With CBD laws becoming increasingly flexible, the green rush has reached the UK, and there is a high demand for CBD products. If you’re thinking of getting in on the action and starting your own CBD company, here is all you need to know to become a successful CBD business owner.
The 3 essential steps to starting a CBD business brand
- Have a sales distribution network: Identify the niche you want to service, premium oils, male skincare, female pains, CBD tanning lotion, choose one, and you have your focus.
- Check you have a route to market: The greatest product without a way to sell it will still lose you money. Advertising is restricted, so you need a good marketing company with a track record in CBD with solid, engaging content, and a large social media following or access to people with the influence you will need. Influencers can be key to success, but finding one as invested in your business as you are will be difficult.
- Find a reliable UK CBD supplier: White label and private label is the simplest and easiest way to market. You can start with a successful product, prove the concept for your CBD range, and you can design your own version and own the IP later. Best to make sure it works before you spend your investor’s cash!
While still very new, cannabidiol or CBD is quickly becoming a household name. These days you can find CBD oil throughout the high street and online marketplace in the form of tinctures, drinks, edibles, and so on.
The growth of CBD oil products has been so immense that industry analysts believe the global CBD market will reach $42.7 bn in sales by 2024.
CBD market in the UK
The UK CBD industry is growing at a phenomenal rate. Surveys conducted in May and June 2019 by Dynata and YouGov indicate that between 8- 11% of UK adults, respectively – approximately 4-6 million people – have tried CBD.
Plus, the UK Cannabis report by Prohibition Partners predicts the legal cannabis market will reach £2.31 bn by 2024. Whether it is just retail or CBD wholesale, now seems to be the time to get into cannabidiol.
The CBD industry’s potential has prompted many people to explore how they can launch a CBD business. The industry is not without its challenges, though, especially surrounding the evolving legal landscape, but the opportunity is significant.
CBD white label
If you're considering getting involved in white label with the CBD industry, you first need to understand more about cannabinoids and the products that utilise them. We have shortlisted approved suppliers and can help with:
- CBD tea and coffee with a variety of blends
- Tinctures of multiple flavours
- Edibles, vegan, vegetarian and standard infused gummies
- Soft gel capsules
- Skincare range of 345 products from cleansers, toners to facial creams and luxury oils
Just like other product wholesalers, CBD wholesalers deal primarily with bulk orders, typically for online stores. There are many CBD wholesalers in the UK. These wholesalers allow CBD businesses to purchase products in bulk at a discounted rate that they can then sell directly to consumers. These wholesalers sell a range of different CBD products such as tinctures, oils, edibles, and more. The more products a CBD wholesaler supplies, the more opportunities they have to earn revenues and build a bigger clientele base.
CBD wholesalers sell to various CBD retailers and businesses for onward sale. By simply selling CBD products in bulk for a lower unit price, wholesalers can avoid spending time and money preparing goods for sale to the end customer.
The demand for CBD wholesalers is rising exponentially, so now is a good time to get into the UK’s CBD business.
If you’re considering getting involved with CBD wholesale, use our contact CBD wholesalers form to get started.
Importing CBD into the UK
With the introduction of Brexit, new customs declarations, shipment delays, forms, and three separate novel food authorisation schemes are impacting UK CBD businesses and their foreign partners. This is putting a strain on supply chain relationships and generating extra costs.
Chair of the Scottish Hemp Association, Kyle Esplin, worries that “products coming in from Europe will be held up unnecessarily or jammed in the system in some way.”
There has long been an inconsistent approach to importing CBD products, and Esplin believes “Brexit is only likely to compound that issue.”
Important manufacturing or selling dates could be missed and extra expenses incurred if shipments are held up at customs. Robert Jappie, a partner at INCE in London, says the biggest issue will be customs declarations under the current post-Brexit trade deal. He used the example of transport trucks getting held up or denied entry at the UK border because they lack the correct documentation. “A lot of EU companies are saying, ‘Look, we just don’t have the time to fill out all these forms. It’s not cost-effective for us to do it,'” Jappie said.
This means that some UK CBD companies may need to look outside of the EU for ingredient suppliers to avoid wasting time and incurring extra costs.
The UK and the United States are yet to work out a trade deal; however, analysts don’t expect any fundamental changes to the current tariffs situation.
The supply chain issues Brexit has caused have forced CBD businesses to reconsider their business strategies.
Furthermore, Brexit has created three regulatory frameworks to bring manufacturers into compliance with the Novel Foods regulation, which requires some food ingredients to get tested and approved by food safety authorities before being sold to consumers.
