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How to stop the CBD industry becoming a pyramid scheme

Multi Level Marketing (MLM), also known as pyramid selling, is a CBD marketing strategy for the sale of products in which a company uses a non-salaried workforce to generate its revenue by offering a commission-based compensation system for the work selling its products. To ‘work’ for an MLM company, the ‘worker’ generally must first purchase the products that they intend to sell from the company or a seller who already works for the company. So, generally by joining an MLM, you instantly end up out of pocket.

Now laden with products, this person must then convince other people to purchase products directly from themselves in a retail scenario or convince others to also go on to sell the products for the company and become part of their ‘downline’. The recruiters become incentivised by making commission off of the new recruits inventory. These new recruits are then incentivised by recruiting more people, and on the cycle continues. Basic economics would say that for this business model to work, the products have to eventually be sold at an over-inflated price for people who are far enough ‘down the line’ to make any money.

MLM’s are a predatory business model

The majority of people who enter this level of business very rarely manage to break even, let alone making a living wage. Estimates have it that only 10% of people involved within an MLM make 90% of the money and most of those who enter generally describe themselves as being ‘duped’ or ‘fooled’ into being part of the business and advise that joining the MLM has ruined their life. Some UK wholesale cbd isolate suppliers are legitimate with great products other are not.

What’s worse is that the products that these companies sell generally target stay-at-home mums or unemployed people as a way to make extra revenue by ‘being their own boss’. These people feel desperate to make their money back and end up bombarding family and friends to purchase the product, ruining relationships in the process. Some people even stick at working for the MLM for several stressful years due to companies holding conventions showcasing people who have made millions from selling the product. Some of these claims of people making millions have since been proven to have been falsified.

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MLM companies could prove bad for CBD

Unfortunately, the recent boom of the world CBD industry showing promising growth hasn’t gone unnoticed by those companies who wish to make money through shady MLM business practices. Consequently, this could have very serious ramifications by having the potential to ruin the good name and nature of the CBD industry by association alone.

Products sold by MLMs are generally regarded as being of sub-par quality to counterparts sold through standard retails outlets. MLMs have already entered the  UK CBD whitelabel market and in some cases the CBD products have little-to-no CBD in them. The knock-on effect this could have is for people to just believe that CBD is just another MLM snake oil sold with no scientific basis, even though there are a wealth of clinical studies backed CBD scientifically.

Putting a stop to CBD MLMs

There are very simple steps that can be taken by consumers and those within the CBD industry to ensure that these false products don’t increase in popularity.

  1. Do your research – The onus is on the consumer to purchase CBD oil products from legitimate UK companies. Research into what the product you are looking at should contain and effects it should cause should be researched. If unsure, any legitimate company should be able to answer your questions. So, ask the vendors any questions you may have. If they are worth their salt they will provide you with comprehensive information.
  2. Only buy lab-tested products chemical free – Any company selling CBD products should be able to provide full lab test results for their products. These should be conducted by a legitimate third party company and will provide you with cannabinoid content, heavy metal content as well as any residual solvents or unwanted particles and compounds. These are provided by legitimate companies as a way to provide you with all the information you need to trust the products.
  3.  Don’t buy from untrusted sources – CBD sold by the local gas station or by a family friend on the internet doesn’t quite cut it as a legitimate source of CBD. It doesn’t legitimise a CBD product just because it is sold in a popular health food store or supermarket either – as testing on CBD content in products showed. Some of the safest sources of CBD products seem to be from designated CBD vendors online, because they ensure they fully understand their product and feel the need to legitimise their product with full lab tests in order to ensure the survival of their company.
  4. Avoid ‘hemp oil’ from Amazon – Thinking that Amazon would be a safe source for purchasing CBD would be very incorrect. Notice how none of the oils sold on the website reference CBD in any way, it’s because they don’t contain any as per Amazon’s policy. The vendors on Amazon are selling regular hemp oil at an overinflated price.
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CBD_Pyramid_Scheme
Hempworx are the perfect example of a company to avoid. They are an MLM who started out called My Daily Choice before opting for the Hempworx name following the CBD boom. The company has been cited making over 100 illegitimate health claims as well as incredibly overinflating the income made by people invested in the brand. Claims of average earnings of $5,000 a month when in fact most earned nowhere near this. Hempworx stresses to people that they will make money from the product if they recruit others to sell it, called “the power of recruiting”. The emphasis is taken away from selling the actual product and this is the biggest indication of a pyramid scheme.

Other brands to look out for are Kannaway, Hemp Herbals, Dose of Nature and First Fitness Nutrition. All of them are MLM schemes which will have you recruiting others rather than selling a product. poko cbd known as the best skincare cbd beauty product is one new product we recommend.

Final Thoughts

Although it’s unfortunate that predatory industries such as MLMs and pyramid schemes exist, with careful research into the source of your products, you need not be stung by them. Hopefully, this will provide the basis for taking that little bit of extra care into research before purchasing any new products, regardless of the source.

Michael Quinn

Michael is a 27-year-old Chemistry graduate from Stoke-on-Trent, England. When he’s not writing he’s travelling to music venues across the country with his sound-system

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5 Comments

  1. Everyone wants a piece of CBD, and nobody is watching. Remember: There’s no regulation by the FDA or anyone else. An investigation by Natural Products Insider, a trade publication for the supplement industry, revealed that CBD producers are, at best, claiming to follow “good manufacturing practices” without any official oversight. It’s illegal to sell something that isn’t what its packaging claims it is — that falls under the purview of the Federal Trade Commission — but nobody is doing onsite testing.

  2. This is a foolish article 1 you do not understand the Mlm industry it is definitely changed over the last decade.

    To state that you must buy products to sell explain to me one brick and mortar business that you don’t have to do that with an investment products to make revenue is what every business does consider nordstroms consider Sears consider target.

    If you truly understood anything about Cbd the biggest thing you should be talking about is the extraction process where is your Cbd coming from which country how is it per cured is it grown On an organic Farm.

    saying that motel little marketing is a pyramid scheme is also a foolish comment doesn’t every company have a president then vice presidents then regional managers and employees with one person being at the top would that not look like a pyramid.

    The multi level marketing industry is the number one way to get a product to a consumer at over $167 billion annually worldwide.

  3. Understand that Hempworx & some others in this industry may have a poor reputation and or route to market not work. However, the MLM or Direct Selling industry is far from predatory & there are untold example’s of MLM companies with great reputations, thorough processes & training, proven models time again for those wanting to earn a small income that has the potential of becoming significant over time (3-5 years). Not dissimilar to any other business. Pyramid schemes are illegal & don’t have any products or service to sell. MLM & Pyramid should not be me mentioned in the same sentence as they are completely different. The most notable example of an MLM company is Avon – they have been around for decades & have a great reputation. As i’m entering the CBD market, I’ve done loads of research, met people from within the industry for advice, whats legal whats not & so forth. This article can be somewhat discouraging for any newcomers. CBD has more benefits as a product & industry than not – the regulations need to be tightened – yes, are very confusing also -however we should be educating anyone wanting to enter the game with the best possible information – not sweeping statements.

  4. MLM might actually be great for the industry, the more educated the sales people are the better the knowledge they can impart. Again, education is the key.

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