from suppliers that:
- Derived from marijuana itself (not legal in all states in the US)
- Derived from hemp seeds, which contain very little CBD
- Have more than 0.3% THC
- Makes medical claims on their website
- Have unusually low prices
- Don’t follow federal regulations
Before looking at CBD suppliers, learn how to read a certificate of analysis (COA) for hemp-derived products. A COA will help you determine if there’s less than 0.3% THC in a CBD product.
CBD Compliance by eCommerce Platform
In addition to federal and state regulations, there’s also limitations on the platforms you can use to sell CBD online. Take a look at these top platforms and their stance on CBD products.
– Permits only US merchants to sell topical and consumable hemp and/or hemp-derived CBD products (no marijuana-derived CBD) – Allows for hemp and hemp-derived products – Allows CBD products – Allows CBD products (check out their CBD guide) – Allows CBD products – Prohibits CBD products entirely – Prohibits CBD products entirely – Allows CBD oil
Payment Processors for CBD Stores
As a CBD seller, you will also need to work with a third-party payment processor to accept payment online. For example, Shopify does not allow CBD sellers to use Shopify Pay.
Instead, you will need to find a high-risk payment processor provider that is willing to accept the additional risk involved with products like CBD. Some examples are:
For whatever payment processor you do choose, make sure your eCommerce platform will integrate with the provider of your choice.
When selling online, you should also look into product-based shipping rules. Since CBD product regulations vary by state, you’ll want to ensure you stay within safe shipping zones.
In terms of carriers, major providers like UPS, FedEx, and DHL will ship for you. USPS did put out this notice that US CBD sellers should be aware of.
The 2019 Hemp & CBD Industry Factbook predicts that retail sales of CBD in the U.S. are expected to surpass $1 billion in 2019 – a 133% increase over 2018 sales – and may eclipse $10 billion by 2024.
How to Stand out in the Crowded CBD Market
As you build your CBD brand, it’s important to craft a brand voice and marketing strategy that stands out among tough competition. CBD is no longer a novelty item. Your customers can find it on shelves at local stores like CVS and Walgreens.
So, how do you ensure someone buys from you instead of a competitor?
Since CBD has seen explosive growth as an industry, there’s been more than a fair share of brazen health claims and “fake” CBD products to hit the market. These problematic products have ranged from making consumers severely ill to having no real CBD in them at all.
You won’t be able to fool customers with low quality products either. They’ll be quick to call out sellers who do and be sure to let their friends know too.
Do your due diligence when sourcing your products, both for the health of your business and customers.
At the very least, cover your basic marketing efforts. That means following SEO best practices to drive web traffic, having easy-to-use website features, and consistent email marketing. These tactics are even more important since there’s advertisement restrictions for CBD on Facebook and Google.
Interacting with Your Community
In 2020, high quality products and savvy marketing will only get you so far though.
Leading brands find creative ways to interact with their communities. They understand their buyers needs and wants, and foster authentic relationships based on that.
When products are relatively equal in quality, this is what sets you apart from other sellers.
Interacting with your community can be everything from educational content, sourcing new product ideas, influencer marketing, and in-person/virtual events.
What works to build your community will vary from brand to brand. Your decisions should be based on a deep understanding of your unique audience and meeting their needs.
Take a look at CBD seller Beam. They cater towards CrossFit athletes and the benefits of CBD for fitness and recovery. Check out Beam’s Instagram feed to understand how they connect with athletes on a personal level.
Sell CBD Wholesale
If you’re a CBD manufacturer, wholesaler, or distributor, perhaps you want to concentrate more on B2B selling rather than running your own online store and/or marketplace listings.
4 Ways to Finance Your CBD Business
Once you start selling, you’ll most likely face the challenges of financing your everyday options, especially for a product that’s still heavily regulated.
How do you ensure you have enough cash on hand to keep up with inventory demand, marketing costs, or other business expenses?
Here’s a few financing options to consider:
Credit cards are a go-to for most businesses to pay for general expenses like inventory. Cash back rewards can also be a great way to earn a little extra cash to put towards other needs.
Credit cards alone though don’t realistically support your entire business operations. Low credit limits and maxed out cards can still limit sellers, especially if your business is growing faster than your credit limit will allow.
There are limited traditional financing options for startup CBD brands because of legal red tape preventing financing from bank lenders.
But, one option is called a “bridge loan”, which is a short-term loan a seller can use for immediate needs like rent, inventory, and utilities. These loans though typically have high-interest rates and require you to put up collateral, which is typically a hard asset like commercial real estate, or your home.
Even if you’re approved for a bridge loan, they can be risky for your long-term financial health. Securing a loan with personal collateral (in the event you don’t own any commercial real estate) means your business is tied to your personal assets. Any unforeseen business issue can spill over into your personal life.
Merchant Cash Advances
Since traditional financing options like loans can be limiting and risky, CBD sellers can take advantage of alternative options like merchant cash advances. They aren’t technically a loan and still give you short-term access to the capital you need to run your business.