“Novel foods” under EU guidelines are foods that have not been consumed to a significant degree in the EU prior to 15 May 1997.
This regulation was set up in 2018 to improve conditions for food businesses to import new and inventive food into the EU market.
UK manufacturers mainly ignored these rules even though they have been applied in the EU for two years already, but with Brexit's three new regulatory frameworks UK manufacturers will need to toe the line.
If you are starting up a CBD company, it is vital that you stay up to date with the ever-changing laws and regulations regarding importing CBD products to ensure you aren’t caught off guard.
What is CBD?
CBD is one of 113 cannabinoids found naturally occurring throughout the cannabis and hemp plants.
The most famous cannabinoid is arguably THC (tetrahydrocannabinol). This is well known as the euphoria-inducing element contained in cannabis, often associated with weed/hash due to the high THC levels often found in street cannabis.
CBD (cannabidiol), however, does not produce an intoxicating effect. Instead, it has a range of potentially therapeutic health benefits. However, research into its potential medical applications is ongoing.
CBD products are generally created in several steps. First, the raw material needs to be cultivated and harvested from the hemp plant containing less than .2% THC.
For example, if you plan on using industrial hemp to create your CBD products, you will either need to cultivate or purchase a large amount of the plant. From there, CBD oil is extracted from the plant using a variety of methods to isolate that compound only.
Again, you can do this yourself or outsource the process to an extraction company. Once you have extracted the CBD oil, it can be sold as a concentrate or used to infuse a variety of products. Some of the most common CBD products on the market today include sublingual tinctures, infused edibles and topicals, like gels or creams.
Types of CBD products
Like we said above, industry experts predict that the CBD market will reach $42.7 bn in sales by 2024. This would be a major surge from $1.9 billion in 2018.
Some trends the CBD market might experience in the near future are increased potency of products, more brick-and-mortar CBD shops, more pharmaceutical CBD products, and more access to products online through CBD websites and e-commerce shops.
In fact, CBD online sales currently account for 60% of the sales channels.
The CBD industry is introducing new products all the time. If you're looking to start a CBD business, you will have a wide range of product types to consider selling.
The most popular CBD products today
- Sublingual tinctures: A sublingual tincture is CBD oil in a small bottle with a dropper. You ingest these products by placing them under your tongue and waiting for the oil to absorb.
- CBD edible gummies: CBD edibles are a rapidly growing sector of the industry, including baked goods, candies, and foods. CBD edibles have faced significant regulatory scrutiny from the U.S. Food and Drug Administration (FDA) but remain a commonly found product.
- Vape concentrates: Vaporiser concentrates, such as CBD oils and waxes, are another common product.
- CBD topicals: CBD topicals include gels, creams, and sprays for aches and pains. These products target a localised region of the body when placed directly on the skin.
- Capsules and pills: Many patients who experience seizures or digestive issues take CBD capsules or pills to treat their conditions.
Additionally, CBD isn’t just for humans. Animals also experience calming effects when given small doses, and many businesses offer CBD products for pets, like dogs or cats.
The legality of CBD
Wait a second, aren’t cannabis products illegal in most places? The answer is essentially no. CBD is not illegal once you follow guidelines.
The UK government and governments worldwide still consider cannabis and products containing significant THC a Schedule 1 drug. The Drug Enforcement Administration does not recognize any legal use of CBD in the UK for these products and believes they have a high potential for abuse.
UK – Have under 1 mg of THC & be extracted from hemp with less than .2%.
In the UK, many states have passed their own laws contradicting these statements. We will note that the DEA continues to classify CBD under Schedule 1, except CBD found in the aforementioned epilepsy medication.
However, the 2018 Farm Bill passed by Congress legalised the cultivation of hemp containing CBD. This is so long as the harvested plants contain less than 0.3% THC by weight.
Any CBD products derived from this legal hemp would be permissible under the guidelines of Congress. The FDA (Food and Drug Administration) is still considering where it stands on CBD, but because there’s only one product that’s been specifically approved as a medicine, other CBD products cannot be advertised or represented as having health benefits.
Of course, many states have weighed in on the issue as well. Colorado, among the most permissive, has legalised any component of the hemp plant for use as a food product. Texas, meanwhile, maintains that any cannabis product that contains even a trace amount of THC remains illegal.
So, is CBD legal?
In a nutshell, CBD products are federally legal to sell online within the UK and many countries worldwide.
Any CBD product available for purchase online must be made from industrial hemp or contain a THC concentration of less than 0.2% for any EU country and .3% for a US country. Cannabis-derived products are subject to FDA regulations, and requirements differ depending on the type of CBD product being sold.
