If you have been paying attention to the media lately, you know that the CBD gummy industry is growing at an extremely rapid pace, and it shows no sign of slowing down. As a matter of fact, CBD is projected to bring in a whopping $22 billion in 2020.
You may see brands pioneering the future of CBD gummies, like Verma Farms, and be inspired to try starting your own CBD gummy company. You would not be alone. Lots of companies are throwing their hat into the ring. Keep reading to find out key considerations, and learn how to start your own CBD gummy company.
Legal Considerations
The Farm Bill of 2018 made the farming of industrial hemp, and manufacturing of hemp products, federally legal. This means that on a national level, hemp containing less than 0.3 percent THC is legal to cultivate. The laws are still murky, however. The United States Department of Agriculture regulates hemp farming, but the Food and Drug Administration regulates products containing cannabis—which includes CBD.
The FDA has determined that CBD in food and dietary supplements is illegal, and this mainly affects all sales across state lines. Many CBD companies still sell various food products in multiple states without consequences, and confusion continues to grow. The two departments have been working together to finalize specifics, but the landscape is still shifting dramatically. The laws are taking time to catch up with the quickening pace of the cannabis industry.
To complicate matters further, each state has its own laws regarding every part of the CBD industry, from the farming of hemp, to the possession of CBD. In many states, CBD products are completely legal with no restrictions. Some states require a prescription and put a specific limit on the amount of THC that can be present in any CBD product. Other states require a special license in order to sell CBD, and a few states still entirely outlaw hemp and hemp products. It is vital to know the laws in your state as well as the states in which you intend to do business.
Financial Planning
Despite the booming industry, and the fact that there is tons of money to be made right now, many banks will not do business with companies in the cannabis industry. This is because the legality of CBD products is on unstable ground currently. Many financial institutions just will not take the risk. Banks that are willing to do business with your company will likely require you to open a high-risk business account, specifically designed for businesses that have elements making their market less stable than is typical.
In addition to finding a bank that will process your payments, you may need a bank that will provide you with a loan to cover costs in the first year. Figure out how much you need for living expenses and what other sources of income you have. Add this to the upfront investment and monthly expenses, including travel, advertising, and rent and utilities if you have a brick-and-mortar store. Do your research to determine how long it should take before you start making money. If you have enough money to cover all of that, great! If not, you will want to apply for a loan.
Finally, different states have different tax laws regarding cannabis products. Your state may simply require you to pay the standard business taxes, or you may need to pay a specific tax on your products. Make sure you understand the tax laws in your state when putting together your financial plan.
Business Plan
Even a CBD gummy company needs a solid business plan. You need this in order to get loans, and it will help guide your direction throughout the process. When you have a business plan, you can open your doors—physical or virtual—with the confidence of a firm foundation to build on.
Your overall business plan and your financial plan will be intertwined, so be prepared to make adjustments as you make decisions about things like distribution process, distributors, employees, location, and advertising platforms. You should know how all of these elements will fit together before you start your company so that you can focus on running your company once you officially open. All businesses have plenty of twists and turns, without the instability of having to answer questions that should have been answered in the beginning.
Marketing Strategy
CBD companies have a few challenges when marketing their wares. The FDA bans the use of any medical, health, dietary, or supplemental claims about CBD products. Technically, consumers searching on Google for a “supplement to reduce inflammation” should not find your company in the search engine with those keywords.
Social media platforms all come with their own unique challenges as well. Facebook and Instagram are constantly shifting their rules, and it can be difficult to keep up. As of right now, you can purchase paid advertising on Facebook that mentions CBD topicals and links back to your site, but you cannot mention any other form of CBD.
Despite these challenges, your customers will find you as long as you do your marketing well. You need to make sure your branding is on target, focusing on content creation and search engine optimization. You want to make sure you can get your CBD gummy company in front of anyone who may be looking for you.
Decide who you want to market to. With almost every human (and pet) potentially in the market for CBD gummies, you have to narrow your focus in order to be found. Will you market to seniors? Executives? Athletes? Dog owners? Figure this out and then create content geared toward your specific market.
It’s a good idea to attach a blog to your website in order to educate and inform your customers. Having lots of content will boost your rankings in the search engines as well. Just make sure that any claims you make in your content is backed up by an approved scientific study.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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