When the world of CBD exploded into the mainstream, cannabis and CBD companies experienced great success. If you don’t yet know the meaning of CBD, it’s essentially the non-psychoactive compound in the cannabis plant that can bring mental and physical relief without the high. At one point, the entire cannabis industry was filled with endless CBD business opportunities, from distributors and courier services to marketing and subscription boxes.
But with so many options on where you can buy your CBD and quality level that can vary greatly, this fast-growing opportunity has turned into a series of challenges for business. Here are the biggest ones to look out for.
1. Low quality CBD
The fastest way to ruin your reputation in the industry is to sell a low quality of cannabidiol, which can lead to some serious CBD side effects in the user like headaches or nausea. Low quality CBD is generally not organic, and is grown and refined outside of the US. Customers are also more educated now on how and where to buy CBD that’s high quality.
Always make sure you go with a CBD manufacturer that provides lab-testing by a third party, so you can avoid the pesticides, heavy metals, mold and other unappealing things hiding in your product.
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2. Lack of business plan
Having a strategic cannabis business plan is one of the cornerstones of success. You need to make sure you have all the applications and licensing squared away, as well as knowing the legal limits of your local area and state. For instance, some states require certain packaging rules, or that product is tracked from seed to sale.
Licensing can be very slow and expensive – if you don’t plan beforehand, maintaining your business can be tough in terms of earning profit. A CBD business requires sufficient research on market opportunities and the finances required since this is a crowded space to enter.
3. Choosing the wrong CBD oil distributors
If you get stuck with the wrong oil distributor, you get stuck with low quality and impure CBD. A lot of these poor quality brands have good marketing, so it’s important you know your stuff and research all aspects. For instance: learn the difference between CBD isolate, full-spectrum, and broad-spectrum products, which all have different benefits and THC contents. High-quality products might be more expensive, but your consumers will be willing to pay more if they see that your CBD oil distributors put an emphasis on quality and purity.
4. Competition
In the cannabis and CBD business, one of the biggest issues you’ll face is the high level of competition. There are lots of CBD oil companies out there, and some fields are more saturated than others. In 2020, more investors than ever are wanting skin in the game. And while that can be said for any industry, you’ll need to be at the top of your game in CBD, since there are such stringent regulations. Earning the customer’s trust should be your next biggest goal in getting ahead.
5. Banking and payment processing
The FDA has made it difficult for people in the CBD businesses to thrive and be successful, but banks and other payment processing services are making it even harder. PayPal doesn’t even allow CBD sales and will promptly shut your account down and hold your money for up to six months if they find out! Lots of other transaction processors have similar restrictions and will take advantage of this legal grey area, charging CBD oil companies high fees or restrictions on what kind of CBD products your can sell.
Fortunately, Shopify announced in September 2019 new services to help US merchants sell their products.
6. Not investing in a CBD drop-shipping service
Doing everything yourself might seem like it saves money and lets you maintain control, but chaos will soon ensue and you’ll be dealing with a lot more working parts that require much more attention. Instead, focus on your business and use CBD drop-shipping services, which works for both brick and mortar and digital businesses. These services actually fulfill your clients’ orders for you, and allow you to store your inventory in their warehouse. Along with reducing warehouse and shipping costs, it makes keeping track of your inventory much easier.
7. A bad reputation
The public opinion around cannabis and CBD is something that’s still evolving. Not everyone has dropped the stigma around hemp, which is still seen as socially unacceptable even though it has less negative effects than alcohol. People also can’t seem to differentiate between CBD and THC, causing misunderstanding. For this reason, educating your customers is essential. Companies like My CBD offer this info in their FAQ’s where they answer the common question of whether you’ll get “high” off CBD hemp oil (the answer is no).
