The CBD market is expected to exceed $20 billion by 2024 – get in on the action with our seven step guide on how to set up your own CBD online store today! Find out how to sell CBD online, including laws, rules, regulations for selling CBD online, and everything you need to get started. Before you start selling CBD online, read our guide on CBD regulations and how to grow your CBD brand over time.
How to Sell CBD Online 2022 | 7 Simple Steps
It seems that CBD (cannabidiol) is suddenly everywhere you look. Health stores, high streets, pharmacies, and even coffee shops are all excitedly stocking their shelves with CBD products. It’s a craze that’s quickly gathered momentum, and is set to keep growing over the coming years.
It’s been forecast that the CBD market in the US alone will exceed a whopping $20 billion by 2024 – so if you’re looking for an opportunity in a growing market, you’re in the right place to get in on this CBD revolution.
But selling CBD comes with its own unique set of challenges – especially if you’re selling online.
To help you set up your budding CBD business for success, we’ve put together this extensive guide to walk you through the tips and trip-ups that every CBD seller should know. We’ll ask important questions like “What is CBD?” and “Is it legal?” before walking you through the seven steps to setting up your own CBD online store:
How to Sell CBD Online – 7 Simple Steps
We’ll also give you an insider tip on the most common CBD mistakes to avoid, and offer advice from experts who’ve been through it all themselves.
If you’re ready to become part of a global, lucrative, and sometimes controversial movement, then read on and get ready to start your own CBD online business!
Now seems like a good time to point out that this article is primarily aimed at US sellers.
CBD laws in other regions may differ from the information given in this guide, so double check your local legislation before launching your business.
We’re not lawyers here at Website Builder Expert – we’re more into techy stuff – so please always seek legal advice to check your CBD business is all above board. Happy CBD selling!
What Is CBD?
Let’s start with the basics, because there’s a lot of confusion and misunderstanding around what CBD actually is. CBD, or cannabidiol, is one of the main ingredients of cannabis – but don’t let that put you off.
CBD isn’t psychoactive – that means it’s not responsible for any of the “high” symptoms associated with cannabis (like paranoia or euphoria). The ingredient of cannabis that causes those symptoms is called THC.
You can get CBD from both hemp and marijuana plants. This guide will focus on hemp-derived CBD, because it contains much less THC – around 0.3%, which is the legal limit allowed when selling CBD products (we’ll cover the legal side of selling CBD next).
Why Do People Use CBD?
So, why is CBD so popular? Well, people believe it has medical benefits without the negative side effects that come with THC. These benefits include helping to:
- Relieve pain
- Reduce inflammation
- Relieve anxiety and depression
- Ease migraines and nausea
- Decrease seizures
Did you know? A drug containing CBD, called Epidiolex, was approved by the FDA (Food and Drug Administration) in 2018. This drug is used to treat rare forms of epilepsy, and was the first (and so far only) prescription drug to contain CBD.
There are plenty of different CBD products available. The main types include:
- CBD tinctures – place a couple of drops under the tongue.
- Edible CBD products – such as CBD infused chocolate, or adding it to coffee!
- CBD creams – applied directly to the skin to help with inflammation or arthritis.
- CBD capsules – tablets are a fast and familiar way of taking CBD.
- CBD isolates – “purified” CBD that has been turned into a powder.
- CBD vaporizers – vaping delivers quick results, and is a popular method of taking CBD.
- CBD patches – similar to nicotine patches, this gradually releases CBD into the body.
- CBD for pets – our four-legged friends can benefit from CBD, too!
That’s quite a list, and it’s barely scratched the surface of all the ways CBD can be taken. Nasal sprays, lollipops, and CBD oil-infused candles are just three examples of how you can get creative within these product categories.
Okay, so CBD won’t get you high, and there’s a wide range of product types to choose from. But is anyone actually reaching into their pockets to buy CBD products? What if this is just a passing craze?
