Since cannabidiol (CBD) is still relatively new to the mainstream, many entrepreneurs have considered making a name for themselves within this industry. However, though the market is projected to reach $20 billion in sales by 2024, newcomers may have more difficulty than that optimistic number suggests.

“This industry needs people everywhere,” Franny Tacy, Chief Creative Officer, Owner & Operator of Franny’s Farmacy, tells us. “So, I always say, look beyond just CBD. Because hemp is the only crop that can feed, cloth, shelter, and provide medicine. There are so many different opportunities within this industry.”

As with any fast-growing industry, competition is tough. There are hundreds of reputable CBD companies already out there — and plenty more which don’t meet industry standards (i.e. third-party laboratory testing). Being as hemp production continues to skyrocket, the number of CBD companies is only bound to grow as resources become unbounded.

The current story of the CBD industry is one of contradictions: rapid growth, but falling profits for many companies, including some of the original players.

To get a clearer picture of the current state of the CBD industry, we asked some leading industry professionals what it takes to stand out in this highly competitive field.

Chronic fatigue diagnosis leads to CBD business

Ken Lawson, CEO of FOCL, spent much of his twenties grinding to get a start-up going. After years of strenuous work hours, his body was in a state of constant exhaustion. Partly from stress, partly from unhealthy eating habits, but mostly from not taking care of his mind and body.

“One day my body just shut down,” Lawson tells us. “I couldn’t function. Doctors couldn’t figure out what was wrong and, after a couple of years, I was diagnosed with chronic fatigue syndrome.”

For many, a chronic fatigue syndrome diagnosis can last a lifetime. However, if you’re young enough and make drastic changes, you can make major steps towards recovery. Lawson took full advantage of this opportunity. Through this journey, he began exercising and taking all-natural supplements. Eventually, he stumbled upon CBD.

“At that time, CBD was still illegal and, though there were people selling it, it was still very much a grey market. So, it was hard to start a real business” Lawson explains. “When the farm bill passed in December 2018, I was ready for a new [business] venture. I decided that was my time to jump in and show my passion for wellness and my experience for online marketing.”

Passion is ultimately what it takes to start a business of any sort. If you’re not passionate about CBD or health and wellness, what’s the point in adding your name to a list of other products already out there? Just because CBD is popular doesn’t mean it’s quick cash-grab. There are a lot of CBD businesses out there — many of which think hemp is the next cash crop. Maybe it will be on a national economic scale, but that doesn’t mean it will be for you.

The right timing

Admittedly, Lawson got into this industry at a prime time. When hemp and CBD were legalized on a federal level, the public began to notice. With proper education, the demand grew higher than expected and, with that, so did the number of entrepreneurs trying to make a name for themselves.

Since this time, the CBD industry has changed drastically. And it continues to change.

New regulations are on the horizon. The federal government has reacted promptly to the large demand for CBD and is devising new rules for the industry. One of which includes federal backing on insurance and loans for CBD companies.

Of course, it can be expected that the Food & Drug Administration will soon create regulations concerning CBD production. Though this is more beneficial for consumers as it will provide us with safer CBD, it’s also going to have an impact on businesses. New regulations mean new practices within the industry all of which are going to come out of a business owner’s bottom line.

With that, it’s safe to say Lawson had the advantage of getting into the game and learning the market before these regulations become a reality. Not to mention, those who made their name before Lawson.

A blueprint for success in CBD industry

So, what does this mean for someone who didn’t make it into the market early on? It means there’s a lot of information out there concerning what is expected within the CBD industry.

With the right research, you’re given a blueprint for what is necessary to run a successful CBD company. Remember, when Lawson had first begun, the CBD industry was very wild west. Many companies took their attempt and failed because they didn’t have the knowledge of what people are looking for when purchasing cannabidiol. There were no standards such as testing or using only all-natural ingredients.

We now have the knowledge and standards and it is one of the most valuable tools you can use to build a company.

There’s no ‘business as usual’ in CBD industry

Not to mention, there are a lot of veterans of this industry who are happy to spread knowledge of this industry. One of the biggest out there is Franny Tacy, who was the first woman to legally plant hemp in the state of North Carolina in over 70 years.

For over 12 years, she worked within various sections of the pharmaceutical industry. At one point working directly with corporate America and running a $10 million territory.

“I worked on the farm for 3 years before I was able to quit my job,” Franny tells us. “And it was the next year I started planting hemp. I didn’t even know if it was having any impact.”