In addition, the legality also varies from state to state, so you’ll have to comply with local laws. Some states allow cannabis-derived CBD, while others allow only industrial hemp-produced CBD. The safest method is to sell CBD sourced from hemp as it has lower traces of THC.
Policies around CBD in eCommerce and paid advertising may change at any time. As an online merchant, you’ll want to closely monitor these movements and be prepared for any changes in CBD legality, advertising rules, and cannabis news.
Now you're ready to start a CBD business!
Here's what you need to do to start a CBD business – Understand and comply with laws and regulations about CBD, develop a strong CBD-orientated business plan, identify your suppliers, start a website, and establish your brand.
That's just a quick overview, but there is a lot to know about how to start a CBD business.
There are countless unique opportunities for new businesses to sell CBD.
Starting a CBD business includes all the hard work and effort of launching any other company in addition to the uncertainty of a shifting regulatory landscape (and all the issues that accompany it). However, in a fledgeling industry projected to undergo explosive growth, the heavy lifting today might be well worth it tomorrow.
Learn from others
Cory Slovik, owner of Core Roots CBD, started his own company after experiencing the beneficial properties of CBD.
“I used to be a pro snowboarder … and I was always sore; my muscles were constantly in agonising pain. I tried CBD, and it helped me tremendously,” said Slovik.
“Then, years later, cannabis … started coming to the forefront, and there was research and data backing up everything I felt on the mountain.”
Slovik soon launched Core Roots CBD, seeing a business opportunity and a way to help other people treat their pain. He said starting a CBD company is like any other business, plus a bunch of added steps.
As the cannabis industry grows, entrepreneurs have an opportunity to capitalise on demand for CBD products.
Things you need to be sure of
Here are a few things you need to be sure of before going ahead.
1. Understand the landscape of the CBD industry.
Changes in the law are happening constantly, and it’s important to stay on top of, also the guidelines for promoting on platforms like Facebook. Tenuously regulated and subject to constant changes, there is always a commercial danger present in the larger cannabis-product industry.
Focusing on CBD products is essential. These will remain in demand regardless of whatever political changes occur by the time your company is up and running.
Ask yourself, how are you going to attract customers? Many small businesses fail because they can’t drum up enough business in their opening days to keep the lights on. It’s imperative that you come up with a game plan early on in the process.
2. Knowing who to hire
You might know your way around a cannabis plant but have relatively little business experience elsewhere. This can lead to hiring the wrong people for the wrong reasons.
Don't be afraid to accept those who have plenty of experience in other industries. Workers from a variety of backgrounds, even with nothing related to cannabis, can prove to be essential.
3. Trade organisations – UK
As the CBD industry is a relatively new and fast-moving industry in the UK, a number of trade bodies have emerged to establish a framework of ‘best practice’ among their members.
Chief among these is the Cannabis Trades Association (CTA), a non-profit organisation dedicated to supporting CBD, cannabis, and hemp businesses in the UK, with over 900 registered UK members.
They can help you get your CBD business off the ground while staying within the legal guidelines and producing high-quality, safe products and information.
4. Be wary of THC – UK
There are legal limits on the amount of THC in CBD products – currently set at 0.2% – but this is further complicated by a limit of 1mg of THC per container or bottle, no matter what size.
To further confuse matters, the National Pharmacy Association (NPA) released a document in July 2019 stating that the Home Office had informed them that any amount of THC in a CBD product, even trace amounts, would classify it as a Schedule 1 Controlled Drug – severely restricting the sale of full-spectrum CBD products.
Many commentators in the CBD industry disputed the legality of this statement, and the NPA has since removed the statement from their website, but this demonstrates the lack of consistency when it comes to the legal status of CBD in the UK in regards to THC.
5. Have an emergency plan.
Dealing with regulatory uncertainty is never easy. Especially when you’re in an industry that’s still grappling with misleading social stigmas.
A cloud of uncertainty has descended over the larger cannabis industry, and it’s unlikely to go away anytime soon. This shouldn’t thwart your commercial ambitions to launch a thriving CBD company. However, you should be aware that it won’t always be easy to be a part of this still-maturing market.
Have an emergency plan in place in the event that your financial partners bail on you.
Many financial institutions and banks won’t do business with cannabis companies, for example. This means you can over depend on payment processing providers who may pull the rug out from you at any moment.
Be able to accept a wide variety of payments from customers. This is the only surefire way to establish financial sustainability. At least until banks and traditional financial institutions embrace the cannabis/CBD industry.
