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Creating a CBD Business: What You Need to Know

Creating a CBD Business: What You Need to Know

Opening a CBD Business can be a great opportunity for a budding entrepreneur. While it can be everything you’ve ever wanted, are you prepared for the unique nature of starting a CBD business? Let's touch on some basics to get you started. 

What Is CBD? 

Cannabidiol (CBD) is just one of 80 chemical compounds, which are derived from the flower of a cannabis plant. CBD works by interacting with the body's endocannabinoid system. They act like neurotransmitters, with promising evidence to suggest benefits for alleviating pain, addressing symptoms of anxiety, reducing the effects of schizophrenia symptoms, and easing seizures.  

Types of CBD 

There are a few popular types of CBD that are widely available. Here are some of the most common types of cbdCBD: 

  • Capsules/Pills: This form is the most popular way to take CBD, with ingredients to maximize the absorption.  
  • Tinctures: This form is extracted via a CO2 method, which increases the efficacy.  
  • Edibles: This format is popular because of the discretion, ease of use, and taste. The taste is masked in a smoothie, brownie, snack like granola or chocolate, or another delicious treat.  
  • Topicals, Salves, and Balms: These forms of topical application are popular for use on aching muscles, joints, and skin issues. 
  • Vape juice: Vaping is one of the most effective ways of ingesting CBD.  
  • Oral sprays: The spray allows you to easily take CBD oil tinctures, with flavors to mask the CBD taste.  

With so many types of CBD to choose from, each person usually determines the type that works best, based on taste, how the CBD form is delivered, as well as the quality and efficacy of the type. While capsules/pills are popular, edibles are also great ways to ingest CBD.  

CBD industry projections  

The CBD industry is growing, with projections that it will reach $16.32 billion by 2026. The most common uses are for pain (64%), anxiety (49%), and insomnia (42%) with 22% saying that they use CBD to replace an over-the-counter drug or prescription. The veterinary CBD market is growing as well.  

cbd oil It’s Legal But Still Developing  

In 2018, the Farm Bill was signed into law, which legalized the sale and production of hemp and its extracts. While the sale is legal, it cannot contain more than 0.3 % THC (tetrahydrocannabinol). It is possible to accidentally grow a crop with THC, and it’s also possible for the (legal) CBD to be contaminated by chemical solvents, THC, and pesticides during the extraction process.  

Even though it’s legal under federal law to buy CBD that is derived from a hemp plant with less than 0.3% THC, some states still restrict the possession and sale of CBD. Still, there’s every reason to be hopeful that the trend toward wider acceptance will continue.  

Challenges CBD Businesses Face  

While starting a CBD business may be the perfect opportunity for you, it’s not without more than its fair share of challenges. Already 20% of small businesses fail in the first year, but starting a CBD business is even more difficult than a “normal” business venture. Here are a few of the most significant challenges that you will face as you start your CBD business. 

Banking: Because of the legal complications and restrictions, access to traditional banking options will continuecbd merchant processing to be an issue. When a startup company is forced to operate in cash, there are additional security and logistical issues to consider. With the increased product availability, it’s becoming easier and more straightforward to start a business that will beat the odds.  

Payment processing: The current shaky standing of CBD businesses limits the options for payment processors, because only the largest ones can stand up to the pressure of restrictions on CBD sales. The limited options may mean higher fees and more restrictive contracts when it comes to CBD merchant processing.  

Access to capital: For most startup businesses, the biggest challenge is the lack of capital. So, it's probably not surprising that it’s even more of an issue when you’re starting a CBD business. It’s a risky business, so it’s not always easy to raise the capital even with the promises of record-setting CBD revenues.  

Advertising: Some ad networks like Facebook, Twitter, and Google limit the types of ads or claims you can post. It’s always best to check and continue to check on the current state of CBD restrictions every time you post content to any of the ad networks.  

You May Also Like: What You Need in a CBD Merchant Processor

CannaBusiness Financing Can Help You Get the Money You Need 

Our team has the industry know-how and experience to help you secure loans or lines of credit, and can assist you in getting the funding that you need for your new CBD business ventures. If you're in need of startup funding, reach out to our team today and get pre-approved in as little as 48 hours. 

 

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