Unfortunately, we can’t see into the future, but all signs and statistics are pointing towards CBD becoming a booming industry. The Farm Bill, passed in December 2018, has been largely responsible for the surge in CBD sales.
The bill allows farmers to legally grow hemp, opening the door for the CBD market to boom…
…and boom it did!
For starters, the US CBD market saw a growth of 562% from 2018 to 2019, and it doesn’t seem to be tiring after such an explosive sprint off the starting blocks.
As many as 14% of Americans say they use CBD. Treating pain was the biggest reason given, with anxiety the second most common cause for turning to CBD products.
Is CBD Legal?
A lot of the confusion around CBD is to do with the legalities of selling, buying, and using it. So we’ve picked out the key things you should know about the legal side of selling CBD online.
The first thing to make clear is that, yes, CBD is federally legal in the USA, as long as it meets certain requirements.
It is federally legal to sell hemp-derived CBD in the US, as long as it only contains up to 0.3% THC. If your CBD product contains more than 0.3% THC, it is legally defined as marijuana – not something you want to be selling!
Despite this, you do need to be careful – or at least mindful – about how you approach selling CBD online.
For one, different states have different rules and restrictions around CBD, and don’t always match up with the federal law. Because of this, you must always check your local legislation to make sure you’re not breaking any rules.
For example, some states require CBD to have 0% THC rather than 0.3%, and in a few states any CBD is still illegal.
Aside from always checking your state’s laws, there are two main things to know:
1. You can’t make medical claims about CBD
We know, this seems designed specifically to trip up CBD sellers. While the main reason most people use CBD is for its medical benefits, you can’t make grand medical claims when selling CBD products.
This is because CBD hasn’t been officially researched or approved by the FDA – until more is known about the effects of CBD, you simply can’t make claims about its medical benefits.
For example, you shouldn’t advertise on your website that your products can help prevent or cure serious illnesses like cancer or Alzheimer’s. Be careful about what you’re promising your customers, and always ask yourself what evidence you have to back up these claims.
Top Tip! Evidence should be scientific, rather than anecdotal – e.g. “my great aunt Gladys took CBD and it magically cured her overnight”. The internet is full of stories like these, and unsurprisingly, they won’t protect your business from FDA warnings.
Like many other natural drugs, CBD can interfere with other medications, which is why it’s especially important to be careful with your marketing. In short, you can sell CBD, but you can’t start promising to treat people with it.
2. US sellers should avoid CBD edibles
While CBD edibles are legal in other countries like the UK, and are a familiar sight on US shelves, they’re actually illegal under US law. The FDA has banned adding CBD to food and drink under the Federal Food, Drug, and Cosmetic Act.
Until that changes – if it ever does – it’s best to avoid selling CBD edibles if you’re based in the US. Some companies market their CBD products as “dietary supplements” – do not do this. (You’ll get in trouble).
Instead, pick a CBD product that doesn’t involve food, drink, or diet, and sell safe in the knowledge that your business is totally above board.
How to Sell CBD Online: The Ultimate Business Guide
If you’re looking to sell CBD online, it can be tricky to know where to start. Most tier-one banks and payment processors will consider CBD a high-risk industry, which can make it difficult to obtain a merchant account to sell CBD online, especially if you sell directly from your own site. In addition, many marketing platforms prohibit you from advertising your products. This means you’ll need to find creative solutions to overcome these obstacles. However, there are still some ways that you can successfully sell and market your CBD products online. In this article, we’ll go over a few tips to help you find a CBD merchant account, choose the products you want to sell, and build your website, all while complying with state and federal laws.
What is CBD?
Cannabidiol (CBD), a type of cannabinoid found in the cannabis plant, has recently experienced an increase in attention. This is due to its potential use as a treatment for people who suffer from chronic pain and other ailments. Although many pharmaceutical companies are researching and developing CBD products, there are few medications on the market at this time. As a result, many people are turning to CBD products from other sources for pain relief and treatment of their conditions. While some states have legalized cannabis for recreational use, including tetrahydrocannabinol (THC) and cannabidiol (CBD), many others have only approved it for medicinal use.
