Don’t be among the bad actors flooding this busy market.
5 min read
Opinions expressed by Entrepreneur contributors are their own.
Since its legalization in 2018, the CBD retail industry has experienced explosive growth. Brightfield’s 2019 U.S. CBD report predicts that the market will grow to an astonishing $23.7 billion by the end of 2023. That’s led to a flood of entrepreneurs looking to make a profit in this lucrative space. Unfortunately, the abundance of businesses has made it difficult to choose a trustworthy brand or go-to CBD product — especially for newcomers.
Although there are several great companies in the CBD industry, sadly, there is also an overwhelming number of bad actors producing low-grade products. According to the Journal of the American Medical Association, 69 percent of online CBD products are mislabeled; some had extra CBD, some had less, and some contained hidden cannabinoids. As a consumer, you do not want to be buying low-quality medicine, or worse, medicine that is too strong for you to be taking or products that contain impurities. That is why it is important to only shop with reputable CBD suppliers that produce the best products available. If you’re a consumer, make sure you are shopping with trusted brands and only buying top-shelf products. But if you’re an entrepreneur, this need for authenticity and reliability leaves tons of room for opportunity, so let’s take a closer look at some variables to consider if you’re looking to build a company in the CBD space.
1. Where will you source your CBD?
It is important to know where your CBD comes from. Was it extracted from a hemp plant grown in the United States or from a plant grown overseas? The laws that govern farmers and how they grow crops differ from country to country. To be on the safe side, most CBD consumers find it optimal when the CBD company they shop with extracts their CBD from hemp grown within the United States because they know that it’s compliant with U.S. government standards.
2. Does the source company test its products for quality and purity?
Every reputable and transparent company will test the quality of their products with a third-party laboratory, assuming you’re outsourcing the easiest way to get into the space. This is a crucial step in the CBD-manufacturing process. Third-party lab testing informs the manufacturer and the consumer about the chemical make-up of the product, as well as if it contains any impurities. As a consumer, it is best to shop with a brand that has all of their products tested by a third-party lab that has approved the product and not found any impurities. The quality of your product as an entrepreneur is always the most important factor, whether in CBD or beyond, so make sure to be diligent with your assessment.
3. What is your business model?
Another factor to consider is whether your company is going to provide a wide variety of products, focus on just a few products or — even better — specialize as a craftsman of a single product. The more products that a company has in their catalog, the less likely it will be giving each product a significant amount of its time and energy. SweetDrop, for example, realized that instead of being a jack of all trades, it could create a better product by focusing exclusively on CBD drops — and it was right. The company has generated immense amounts of positive feedback, and theirs is a great model to follow.
4. How will you protect your reputation?
No matter what you are building, you should always be aware of your company’s reputation and how you’re perceived in the marketplace. An easy way to do this is to make sure your company has a website or a social-media presence (even if you aren’t active, lock down all possible social-media handles) and a way to incentivize consumers to write positive reviews. Most companies worth shopping with will have a reputation that you will be able to keep tabs on in some way, shape or form. You are going to want the to be transparent with your processes, as well as remain active online and within your community.
5. What do consumers look for in a CBD product?
It’s best to sell a product that’s legal in all 50 states, unless you live in a location where recreational marijuana is legal or have a prescription that allows you to take more than the legal THC limit. When the Farm Bill was passed in 2018, it made CBD that contains less than .3 percent THC legal in all 50 states. To avoid any mishaps with law-enforcement officials or the federal government, it would be best if you sell CBD products that contain the legal THC limit or less, assuming you haven’t been advised by a doctor to consume more.
It is important to do your research before building a CBD brand or selling a CBD product. At the end of the day, consumers that are shopping for a CBD product or a reliable CBD brand are no different than shopping for any product they’re interested in. As long as you make sure the brand or product hits every mark on the checklist of what many believe are standard traits of reputable brands and products, you can rest assured that consumers are making a sound purchase when buying your brand and that you’re building a successful company.