Cash advances differ from loans in many ways. Unlike loans where the business borrows money and pays it back over time in fixed monthly payments, merchant cash advances or MCAs work differently. They are not technically debt. Instead they are a purchase of your future receivables or sales. So an MCA will purchase your future sales and collect a fixed percentage of what you sold (usually weekly or daily). So if sales go down, you pay less that day, month, or week, if they go up, you pay more. There’s usually no long approval process with cash advances, and many (including Payability) do not do credit checks. Unlike loans, MCAs never require you to put up collateral such as your house to secure the funding.
Providers like Payability offer cash advance solutions that are based on your future online sales and account health. Future sales are based on all online sales both web stores and marketplaces. Capital can be used towards large inventory purchases, marketing expenses, or other business needs. Learn more about the differences between loans and cash advances.
Check out Payability’s Instant Advance solution. With no credit checks, you can get approved for up to $250,000 in as fast as one business day. Payability will remit a fixed percentage of your online sales, making it easier to handle payments based on your real time sales.
Accelerated Daily Payments
If you sell CBD on a marketplace like Tophatter, you could also apply for Payability’s Instant Access. This solution pays you next-day, every day for all your marketplace sales. This avoids the delayed payouts of marketplaces that routinely put sellers in tight spots.
As with Instant Advance, there are no credit checks, tax documents, or complicated paperwork required. Plus, you can get approved for financing in 24 hours based on your eCommerce account health and sales performance. As long as you are abiding by the marketplace or shopping cart’s terms and conditions for CBD, Payability could be a funding option for your CBD business. Minimum requirements apply for both Instant Access and Instant Advance. These funding options are not available to brand new businesses.
Venture Capital (VC)
Last year, there was about $2.62 billion in VC investment in cannabis-related companies.
While funding can be a great fit for some brands, it does come at a cost. You give up a part of your business. There’s pressure for constant and significant top-line growth. And, you can lose the ability to make the best long-term decisions for your company.
Before taking on VC money, read more about the pros and cons of venture capital funding and its effect on direct-to-consumer (DTC) brands over the past two decades.
The Promising Future for CBD Brands
Experts project the US CBD market will grow to $89 billion by 2026, and it’s relatively in its infancy.
Getting in the market now and understanding how to overcome its challenges will ensure you build a CBD brand that lasts. For more on how to sell CBD and what types of consumers buys CBD check out The CBD Insider 2021 US CBD Consumer Report.
Jillian Hufford has over seven years of educating merchants on digital commerce and marketing growth strategies and best practices. She is a frequent author and thought contributor on DTC and B2B commerce, SaaS software, and B2B content marketing. She also contributes regularly to CMSWire. Connect with Jillian on LinkedIn: @JillianHufford
How to Start a CBD Home Business Online – The Ultimate Guide
The cannabis industry is expanding right in front of our eyes. If you look around, CBD is everywhere.
From humans, animals, pets to becoming infused with lipsticks and cosmetics, this uncommon substance is now in the limelight.
If you closely look into e-commerce products, you would know that home-based businesses selling CBD have become a prominent solution for whoever wants to buy and sell it online.
Despite the growth and opportunities available for CBD home-based businesses online, several complications might step in.
In this article, you will get to know all about how to start the best CBD home business, ways to navigate through legal obstacles, including a step-by-step guide to launching your business. In the end, you will find tips to overcome probable challenges as well. Keep reading ahead to know all about CBD home-based business.
Is the CBD Market Worth it?
The answer to this question is very clear! Yes, the CBD market is expected to reach a total of $20 billion by the end of 2024.
Thus, it is evident that CBD is going to become a household item for its frequent buyers.
As long as your product serves its benefits, buyers will come back again and again to seek the same advantage and relief from CBD products.
But wait! Despite the CBD market holding worth, up to billions, one question would remain highly important.
There must be a reason why you want to start a CBD business online. Knowing “why” to run a business greatly impacts vital decisions about business operations.
The money would be one of your desires. But let me tell you, that should not be the sole reason. Knowing your core reason to start a successful business gives you the motivation to make tough decisions.
Without having a significant desire in your mind, you would not be able to do little things to flourish a business. Thus, before you invest greatly in infrastructure, think again to find a pinpoint towards your motivation to start the best CBD home business online.
10 Steps to start CBD home business online
Identify your niche and products:
A quick digital overview of any wellness store would give you a vivid idea that now you can get CBD-anything. Yes, you have heard it right.
Creams, sprays, ointments, chewing pills, accessories, and whatnot. What should you sell? Well, now that’s for you to decide.
If we look closely in the market, there are several types of CBD retail. Full-spectrum and broad-spectrum are many of the two prominent types which prevail.
However, when it comes to the products, among a wide range of products, only a few of them hold great market value. Those captivating CBD products include food, beverages, cosmetics, and pet products at a greater hype.
Above all, another important decision would help you finalize your niche and products for the CBD business.