Understanding the CBD Industry and Market
CBD has been around for thousands of years. Ancient Egyptians used it for its medicinal properties, but its modern applications have only become popular in recent years. In fact, forecasters anticipate the CBD market will grow by $20 billion by 2024. Although it’s widely recognized for its healing properties, CBD is not yet FDA approved. Because of this, there isn’t much medical research on the compound. This makes financial institutions hesitant to facilitate digital commerce for CBD products.
Despite their perceived level of risk by payment processors, there are other ways that merchants can sell CBD products online. However, without a high risk merchant account provider or eCommerce platform, you may not be able to sell CBD online.
Understanding CBD Laws, Regulations, and Licensing
In 2018, cannabis became medically legal on the federal level with the passing of the Farm Bill. Since then, 13 states have made cannabis recreationally legal. However, many states still categorize CBD and THC as illegal. In order to successfully sell CBD online, it’s crucial to understand how to properly start a CBD business.
One reason it’s difficult to sell CBD online is that it must contain less than 0.3% THC to comply with federal laws. While further research is still necessary, scientists are doing their due diligence to substantiate the claims that CBD has both preventative and corrective qualities.
Benefits of Selling CBD Products Online
There are many benefits of selling CBD online. Doing so can help your business:
- Increase Your Revenue. One of the most important reasons to sell CBD products online is because it can grow your revenue exponentially. By going global, you’ll be able to sell to a much larger customer base and sell more by increasing competition. If you sell locally, there may not be many local businesses selling similar products that your customers can choose from. However, if you sell globally, there are thousands or millions of international competitors selling CBD products on countless websites. This expands your potential customer base dramatically as well.
- Reduce Your Costs. Forget about the overhead costs of running a physical business. When you sell CBD online you save money on a physical location, money that can be put back into your business.
- Increase Your Customer Satisfaction. If you sell CBD products locally, customers must drive to your store and wait in line to make a purchase. This can be frustrating for customers since they may not want to buy CBD products in person. When you sell CBD online, you allow customers the convenience of shopping whenever and wherever is convenient for them.
Creating a Website to Sell CBD online
Regardless of what types of CBD products you’ll offer, you must first determine how to sell CBD online. To sell your products on the web, you’ll need a website with all of your basic product information. This should include descriptions, prices, and photos. It’s also a good idea to have customer testimonials and reviews posted on your site. These can help sell your product and build trust with your customers, as social proof is paramount.
To successfully sell CBD online, you’ll need a high-quality website that looks professional and contains pertinent information about your products. Here are some tips for building an attractive and functional site:
Start with good hosting
The hosting service you select will largely determine how well your website performs. Low-quality, free hosting services will likely provide a subpar experience for your customers. This affects how they perceive your brand. Make sure to select a reputable company that provides the maximum load speeds possible, so your website is always available.
Add a blog to build relationships
Posting content on your website is a great way to build relationships with customers and current/potential business partners. Writing blog posts about topics related to CBD products will help you establish yourself as an expert within your industry.
This can make you more marketable for partnerships or sell CBD online jobs in the future. Conducting thorough research and writing about related topics can also help drive people back to your website. This, in turn, increases the likelihood of them buying something from you.
Add a mailing list
Building an email list is one of the best ways to sell CBD online long-term. This is because it allows you to sell CBD products directly to your customers without needing their contact information.
eCommerce platforms that support CBD
Although they can be tricky to find, there are eCommerce platforms that support CBD merchants. And if you already have a website with a shopping cart, you can easily integrate our eCommerce merchant services for a smooth transition into selling CBD.
Shopify is one of the most popular eCommerce platforms today. The platform provides merchants with everything they need to sell CBD products online. It’s also straightforward to use and has features that make it easy for customers to shop at your store. Plus, Shopify is extremely secure because all credit card information is encrypted before being stored on the platform.
