Learn the 4 Most Common Ways to Start Your CBD Business

Posted on August 26, 2020

4 Most Common Ways to Start Selling CBD

When starting a CBD brand, established entrepreneurs and first-time CBD sellers alike will find there are many ways in which to enter the thriving CBD industry. 

The first thing to consider is that no matter which path you take, there are six steps that every CBD business has to complete in order to get to market successfully. However, how those steps are accomplished (and by who) depends entirely on your chosen business method.  

In this blog, we’ll highlight the 4 most popular options for launching your CBD brand, from the do-it-yourself to the do-it-quickly, and how each one will affect the steps you need to take to join the booming CBD industry.

Steps to Build a CBD Brand

  1. Grow Industrial Hemp

  2. Isolate the CBD

  3. Create & Test Your CBD Products

  4. Create Your Brand

  5. Market Your Brand

  6. Sell Your CBD Products

4 common ways to start a CBD brand table-Article-The Hemp Plug

CBD Selling Method # 1: Do It Yourself

Required Steps: 1-6

Summary

The most involved and demanding path one can take to building a CBD brand is the do-it-yourself-method. 

A vertically integrated business model, the do it yourself method is one in which the CBD business owns and operates every aspect of their process.

In this case, a business owner would be responsible for all six of the steps we have highlighted above.

To some, this is the ideal way to run a business. However, it is important to consider all of the nuances that come with starting your CBD business from the (very literal) ground up.

Why Use the Do-It-Yourself-Method For Your CBD Products?

This method gives business owners full control of their processes, products, and brand identity, allowing them to set the pace and standards in which they operate.

Because the business will create its own proprietary CBD formulations, it will have the advantage of exclusivity on the CBD market.

Weekend warriors and those preferring to take a hands-on approach to build their CBD brand may find this an appealing option, but there is quite a bit to consider before diving in. 

This method will demand the most from any entrepreneur. 

Business owners will need to encompass every aspect of business development, from procuring a farm and cultivating quality industrial hemp to testing out different formulations, seeking third-party lab tests, complying with all federal and local regulations, branding and marketing their brand, managing fulfillment and shipping, and more. 

This all translates into an enormous initial investment upward of $2M. Many entrepreneurs aren't prepared to make that investment.

In addition, because the process will begin from the seed stage, it can take years before any profits are seen. If ever.

Benefits

  • Control and influence every phase.

  • Create a product that is completely your own.

  • Learn every phase of the industry.

Drawbacks

  • Requires an enormous amount of capital (approximately $2 million USD) to start.

  • Requires purchase of farmland where growing hemp is legal.

  • Requires chemistry knowledge to isolate & test CBD compound.

  • Requires business knowledge to brand and market your CBD product.

  • Requires legal knowledge of Hemp CBD at a federal, state, and local level, of where you produce and where you wish to sell to.

  • Requires multiple years before any sales are made.

  • Requires very prudent risk management as there are many regulatory hurdles to jump over.

Bottomline

This method is for very few people who are wealthy, knowledgeable, and patient as this whole process will take at least 2-3 years. 

CBD Selling Method # 2: White Label CBD

White Label CBD -4 Most Common Ways to Start Your CBD Business- Article

Required Steps: 4-6

Summary

Now that we've covered the most time-consuming method, let's jump to the fastest. 

A white label CBD service is one that manufactures a product and sells it to retailers and wholesalers in bulk. 

These businesses then apply their own brand to the white label product before going to market.

In the case of white labeling, your branding is what will set you apart from others with similar CBD products. 

Due to the nature of this method, brands do not have exclusive rights to a unique product. 

This means that companies will need to craft a unique and strong brand identity and a thorough marketing strategy to stand out. 

Why Use White Label For Your CBD Products

As part of the white labeling process, the manufacturer absorbs the cost of the expensive machinery, the responsibility of lab testing and certifications and even fulfillment.

Since white label products have already been manufactured by a third party and vetted by independent lab tests, they usually have a shorter lead time and can help businesses significantly cut costs and reduce go-to-market time. 

In fact, this option means that entrepreneurs receive a ready-to-market product that they can brand and launch in as little as two weeks.

Business owners who choose this route have fewer risks and challenges and can spend more time focusing on growing their brand. 

Benefits

  • Skip years of hard work.

  • Start selling in just a couple of weeks.

  • Get high-quality CBD products with no more than 0.3% THC.

  • Ensure all CBD products have promised CBD potency.

  • Select from over 10,000 CBD product variations.

  • Avoid legal fees.

Drawbacks

  • Still need to have knowledge of how to brand and market your CBD products.

