The number one rule of going into any business is “go where the market is.” One way to tell that is by gauging where consumers are already spending their money. With recent sales statistics showing clear growth, it’s clear that one of those lucrative areas is the CBD industry.
Even though the CBD market is still emerging, it’s quickly becoming one of the most valuable spaces to open up shop. There are a lot of competitors trying to get on board with this growth trend now, which makes sense, considering it’s a huge advantage to be one of the first on the scene.
Whether your CBD business is selling tinctures, edibles, gummies or any other CBD products, there’s never been a better time to get started and find success in this market.
If you’re thinking about starting a CBD business or have already started one and are looking for ways to grow, this article is worth exploring.
Why Is the CBD Industry So Popular?
The CBD sector of the cannabis and hemp industry is one of the fastest-growing markets. Its popularity skyrocketed recently, partially due to the 2018 Farm Bill legalizing hemp-derived CBD on a federal level. Another reason is all the potential health benefits CBD offers – from reducing chronic pain to improving cardiovascular health.
Another reason for its increasing popularity is that CBD is a natural product, which is especially sought after in wellness circles and niche consumer segments. More and more people are turning to natural remedies over pharmaceuticals to deal with anxiety, pain management and inflammation.
Besides, CBD products are incredibly versatile. They come in so many different forms from edibles and lotions to oils, just to name a few. Consumers have a wide range of products to choose from at their fingertips, meaning there are a number of ways to integrate CBD into their daily routine. Insert unlimited marketing opportunities for CBD business owners here!
With its increasing popularity and customer base, more and more entrepreneurs are thinking about entering the CBD industry to capitalize on this booming market. If you’re one of them and aren’t sure where to begin, we’ve gathered a couple of helpful hints to start you on the right track.
What Are the Top Things to Keep in Mind While Running Your CBD Business?
Running a business is a difficult task – and is especially more difficult when it’s in the CBD industry. As a CBD business owner, you need to be mindful of laws and regulations, payment processing issues and the competition. But, don’t worry – we’ve gathered some tips to keep in mind as you run your CBD business.
1. Understand the Laws and Regulations Around CBD
Although hemp-derived CBD has been legalized on a federal level in the United States (including hemp extracts like CBD oil), there are still significant regulatory considerations surrounding industrial hemp that vary by state.
There are still nuances that you should be paying attention to if you don’t want to get in trouble with the law. This is why it is essential to know your local CBD laws surrounding regulations and licensing.
2. Establish Your Brand
To have a successful CBD business, you need to know your business inside and out. How you will fill a gap in the market and knowing who your target customers are. With that in mind, you can then start establishing your business brand.
Your branding should revolve around satisfying your target customer’s expectations, desires and needs.
One way you can do this is by designing a stand-out logo. Logos are often more synonymous with a CBD business than the name of the company. Many people associate businesses with that visual icon. Investing in stellar brand design for your CBD business that connects with your target audience and is a crucial marketing initiative to focus on is an important starting point.
Apart from brand design, another way you can establish your business is through developing a memorable tagline. Your tagline for your business should speak to what your business is about in an easy, concise and catchy way.
3. Know Your Competitors
The key to gaining a competitive advantage in the CBD industry is developing a high-quality product that will withstand the scrutiny of regulators and educated consumers. If you want to differentiate yourself from other CBD businesses, it’s critical to know your competitors so you can provide services to your customers that they don’t have.
Be unique and stand out. One of the ways you can do this is by using services that help your customers like click-and-collect.
Certain jurisdictions have made it possible for CBD retailers to offer click-and-collect or curb-side pickup ordering. This lets retailers fulfil online orders swiftly while customers can pick up their orders faster in a contactless manner, which comes in handy during a global pandemic.
Merrco can connect you with the major CBD tech companies in the market, such as delivery, click-and-collect services and more.
4. Market Your Products
Now that you’ve established your brand and got the best CBD product on the market, it’s time to let your customers know.
Marketing and selling CBD products is tricky. While the 2018 Farm Bill passage liberalized the industry to some extent, it is still difficult to sell and promote CBD products on major online platforms.
Likewise, social media advertising is virtually non-existent; paid ads for CBD products risk account suspensions or bans. However, there is light at the end of the tunnel. You can get creative and try different marketing strategies like influencer marketing.
Influencer marketing involves your CBD products getting promoted by an influencer to their followers and fans. The advantage of this marketing method is that influencers often have a lot of trust with their audience and tend to promote lifestyle-based products, which is perfect for CBD.
It’s essential to know your target audience. Once you do, it will be easier to identify your selling proposition, develop your business brand and pick your marketing line.
5. Choose the Right Payment Processor
To be successful, you need to have various payment options available, ones that your clients can easily access. For example, in addition to paying with cash, you can use a merchant account to process their debit or credit cards.
Payment processing is an essential component for any business, and it is especially crucial for CBD businesses, as they are considered high-risk. Many banks and major credit cards are reluctant to work with CBD businesses because of the ambiguity concerning CBD’s legality and the variations across state lines.
This makes it incredibly challenging to process both online and in-store payments.
What’s the solution? Finding a specialized processor who keeps their customers compliant in regulated industries and gives you a strong competitive edge with smart, simple payment solutions tailored to your special business needs – as we do here at Merrco!
What Are the Challenges of Running a CBD Business?
The CBD industry faces a lot of unique challenges. If you want to start a CBD business or already have one, here are some things to consider before you get started.
The stigma surrounding the use of CBD. Some people are turned off from CBD because of its association with cannabis. Although the stigma has reduced in recent years due to the federal legalization of hemp and more CBD research available to the public, some consumers remain skeptical.
Finding a suitable payment processor. Many major financial institutions are hesitant to process sales of CBD products, as the cannabis industry still falls under the high-risk category. As a result, many payment processors will be reluctant to work with CBD companies as well. So, you have to look for a payment processor that understands your business, like we do here at Merrco.
Lack of business insurance options. Even with the legalization of industrial hemp back in 2018, prices remain elevated since CBD is still considered a high-risk business. So, just like with payment processors, make sure that you pick an insurance company educated in CBD and has experience working with clients like you.
Potential banking issues. Access to reliable banking services can be complicated due to the fluctuating regulatory landscape. Many banks are hesitant to do business with cannabis companies because the industry is so new to them. This may cause CBD businesses some difficulty finding capital, resulting in the need to look for alternative lenders.
Rapidly growing competition. With an untapped market valued in the billions, it makes perfect sense that we’d see a good deal of competition in the CBD space vying to get in on the ground floor. The good news is that with top-tier CBD fulfilment capabilities, you’ll be able to leave them in the dust.
Expensive licensing. Even with legalization in full bloom, licensing can still be expensive and take a long time. Application fees and other bureaucratic costs can slow your entry to market and eat away at your budget over time.
Conclusion
The CBD industry is a booming sector of the economy, and for good reason. And now that you have a few things to keep in mind as you run your CBD business, there’s really no better time to start.
If you want to get started with selling or distributing hemp-based CBD products, contact Merrco for all your payment processing needs. We are happy to answer any questions about our services, feel free to reach us at info@merrco.com and one of our experts will be in touch with you shortly.