She would soon find out it would. She grew her business to heights any entrepreneur would dream about. Now, Franny’s Farmacy is a staple within this industry and has become one of the largest white/private label products suppliers.

Of course, this isn’t to say it was easy for Tacy to get to this point.

“This is not business as usual. We are entrepreneurs,” she proclaims. “My husband and I have started many different ventures, from restaurants to real estate. Cannabis, hemp, CBD — nothing business as usual. Your banking, your credit card processing, advertising, marketing, media – all of that got shut down time and time again.”

But she didn’t give up. Like Lawson, Tacy had a passion for helping better people’s lives through the right medication. And that passion is what instituted Franny’s Farmacy as one of the best known CBD businesses currently out there.

Advertising the unadvertisable

If you’ve ever started a business online, you know well that one of the biggest ways to get eyes on your company is through paid advertisements. Whether it be through Google, Facebook, or other social media platforms.

The thing about CBD and hemp is these products are practically banned. Most who attempted a paid advertisement of a CBD product had that advertisement taken down. Many even got banned from the advertising platform as a result, even if they’re trying to advertise a non-CBD product.

This is not business as usual.

Franny Tacy, founder of Franny’s Farmacy

Some companies have worked around this issue. Recently, Facebook has relaxed their rules concerning CBD brands in some ways. You’re allowed to run an ad that links back to landing pages featuring hemp and CBD products. However, these ads aren’t allowed to feature the products. Their main reason for limiting ad runs is due to the fact that different states have different regulations concerning hemp.

Due to these limitations, CBD business owners have had to get savvy with their advertising. Some have taken advantage of the numerous hemp and CBD publications appearing across the web, supplying these companies with a product to review for their readers. Regular hemp/CBD events are also a great way to get the word out.

Marketing CBD means creative branding

But truth be told, in order to market a CBD product, you really need to get creative. And this all comes down to branding.

“The brand is everything,” Tacy says. “What are you looking for in brands out there? They’re all trying to sell the benefits of CBD. Well, where’s the person behind that?”

What Tacy is talking about are the stories behind CBD. The founders of some of the top companies have had their struggles with a particular ailment — Lawson’s story, mentioned above, is simply one of many. These people needed CBD when all seemed lost. They know other people out there are also in need. By telling us of their own struggles through life, the customer has a story to relate to. The brand is no longer just another CBD company.

This is what Franny means when she says, “the brand is everything.” Beyond traditional marketing strategies, you need something that’s really going to make people think. We can’t forget that even though CBD has hit the mainstream, we’re still coming out of a nearly century long prohibition on hemp products. Public opinion is still changing.

White/Private Label Companies: CBD Industry Friend or Foe?

One way many entrepreneurs have entered the CBD industry is through white/private label companies. Though these are great for cutting costs for new businesses, they do take away from the personality of a brand.

“[The CBD industry] has become very competitive,” Lawson details. “[CBD] came, sort of like a Gold Rush, and the market got saturated fast. Largely due to these white label companies.”

A white/private label company is a CBD business that provides products (i.e. CBD oils, CBD topicals, etc.) to various brands within the industry. Since the white label company is producing the product, they are the ones responsible for many of the regulations surrounding this industry. This includes regulation fees, extraction costs, and testings.

Since the 2018 Farm Bill, white label companies have appeared all over the market. For people who develop their CBD business through a white label company, the cost and barrier to entry are greatly reduced.

For example, testing for pesticides alone can cost upwards of $40,000 a month. This doesn’t even include all of the testings we’re used to seeing within a Certificate of Analysis. Even still, investing in the CBD industry through white labels is expensive.

“There’s two huge manufacturing companies out of Colorado that white label probably 80% of products,” Franny explains. “They have a $20,000 minimum per product you wanna launch. So, that takes most of your entrepreneurs — your working class American — out of the picture. Because if you want to have 10 products in your product line, you’re looking at a $200,000 investment right off the top.”

Most people just don’t have this kind of capital. And, for those that do, a white label company can very much appear to be a friend. But as Lawson suggests, there are some downsides to working through a white/private label.

“These manufacturers made it really easy for anybody to get in,” he explains. “And a lot of people got in. So, I think there’s going to be a big shake out over the next couple of years. Especially, as regulations kick in.”

What makes a customer want your CBD?

Currently, there’s numerous near-identical CBD products for sale. CBD oil (tinctures) alone are almost identical from brand to brand, with only slight variations that help them stand out.

If you think you have what it takes to start a successful CBD business, it’s vital you ask yourself, “Why would a customer want to buy my CBD?”