However, Shopify’s native payment processor is Stripe, which does not allow you to process CBD payments. In order to sell CBD online through Shopify, you’ll have to partner with a payment processor that allows these types of payments. It’s worth mentioning that Shopify Payments will charge you additional transaction fees for using third-party processors. Because of this, it’s critical that you understand Shopify’s fee structure before you begin processing.
Woocommerce is the eCommerce shopping cart built off of WordPress that makes it easy to sell CBD products on your website or blog. If you already have a WordPress site, this will be an excellent platform for selling CBD online. It’s also attractive and customizable with many features that can help improve the usability of your site. Woocommerce offers payment gateways that you can connect CBD merchant accounts to that allow you to sell CBD products online. This option is free and open-source, making it much more affordable than other platforms.
BigCommerce is a fully hosted eCommerce platform that enables you to sell CBD products online. It’s also a scalable service, which means it can grow with your business as your CBD product sales increase in volume. BigCommerce payment gateways are highly secure and easy for customers to use, so they’re likely to buy more from you if they feel safe doing so. Fortunately, if you partner with the right merchant service provider, you can integrate your gateway with BigCommerce to sell your CBD products online.
Can You Sell CBD on Other Online Marketplaces?
Selling CBD through other marketplaces is attractive because it makes it easy for customers to purchase your products. However, most major eCommerce platforms don’t allow you to sell CBD products, which means you’ll have to sell them on your own website or blog rather than using social media or other platforms. With that said, there are still platforms that will allow you to sell CBD online.
Amazon does sell hemp-derived products, but its policy prohibits merchants from selling CBD through their marketplace. This means you’ll only be able to sell your CBD products on Amazon if you market them in a very specific way. We do not recommend selling your CBD products on Amazon, as it violates their terms of service.
eBay doesn’t sell CBD products, but it does allow you to sell CBD accessories on the site.
According to their terms of service, Google Shopping does not allow you to sell CBD products online. However, if you sell CBD products through your own website or blog, they’ll automatically show up in Google search results as long as the items are legal where you live.
Can you sell CBD on Facebook? In short, no. Facebook Marketplace does not allow customers to buy or sell CBD products on their site. They also prohibit you from advertising your products as those containing CBD. This means you’ll need to sell your CBD products through another platform or on your own website or blog.
Choose What Products to Sell
When it comes to selling CBD online, determining which products to sell is critical. Most CBD merchants sell CBD oil, capsules, edibles, beverages, and other types of CBD products. The most important thing to focus on is selling products that you already know your customers want. If you sell CBD through Shopify or Woocommerce, make sure you configure them to automatically add taxes if applicable in your state. You’ll also want to let customers know what forms of payment you accept and how long it takes for you to prepare their orders.
Selling CBD oils and tinctures
Ultimately, the most popular way to take CBD is through an oil dropper, called a tincture. The oil is commonly consumed by placing drops under the tongue, or sublingually. The oil can be taken by itself if it’s water, coconut oil, or olive oil-based, or added to beverages like tea, coffee, or kombucha.
Most people sell CBD oils and tinctures because they’re easy to produce in mass amounts, which means you can sell them at competitive prices. Unfortunately, selling CBD oils online is complicated. You’ll have to build a website or application that allows customers to enter their dosage information so you know how much CBD oil to sell them.
CBD edibles and beverages
One of the quickest growing and most popular ways to take CBD is through cannabidiol-infused edibles and CBD beverages. Chocolates, gummies, baked goods, and beverages have become some of the most popular choices for CBD consumption. It’s an accessible method for new customers to try cannabidiol-infused products through the comfort of products they’re already familiar with. It’s an easy and affordable way to take CBD oil.
There is a huge amount of research being conducted to catch up with the popularity of using CBD. One such study by the U.S. National Library of Medicine found that CBD is a promising therapy for reducing inflammation associated with acne and psoriasis. Another possibility being researched concerns the concentration of CBD in association with the effectiveness of the therapy. The findings showed that while effective in small doses, it has a greater possibility when using higher amounts.
