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Creating a CBD Product Line: Some Caveats

Doing the legal and financial legwork now could pay off later for early CBD entrepreneurs.

By CSD Editor | February 13, 2020

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The current widespread proliferation of CBD-based products has further highlighted the rapid expansion of the industry with more retailers and medical outlets continuing to sell CBD products.

Research by CBD market analyst the Brightfield Group projects that the U.S. hemp CBD market will reach $22B by 2022. While getting a piece of that pie may be difficult, it’s not impossible. Still, business-savvy entrepreneurs will have their work cut out for them.

To succeed – or to simply operate – there are regulatory hurdles. CBD products are required to contain virtually no trace of THC (.3% or less), meaning consumers experience none of the psychoactive effects often associated with cannabis. Some studies suggest that only 5%-10% of the population know what CBD is and what it does, leaving a huge potential future market share.

Another barrier to success for new CBD-hemp businesses today is marketing. Sellers can’t do much paid search on Google, Yahoo or Bing. Just about all online presence needs to be with SEO – organic search engine rankings – or social media platforms. CBD product e commerce websites are frequently shut down. It’s extremely difficult to stay up on CBD-hemp regulation, product innovation, education, customer service and sales – and also manage a digital marketing campaign.

Banking can be extremely difficult for CBD and hemp producers and sellers. Some local credit unions that tailor to medical cannabis caregivers as well as hemp and CBD products seem to be the only options for everyday traditional banking.

Domestically, there are private banks that CBD businesses in any state can use, but they’re hard to find. Plus, their fees can be very high and carry limitations on what CBD business customers can do. For instance, wire transfers are prohibited in most banks that allow CBD products. Word is that PayPal will shut your business down if it discovers that you’re selling CBD products.

So, while there are regulatory and financial obstacles to starting a CBD-hemp business, there is money to be made. Doing the legwork and completing the homework involved can pay big dividends. Prospective entrepreneurs who are aware of the risks and difficulties can still benefit from being an early player in the CBD marketplace now – before the industry becomes part of the mainstream.

Adapted from information provided through Casco Bay Hemp Co.

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