6. Banking for CBD companies
Traditional banks see CBD businesses as “high-risk” businesses. This means that the systems in the bank cannot cost-effectively manage the risk, causing these banks to refuse to work with companies in “high-risk” industries. Basically, these banks don’t want to associate themselves with what they see as controversial products that are relatively new.
There are a number of obstacles you will have to face financially when trying to sell products as a “high-risk” business, and it can be tricky finding a suitable bank that is willing to work with a CBD company. But it is not impossible.
- Proof of address of owners
- You must register your business
- You must provide proof of where you purchased your wholesale products from
- CBD Products must not contain more than 0.2% THC
Despite a few banks declining applications from CBD companies, there are a number of others that are happy to work with companies in the CBD industry. Try applying to smaller or online business banks as they are more likely to approve your application.
Another thing you might want to consider is using an online payment processor such as LumiPay.
LumiPay specialises in “high-risk” industries, such as the CBD industry. It securely authorises credit card details and direct payments for online businesses.
The online payment processor looks after the business and customer’s security, acting as an interface between the company website and its acquirer. Think of LumiPay as the middleman, carrying out payments securely and quickly, simplifying your company’s role when it comes to any transaction.
There are many reasons to use an online payment gateway:
- It’s easy: setting up your own payment system can be confusing, time-consuming, and require constant maintenance. By using a payment gateway, you will save time and effort.
- Security: The most important reason to use a payment gateway is security. An online payment gateway will ensure payment processing is secure and decreases the chance of fraud taking place. LumiPay uses Payment Card Industry Data Security Standards (PCI DSS). It lists down all the guidelines needed for secure payment gateway processing.
- Experience: Online payment gateways are good for customer satisfaction, meaning they are more likely to purchase from your company again. Global payment preferences and convenience will keep them coming back.
Plan out your business
Keep a close eye on CBD-related news. Know which athletes, celebrities, and prominent influencers are lauding CBD products in order to capitalise on their social buzz. Take heed of successful CBD companies, like CBDMedic, that leverage athlete endorsements.
Constantly expanding to new customers to take advantage of temporary market trends can be very effective. Having your finger on the average consumer’s pulse will be essential in starting a successful CBD business.
Know what you can and cannot say
Many businesses make the mistake of promoting CBD as a miracle substance for health conditions like arthritis, Alzheimer’s disease, and even cancer. However, the FDA requires that businesses refrain from making disease-curing claims that are not backed by reliable and legitimate research.
Since cannabis has not been legalised on a federal level, reputable research on the purported benefits of cannabis is more limited. Making unsubstantiated medical claims about your CBD products is illegal and could put consumers at risk.
It is in your best interests to avoid making any medical claims. Instead, shift your language to the quality of your CBD and the potential benefits of incorporating CBD into a wellness routine.
Research and know your suppliers
If you’re not planning to cultivate your own hemp, your next option is to secure raw materials from a quality CBD distributor or supplier. Whether you’re reselling or creating your own CBD products, finding a reputable supplier should be your top priority.
When evaluating a CBD provider, you’ll need to understand some key details of their manufacturing process, including where they source their CBD, their extraction method, and the concentration of THC in their products (usually detailed in the “Certificate of Analysis” along with the plant species, and levels of CBD and THC). This ensures that your business has high-quality, legal products to sell to your customers.
Keeping up with the latest cultivation techniques will also prove useful, as new practices can yield higher amounts of CBD and cut costs.
Next, you’ll want to set up a website. There are plenty of services that will help you register a domain name. However, tools to build your site are going to be even more important.
Companies like Shopify and Squarespace are well-known providers of e-commerce websites that are beginner-friendly, which is immensely helpful if you’re a first-time entrepreneur. Take some time comparing the benefits of different platforms: who’s got the easiest store to set up? Where can you get the best deal on credit card processing fees? How hard is it to change the site if you decide to expand or switch to a new product line?
Once your site is online, you’re going to have to promote it. There are literally libraries full of books on marketing schemes, and a lot of how you market and to whom will depend on your own personality and drive.
Whether it’s through word of mouth, Facebook posts, Google ads, or something else, you’re going to have to market a LOT. But the good news is that once you get a few sales under your belt and the (hopefully) positive reviews start flowing in, it’ll all be worth it.
Starting a business is always difficult, but with CBD, you have a lot of things going for you. You have a product with a buzz surrounding it that’s only growing stronger. You also have the opportunity to establish yourself as a reputable source. Currently, the CBD world is a lot like the Wild West, so you need to rise above. On top of that, it’s a product built for online retail. And there has never been a better time to operate online.
So what are you waiting for? Get in touch with us today.