Due to a flood in brands, what was once an innovation is now the standard. The majority of reputable CBD companies have a Certificate of Analysis. Many are switching to extracting CBD from organic hemp, and they make sure their products meet various customer necessities (vegan, gluten-free, cruelty-free, etc.).

For some time now, CBD companies have looked identical to one another. Some have tried to innovate with different products. Others capitalize on a compelling story.

Growth will slow as market expands

Cyrus Partow, CEO of CBD Nerds, has been around this industry for some time and is keen on what customers are looking for. “I’ll look for brands that have longevity and a good reputation,” he tells us. “Typically, I do some research into the ingredients and avoid brands that are clearly just white labeling. I much prefer seeing a brand that’s seed-to-sale.”

Having control over what’s happening seed-to-sale is a vital attribute. Though it costs more in the long run, it shows customers your care and passion for hemp and CBD.

“The market will continue to grow, but probably at a slower pace than what we’ve seen,” Partow continues. “I see smaller brands entering the market and diluting existing brand’s customers.”

Live your story to stand out

CBD companies that are just getting their feet off the ground have a sharp understanding of much of the knowledge discussed within this article. The foundation for the CBD industry was laid down throughout the past few years. This offered a solid blueprint to people with new innovations in mind.

“Companies are coming out with new, creative products to capture different parts of the market,” Partow goes on. “You’ll see companies offering things like CBD face masks, inhalers, bath bombs, and so much more.”

These innovations matched with a solid brand are what will make you stand out. The market is already flooded with tinctures and gummies — why not compel long-time CBD veterans and those who have just heard of it?

Still, even with an innovative idea, one of the most important things is you must have passion for CBD. Customers aren’t ignorant and can tell when someone genuinely cares about their product. In a market that’s centered around health and wellness, this care is an essential.

The people with this passion usually have a story about how CBD has affected them. If this story is powerful and relatable, you’re going to naturally grab attention.

“Everyone’s trying to create their story,” Franny proclaims. “We live our story every day.”

The post CBD Industry Insiders Speak: Standing Out In The Competitive CBD Industry appeared first on Ministry of Hemp.

Few industries are as rewarding as the cannabinoid sector right now, but in order to find success in a saturated market, there are some basic rules to the cannabinoid game you should know ahead of time. CBD is no longer up and coming, it is here. To gain traction today, you need to make sure your brand is unique, compliant, and on-target.

No matter when you enter the cannabinoid industry, consumers will still be crazy for this plant and its beneficial constituents. However, now is the only time to capitalize off of emerging new cannabinoids and the long-awaited development of a reliable CBD supply chain, and we are here to show you how. 

Table of Contents

• Quick guide to starting a white label CBD business
• Lab Testing
• Identify Your Audience
• Find A Supplier
• Establish Your Brand
• Pro-Tips: Make Your White Lab CBD business Stand Out
• Ongoing Optimization
• Wrapping Up: FAQ on White Label CBD Business

Quick guide: How to establish your CBD business

Before we dive in, let’s outline the next steps:

1. Find a supplier, and determine how your brand will stand out in a saturated market.
2. Create a website, select a merchant processor, formulate your products, and upload product descriptions.
3. Support your brand with on-site content, guest posts, social media, and other marketing efforts.
4. Respond to the shifting market and customer concerns to develop the best brand possible.

Unlike any fad, CBD is only becoming more popular with time. The massive popularity of cannabidiol (CBD) is, in fact, also raising attention to other non-psychoactive cannabinoids that THC has overshadowed for too long. Rather than receding and going away, CBD is only growing in importance within the global economy, and it’s bringing all the other cannabinoids found in Cannabis sativa along with it.

Although all business involves tough challenges, the CBD industry remains a wide-open door for anyone with the skill and perseverance to walk through.

Armed with the right information, these challenges become insurance that competitors won’t make it as far as you have in the CBD industry. There are five major steps you’ll need to take when starting a white label CBD brand, and we’ll break it all down for you in this guide.

Step 1: Research compliance and lab testing

CBD is unlike any other industry. While recent efforts to synthesize cannabinoids from terpenes have met with some success, Cannabis sativa remains the sole commercial source of CBD, THC, and all the other cannabinoids so far discovered by science. Although many jurisdictions have liberalised cannabis laws in one way or another international laws remain antiquated.