When it comes to usage, your product consumption method can determine successful sales as well. The most common methods include Drops, Pills, Vapes, Tinctures, and tropical.
Depending on the type of product, the usage method can help in making it both user and environmentally friendly.
Understand legal policies for CBD products:
Is CBD legal? Let me tell you, yes! CBD is federally legal to use and sell online but there’s something that you must know!
Any CBD product which is available online must contain a THC concentration of less than 0.3% for legal purchase and sale.
Moreover, the legal principles for online purchase and sale vary from state to state. Thus, make sure to comply with local laws.
Obtain your license and business documents:
Before starting your CBD home-based business, you need to get a couple of licenses. One is the business license and the other is the resale license.
A business license is significant to have legal permission to start your CBD oil home-based business.
However, a resale license is required only if you plan to purchase your product from a wholesaler. This document is important because it can help you in buying wholesale products without paying sales tax.
Thus, research your state laws and their requirement for the licenses to ensure the legality of your business.
Identify your target audience:
No matter how hard you try, reaching out to every demographic is realistically not possible. Thus, to have a successful brand launch, it is important to know your target audience as well.
Who you are selling to is going to determine everything about your product, starting from packaging to marketing.
As per the recent survey millennials and women are the most regular users of CBD. You may target the already identified consumers or reach out to a wider audience to grab new customers as well.
Find a reputable CBD supplier:
Now the most significant part of starting a CBD oil home-based business is to have a reliable CBD supplier. There are two prominent reasons for that.
First, your product quality is likely to impact customer satisfaction. Therefore, a reliable CBD supplier with good quality raw materials can help you in highlighting your brand image and reputation.
Secondly, if you wish to provide nationwide deliveries, it is important to ensure that your CBD product is made with a legal concentration of THC content.
Since no simple testing is available therefore authentic suppliers can do lab testing and provide you with a certificate of analysis thus depicting the originality of your products.
Explore your competitive edge:
As CBD products are everywhere in the market, it’s high time to look out for your competitors thus making your brand unique.
With dozens of brands offering the same CBD products, help the client to find your differentiation. Unique branding can help you through!
What is different about your product? What is the customer getting from you? Attracting the consumer by highlighting the expertise, product quality, and convenience usage can help you establish a successful business.
Select the right packaging:
As much as the product matters, the packaging attracts customers a lot. Attractive and relevant packaging for the product must be your next priority.
Since people are now conscious of moving towards a natural lifestyle, thus eco-friendly biodegradable packaging for the product can help you win greater attention.
Build your brand/Website:
Your online visibility depends on how highly functional your business website is. With dozens of professionals in the field, having an easy navigation website isn’t a difficult thing anymore.
Make sure to have high-resolution images of the products on the website, so that people don’t really have to search for items.
Moreover, relevant content about products, usage, and advantages establishes communication with people, thus ultimately converting visitors into customers.
Advertise it on multiple platforms:
Having a website alone might not help greatly. In a digitalized world, no matter how much you advertise it never feels sufficient.
Conduct thorough research on how to advertise your product, to avoid wasting your resources.
However, on a basic level, you may hire SEO-trained writers to write specified content for your product to maintain a record of success in the particular niche.
Market your orders:
When you are just starting with the business everything regarding the orders can be done at your home.
For better business progress, marketing your orders via consumer reviews can help you greatly.
However, over time, you might need a warehouse and managing inventory to avoid worrying about packing, shipping eventually leading up to the growth of your business.
Challenges That Might Occur!
Abiding by regulations:
As mentioned above, you would need to go through proper channels and state laws to obtain a license and abide by the regulation, which might get draining in reality!
But, let me tell you that patience is the key to success. Due to legal concerns, you might only be able to ship nationally and not internationally.
Therefore you must avoid sending your products to the area with different legal orders. However, you must make sure to stay updated with the regulations to get the most benefit out of them.
Standing out in the market:
While the market is continuously evolving at the fastest pace, it might get difficult for you to stay unique among the competitors. Thus, make sure to keep advertising your products via Facebook and YouTube Ads.
Moreover, with the new emergence of trends, it can get rewarding to revitalize your packaging and brand outlook for an attractive appearance.
What are the new products that you might launch? What is that others are doing better than you? Seeking answers to all such questions can help you understand the “why” you must consider your competitor to do better!
Over time, managing all by yourself can get really frustrating. Without a proper crew and support system, it can become really difficult to fulfill your order.
Thus, a quick fix is to hire a team that can deliver and manage the products in a timely and organized manner.
Starting any type of business would have its own regulations and laws but with the CBD market emerging as a top e-commerce niche, it’s the right time to step in.
While the industry is currently evolving there’s a lot that you can do to make your mark!
Author – Noah Nicholls
Noah Nicholls is a full-time Writer, Traveler, and Marketing Expert who is Currently Working for CBD-Boxes. Noah Nicholls writing relates to a range of subjects such as CBD and health.