Bottomline

If you already have a CBD brand, logo, packaging designs, website, and digital marketing services like SEO & PPC, this solution is perfect for you.

CBD Selling Method # 3: Private Label CBD

Private-Label-4-Most-Common-Ways-to-Start-Your-CBD-Business-Article-White-Label-CBD

Required Steps

  1. Skip steps 1-3

  2. Collaborate with THP (to build unique CBD product)

  3. Build Brand

  4. Market Brand

  5. Sell CBD

Summary

So far we've covered a method that allows you to create your own unique formulations (albeit, in a lengthy and costly process) and one that gets you to market quickly (with pre-manufactured products).

Some business owners, however, want the best of both worlds. This is where private label CBD solutions come into play.

Business owners with an entrepreneurial spirit may have specific ideas on the types of CBD products they want to offer. 

With private labeling, resellers can commission exclusive products for their brand, without having to go through the manufacturing process themselves. 

Although this method does indeed take longer than white labeling, it is far quicker than the do-it-yourself-method and offers a more couture approach to product creation.

Why Use Private Label For Your CBD Products

Private labeling provides a step of customization beyond that of white label while still allowing business owners to skip the time and financial investment of the do it yourself method. 

After a new product is formulated, the manufacturer typically establishes a trademark for it, which creates exclusivity and a niche product with no similar variants. 

Due to its unique nature, if the product is well designed and marketed, it can generate more profit when sold at an elevated price point. 

With the proper team and tools in place, private label products can be incredibly lucrative.

Benefits

  • Skip years of hard work.

  • Get high-quality CBD products with no more than 0.3% THC.

  • Ensure all CBD products have promised CBD potency.

  • Avoid legal fees.

  • Build a unique CBD product.

  • Gain a competitive advantage.

Drawbacks

  • Takes longer than white label CBD solutions because the product needs to be created from scratch.

  • Requires knowledge of marketing and branding.

Bottomline

If you have a target market that does not have a CBD product that caters specifically to them, this option is perfect for you.

CBD Selling Method # 4: Build Your Own CBD Brand

Build-Your-Own-CBD-Brand-4-Most-Common-Ways-to-Start-Your-CBD-Business-Article-White-Label-CBD

Required Steps: Skip straight to selling CBD.

Summary

The fourth method of launching a CBD business, the Build Your Own Brand method, truly is the path of least resistance. 

White labeling solves many of the key challenges that a new CBD business will face. However, it does not address all of them.

That’s because not every entrepreneur is an expert marketer.

The Build Your Own Brand method offers all the benefits of the White Label service as a baseline, and stacks on them. 

In addition to ready-to-market CBD products, with the Build Your Own Brand option, business owners can receive the added support of complete and customized brand development assistance.

This path will be led by a team of experienced marketers who will build a customized brand identity including logos, marketing copy, and packaging design all backed by extensive research and expertise, and catered to appeal to your target audience.

Why Use Build Your Own Brand Solutions?

Whether you have extensive marketing experience or are just getting started, receiving assistance for your CBD brand may be something you want to consider.

Due to the fluctuating regulations surrounding the CBD industry, laws are constantly changing. It is imperative that CBD business owners maintain current and thorough knowledge of these laws and compliance regulations to avoid any potential fines. 

Getting assistance from a partner who is well versed in the industry, can help a CBD brand navigate through all the uncertainties. 

Benefits

  • Full turnkey CBD brand solution.

  • Get all your branding needs met (packaging, labels, logo, etc).

  • Get all your marketing needs met (website, SEO, PPC).

  • Quickest route to market.

  • Skip years of hard work.

  • Get high-quality CBD products with no more than 0.3% THC.

  • Ensure all CBD products have promised CBD potency.

  • Avoid legal fees.

  • Take advantage of over 10,000 variations of white-label CBD products.

  • Least amount of risk involved from a legal & business perspective.

Drawbacks

  • Lacks the control you would get from doing everything (growing, isolating, marketing, branding) yourself.

Bottomline

Unless you’re a CBD industry expert with years of experience, this is most likely going to be the best bet for you.

Conclusion

If you’re interested in joining the CBD industry, it’s important to know that there is a right plan out there for every business need.

That being said, it is important to research all possible paths in order to determine the best solution for your business. 

The CBD market is still in its infancy stage, with the 2018 Farm Act being passed so recently. However, it is already experiencing exponential growth.

If you’d like to join the CBD industry, the time to act is now, while you can still benefit from the first-mover advantage. 

At The Hemp Plug, we can help you get started with a free consultation. Schedule a call today, and we’ll be happy to help you review your options, and answer any questions you may have. 

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