Processing and marketing CBD is perhaps easiest in the United States, but even the American market has its challenges. Check your knowledge on CBD compliance:

• In what way did the 2014 Farm Bill open the American general market to CBD sales?
• How did the 2018 Farm Bill cement these changes into law?
• Is the FDA currently deliberating how to regulate CBD?

If you don’t know the answers to these questions, you have some research to do before you start selling CBD. While crackdowns on upstanding CBD companies have historically been rare, there’s no telling what the coming years will bring. Plus, rarity does not excuse the brutality with which the FDA has brought the hammer down on CBD companies it deems “non-compliant.”

It’s certainly possible to sell CBD in the United States, but the process can be so complicated that many newbie cannabis entrepreneurs deem the enterprise impossible prematurely. Selling CBD is actually easier than selling THC-rich weed in the United States despite mounting marijuana legalization efforts nationwide.

What about lab testing?

It used to be possible to get away with limited or even no testing whatsoever as a CBD company. Things have changed. Met with an overwhelming number of options, consumers can only buy from brands that fit their particular tastes.

Consumers in the 21st century want CBD products that are naturaland most importantly, thoroughly lab-tested. It doesn’t matter if you have an in-house lab at your production facility⁠—you’ll need to have an independent third party lab test each batch of your CBD products for contaminants and potency if you want consumers to trust you with their dollars.

That’s one of the reasons it’s often easier to white label CBD oil rather than opting to produce it yourself. CBD white label manufacturers have to provide access to high-end labs to stay competitive, which provides you with access to the nation’s best and often costliest labs for a fraction of what it would set you back to send your own oil in for testing.

Step 2: Identify your audience

If you’re new to the CBD market or you’ve been out of the game for a while, you may be surprised by how diversified the industry has become. It used to be enough to put together a “one-size-fits-all” CBD brand that covered all the bases. The truth of the matter is, though, that dozens, if not hundreds, of companies, have already entirely dominated that approach.

We’ve reached a natural level of maturation within the CBD industry. The cannabidiol market has reached an incredible level of saturation, which means brands are in hot competition for customers. Instead of starting a price war that everyone would lose, leading CBD companies are opting to land customers in new and unique ways.

• Find out how you want your brand to be different
• Remember to keep your audience focused while not keeping it too narrow
• “Health-conscious soccer moms with diabetes” might be too targeted…
• Try “busy female professionals with kids” instead!

Knowing who your audience is will empower you to reach an existing customer base once your brand is up and running. Otherwise, you’ll simply try to bash into the huge bubble that is the CBD industry without any plan.

No matter how great your products might be, you can’t sell them without a brand. The first step to making a successful brand is understanding who you want the buyers of your revolutionary CBD products to be.

Step 3: Find a reputable supplier for your CBD business

Realize that building out a full-scale lab and all the other equipment necessary to manufacture CBD takes a significant amount of startup capital. The only entities capable of putting together reliable CBD manufacturing laboratories are investors with cash to burn or successful businesses expanding their services.

What you should be asking yourself is, “What are the top-rated white label CBD labs?” Before you protest that we’ve prematurely decided that making your own CBD is impossible, let’s explain. Manufacturing CBD in bulk requires:

• Securing top-shelf genetics
• Investing in toxin-free, organic production facilities
• Preventing any contaminants from entering your products
• Growing and harvesting finicky hemp plants
• Extracting, winterizing, and distilling CBD-rich hemp extract
• Formulating CBD extract into products

It used to be the case that industry outsiders could jump in on the ground level of the CBD industry and succeed. These days, however, one of the only viable options is to secure a safe, stable source of white label CBD products and start building a brand that differentiates itself from all the other players on the market.

How to white label CBD products with the right supplier

The right CBD supplier will:

• Offer a diverse range of products
• Provide full transparency, lab testing, and product information
• Clearly express why its products are superior to a competitor’s
• Be flexible and offer to create custom products
• Offer competitive prices
• Have superior production facilities
• Be available for questions or concerns anytime

Step 4: Establish your brand

Now that you’ve found the right supplier to fuel your rise to CBD stardom, it’s time to figure out how to separate your CBD business from the competition. As industry insiders, we can say with confidence that the CBD market is going through a phase of over-saturation, and the bar to entry is somewhat higher than it was a year or two ago. With the right mindset, however, this challenge can be turned into an opportunity.

Many cannabis entrepreneurs have now turned away from CBD. Deeming the industry “too hard” to enter, they’ve left things up to a handful of 10 or so brands that dominate the market. What nobody seems to realize, however, is that these circumstances have created a perfect storm for true creative brands who want to enter the CBD market.