For those who are looking for muscle relaxing benefits and/or a non-oral-consumption method for using CBD, topicals have been a growing section of the market. Topicals include things like cannabidiol-infused lotions, soaps, bath bombs, or sprays. These are a more palatable option for many people who still don’t like to be associated with hemp, as there is no direct consumption. The cannabidiol is instead absorbed directly into the skin.
Vaporizers and disposable pens
Another quickly growing section of the CBD market is the rise of the vape or disposable pen. A vape requires the purchase of a liquid cartridge that contains CBD oil as well as a battery. The disposable pen, on the other hand, is pre-proportioned and includes everything needed to use it immediately.
A popular product you can sell online is CBD capsules. Those seeking out CBD capsules have a variety of reasons and motivations for this specific way of incorporating cannabidiol into their lifestyle. A common reason for capsules vs. oil is taste. For some, the taste of CBD or hemp oil is unpleasant and the pills provide a tasteless alternative. The convenience of capsules continues with the quick and regulated amount already preset, meaning there’s no guesswork.
Choosing a Payment Processor
Once you’ve chosen the products to sell through your CBD business, it’s time to choose a payment processor that supports CBD. In order to sell CBD online, you must first secure a merchant account through a high risk merchant account provider. Many of these providers specialize in offering accounts for businesses that have been turned down by other payment processors because of their perceived level of risk. High risk merchant account providers may be able to offer you a CBD merchant account, but keep in mind that they may charge you a higher processing rate due to the risk associated with selling CBD.
High risk merchant service providers offer CBD merchant accounts from reputable payment processors and handle all of the compliance requirements for you. Since you sell CBD products, finding a high risk merchant account can be difficult. This is true of any business that sells items without using age verification techniques at the time of sale. Legalization has helped to ease some of these barriers, but there are still a lot of restrictions and additional precautions required by merchants.
Market Your Online CBD Business
The most important thing you can do to sell CBD online is market your business. For many, marketing CBD products is limited by the fear of having their accounts banned or restricted by major credit processors like PayPal and Stripe. And in a highly regulated industry like CBD, marketing guidelines make it extremely difficult– and may seem downright impossible–to advertise through conventional channels anyway. For example, companies such as Google and Facebook don’t allow paid ads that promote CBD products (though Google CBD restrictions are more strict than those of Facebook). However, there are ways to successfully market your online CBD business.
Invest in SEO and content marketing strategies
Content marketing and search engine optimization (SEO) help your customers find you organically without spending money on paid advertising to do so. This strategy typically has a great ROI if done correctly and is something that is easy to start and grow.
Creating helpful content and optimizing your website for search engines ensures that your customers find you when they need help or are looking to purchase CBD products. People often do their research on companies and their products long before they buy, but what happens if there’s a lack of information to meet their needs? By creating high-quality content to fill that gap, you become a trusted expert in their eyes. So when the time comes for them to buy, they’re more likely to choose you over your competitor. With effective SEO, you can avoid having to purchase paid ads and work around Google and Facebook’s compliance standards.
If you’re looking to sell CBD online, it’s important to find the right payment processor and eCommerce platform so your business can succeed online. Many tier-one banks and payment processors consider CBD a high risk industry, which can make it difficult for merchants to sell it online. However, by partnering with a high risk processor, you can sell CBD products through your website.
To sell CBD online successfully, invest in SEO or content marketing strategies that will help customers find you organically without spending money on paid advertising channels like Google Adwords. Just because this is a difficult market to break into, doesn’t mean it’s impossible. It’s important to stay true to your original goal of selling CBD online because there are several meaningful benefits to be gained for your business and customers.
Bronte is a designer and marketer based in Los Angeles, CA. She has been creating and promoting content for over 3 years, covering a range of topics in the payment processing industry. Bronte is currently the Director of Marketing at PaymentCloud, a merchant services provider that offers hard-to-place solutions for business owners across the nation.
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