Starting a new business is always an exciting venture; it’s the promise of something new, the opportunity to be your own boss, and the chance to bring your dreams to reality. Of course, there are many steps to follow in order to make this happen. The first step is to familiarize yourself with the industry you wish to enter; in gaining a thorough understanding of its landscape, you’ll improve your chances of a successful launch. If you’re considering starting your own CBD business, there are some crucial things to note about the industry, its expected growth and trends, the legal regulations and guidelines, and how to develop your unique brand and business model.
The sale and transportation of CBD within the United States first became legal following the passage of the 2018 U.S. Farm Bill. Following its passage, the popularity and demand for such products have skyrocketed, largely because of CBD’s potential health benefits. Several research studies have pointed to these positive health and wellness side effects, such as lowered anxiety and pain relief. For instance, one study published in the American Journal of Psychiatry explored CBD’s effect on cue-induced craving and anxiety in heroin users. Compared to participants who took a placebo, those who took CBD had lower cravings and lower levels of anxiety. Additionally, a different study published in the European Journal of Pain found, using an animal model, that CBD applied directly on the skin could help lower pain and inflammation caused by arthritis.
As news of these promising health benefits has spread, consumers across the nation have been opening their minds – and their wallets – to the power of CBD products. Given this increasing popularity, it may come as no surprise that the CBD industry isn’t likely to slow down any time soon. In fact, BDS Analytics predicts that the American CBD market will generate $20 billion in sales by 2024, which would represent a 49% annual growth rate from 2018.
Now, despite knowing that there is significant potential for profit in the CBD sector, the question of how to secure your business’ portion of that profit remains. An important step in ensuring that your business stands out and that you are able to target your desired niche is to stay updated on key trends that will shape the industry. Some of the anticipated trends for 2020 include increased prominence in functional water beverages, better standardization, and new sales channels. Functional water beverages represent the segment with the highest forecasted compound annual growth rate (CAGR), largely because customers across several demographics are transitioning away from sugary, carbonated drinks, and opting for healthier alternatives. This shift is creating a key opportunity for CBD companies to create CBD-infused functional water products. Additionally, CBD companies often encounter mislabeling and quality issues; however, this is expected to change in 2020 as more and more businesses use Blockchain technology to ensure traceability and standardization of products. As far as sales channels, we can expect to see further diversification and personalization in this area as smaller CBD brands collaborate with larger corporations, and as new businesses – such as yours – enter the market.
Another key component in understanding the landscape of the CBD industry is researching the restrictions and guidelines for the dissemination of cannabidiol products. Despite the passage of the 2018 Farm Bill, there are still some legal gray areas in the sector that you need to be aware of. For instance, CBD products can only be sold and distributed in the U.S. if they meet the definition of “hemp” outlined by the Farm Bill while still abiding by all other applicable laws, including those laid out in the Federal Food, Drug, and Cosmetic Act (FD&C Act). Be sure to do your research and consult the Food & Drug Administration (FDA) if you are unsure about any of these requirements.
Once you’ve gained a thorough understanding of the industry, its challenges, and the opportunities therein, the next step in bringing your business to fruition is to develop a winning business plan. You’ll want to ensure that your business plan accurately represents your company and what makes it unique, that it includes financial projections, and outlines your target audience. You can also include funding requests in your business plan.
Following the formulation and thorough review of your business plan, you can start thinking more specifically about how you’d like to brand your company. For example, you can start brainstorming and drafting ideas for your logo, planning social media marketing strategies, and developing a website. Your logo is particularly important because it acts as the visual representation of your business’s identity and will likely appear on all of your company’s products. In order to make your logo as effective as possible, there are many steps you’ll want to follow. For one, you should research the logo designs of competitors in your industry to ensure yours stands out. It’s also advisable to select a logo that is clean, functional, and effectively illustrate your company’s key offerings.
If you still feel as though you need additional information and/or support before launching your business, there are several useful resources you can consult to facilitate your transition into the cannabis market. For instance, certain CBD companies, such as Joy Organics, offer partnership programs that provide key insights to new entrepreneurs starting out in the industry. Not only do such programs allow you to order custom-branded CBD products with your logo, but they offer educational videos and excellent pricing on premium products. The company even provides a list of key tips and advisory services for launching your own CBD company.
Brimming with unlimited potential for growth and innovation, the CBD industry is projected to boom significantly in the coming years, making this the perfect time to break into it. While you may be jumping at the opportunity to establish your company in the CBD sector, it’s vital to first familiarize yourself with the ins-and-outs of the industry. In researching upcoming CBD trends and current regulations, developing a bulletproof business plan, and collaborating with already established CBD companies, you’ll greatly improve your business’ prospects for success.