• The truth is that CBD isn’t novel anymore
• Consumers won’t pay for “just any” CBD
• They need to be convinced that a particular product is better for them than a competing item
• Just like eyeshadow, car tires, or any other industry, the CBD market has matured
• Diversification is now the key to success

While “off-the-shelf” CBD white label product options work for some brands, a careful assessment of your needs might make you realize a more active, customized approach would yield better results. It’s definitely still possible to succeed in the new CBD market⁠—just remember that custom formulas allow you to create unique products, and pre-made products are best for tackling high-competition CBD verticals.

Tips for making a CBD brand that pops

• Show consumers why they get something different from your brand, even if it’s just a new approach to customer service or an unusual product formulation
• Consumers have reached a certain level of fatigue regarding CBD, so make efforts to keep your product lineup fresh and significantly different from what “mainstream CBD producers” are offering
• If you decide to white label CBD gummies, try using natural ingredients and throwing in beneficial vitamins, minerals, or trending natural ingredients like spirulina or reishi mushrooms
• Integrate your web and social media presence, and learn about the latest ways that Google is rewarding FAQ-based content and penalizing wordy, wall-of-text copy

Step 5: Keep your CBD business optimized

You have a brand now, so you think you’re all done. Not so fast⁠—how are you going to prepare for changes in the future? Any effective brand strategy allows room for ongoing optimization, and the CBD industry is no different. In fact, the volatile cannabinoid market demands even more optimization than established industries, and here are a few of the categories you should focus on:

SEO

If you want consumers to learn about your brand, you need to make your site searchable. Search engine optimization (SEO) is complicated, and the rules are always changing.

Staying visible on Google and other search engine providers (SERPs) remains critical, however, so you’ll need to invest a significant portion of your marketing budget into SEO. From product descriptions to blog posts, learn which types of content Google rewards, and choose content strategies that will provide your pages with the most search impressions.

Social media

It’s up to you how in-depth into social media you get. At the very least, however, you need to make it possible for customers to find you on Facebook, Instagram, and (in some cases) Twitter. Instagram, in particular, is a hotbed of CBD advertising, but as with other social media giants, it’s hard to market CBD directly on this platform.

Instead, you’ll need to get crafty and find ways around anti-hemp censors. Expect social media optimization to take up around 10-20 hours per week when you’re getting started.

Brand adaptivity

Your business itself must remain adaptive if you want to succeed in the CBD industry. Whether that means switching suppliers, adding new ingredients, or even canceling existing product lines and developing entirely new ones, you have to stay flexible. If you start out by making your CBD brand more open-ended, it will be easier to make necessary changes as your dream takes flight.

Wrapping up: Starting a CBD business FAQ

• White label vs. private label⁠—what’s the difference?

Private labeling is when you make product lines for a single brand while white labeling is when you make product lines for many different brands. In most private labeling relationships, a supplier has made an exclusive relationship with a retailer. White labeling, however, allows multiple brands to sell the same supplier’s products.

• How do you get customer reviews?

Getting verified customer reviews is essential to building trust in your brand. Start by asking customers to leave reviews in order confirmation emails, and make sure to ask for reviews on social media as well. A Facebook user might give your business page a five-star review just for answering a question, after all.

• Is dropshipping from a warehouse an option?

Shipping your products directly from the manufacturer’s warehouse is often a simpler solution than distributing orders from your location. Some white label CBD manufacturers offer this service. 

CBD business tips: The CBD industry is changing

Whether it’s your dream to offer CBD gummies, vape, edibles, tinctures, isolate, full-spectrum, or any other type of hemp product, there’s never been a time to get started. From taxes to web hosting to compliance, there are a million-and-one things to learn as a new CBD business owner, but the five steps we’ve covered above will set you up for success regardless.

Whatever industry you’re entering, the keys to success lie in making a firm plan and persevering. In a way, CBD is just like any other industry now; it’s hard to start a brand and make an impact, but there aren’t any specific impediments in your way anymore. CBD and cannabis are becoming normalized across the globe, so even if the competition is steeper, the potential rewards are only made that much sweeter.

Accordingly, treat your CBD brand just like any other business. Reward hard work, think innovatively, and work together to succeed. CBD consumers are gravitating away from “shady weed dealers” and moving toward “trusted health partners,” so build your brand to be as transparent and honest as possible. That might mean more hard work right now, but an ethical approach will ensure your ability to ride out today’s enlightened consumer habits and come out on top as a CBD champion.

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