Before this year began, projections of CBD sales were high. With the world facing an unexpected pandemic, interest in natural health products skyrocketed. That’s why now is a better time than ever to start a CBD business. Starting a CBD business can seem daunting, even overwhelming. You’re talking to people who’ve done Read our detailed guide about a cbd oil business business. Typical target market, growth potential, startup costs, and more for this small business!
10 Steps to Starting a CBD Business in 2022
Before this year began, projections of CBD sales were high. With the world facing an unexpected pandemic, interest in natural health products skyrocketed. That’s why now is a better time than ever to start a CBD business. Starting a CBD business can seem daunting, even overwhelming. You’re talking to people who’ve done it themselves! That’s why Todd Smith, co-founder of Joy Organics, is sharing these 10 steps to make the process less daunting and help you start a CBD business.
1. What’s Your Why?
Every successful company needs to have a purpose. There’s a reason you’ve decided to start a CBD business. Knowing “ what’s your why ” will help you make many vital decisions about business operations.
- Is this a hobby business to run with your family?
- Are you looking to make a full-time career change?
- Will this brand become a multi-million dollar business you intend to sell?
Each of these scenarios requires different resources, business strategies and human hours.
Knowing why you want to start a CBD business also helps you pinpoint your motivation. As Napoleon Hill said, “The starting point of all achievement is desire.”
Desire isn’t a hope or a wish. It’s what gets you out of bed and propels you to make tough and sometimes uncomfortable decisions. Without desire, we wouldn’t do the little things that make for big successes.
2. Who’s Your Target Market?
As much as you’d like to reach every demographic, it’s not feasible. You need to figure out who you’re selling to, so you can design your brand around their preferences. Your target market dictates everything from packaging to blog content to marketing campaigns.
- What do they do?
- Where do they shop?
- What do they care about?
- What is your connection with them?
- Does selling to them excite you?
You can’t just be a one-size-fits-all company.
Creating a connection is pivotal to reaching your demographic. You need to know how they think and what their needs are, so that your brand can provide unique solutions.
We’re lucky that our co-founder, Joy Smith, is our target demographic. She’s a woman between the ages of 35 and 65, who cares about the environment and shops at Whole Foods. Joy knows what her peers find appealing and we cater to those needs.
Since Joy experiences the benefits of CBD, sharing them with others is a desire. Therefore, it excites all of us to be a part of the CBD industry. Does your target demographic spark that same passion? If not, reconsider your target market.
3. How Will You Market Your Business?
To start a CBD business successfully, you must invest a lot of time, money, and energy into marketing. Marketing is where identifying your target market comes into play. You have this clear vision of your ideal customer…now how will you pitch it to them?
First, ask yourself where you’re going to market:
Creating a marketing plan is where you peel back the layers of your customer. Are they eco-friendly people who shop at farmers markets? Then get a booth at local fairs in your area.
Maybe they’re retired people who need joint support? Your resources are better suited on flyers on retirement home bulletin boards and local circular advertisements.
Perhaps they’re millennials who are strictly online shoppers. Then you’ll need to download funny GIFs and up your social media campaigns.
4. Select Your Domain Name
Before you name your brand, see if the domain name is available. If so, buy it before you start design production. You don’t want to run into legal troubles or lose out on the domain after you’ve already invested money in packaging.
Even if you plan to start a CBD business offline, your brand will still need an online presence. You will rely on Google location services for customers to find you.
Here are a few tips for choosing a good domain name. Your domain name should be:
- Appealing to your target market
- Easy to spell
- Easy to remember
- Two words
- Ending in a .com extension
Pick a memorable name which people will associate with that particular item. For example, Burger King sells flame-broiled burgers to 16-35-year-old males. Forever 21 makes clothes for 17-24-year-old females. These brand names conjure immediate images of the brand and its customers.
Joy Organics’ target demographic seeks products that support a healthy and happy lifestyle. Hence, “Joy.” They’re also environmentally conscious. So, “Organics” resonates with them.
Lastly, make sure you can procure the .com extension. There is far more internet credibility with .com than .co or .xyz, for instance.
Research if the domain is available on GoDaddy.com . Click their free “WhoIs?” database and see who owns the name.
We did this when we started Joy Organics. After finding the owner, we paid for the domain name, and were ready to start a CBD business!
5. Create Your Brand
Creating your brand revolves around meeting your target market’s needs, desires, and expectations.
Consider things like
- What are their favorite colors?
- What photography do they find attractive?
- Which design elements do they like?
Scroll through websites where your target market shops. See what design aesthetics resonate with your brand.
Don’t reinvent the wheel!
When you start a CBD business, you’re not going to compete with the big guns right out of the gates. Learn from them instead.
Once you have your brand identity in mind, it’s time to bring your vision to life. Decide whether you’re going to take photos and create designs on your own, or hire a professional. If you hire a professional, don’t be afraid to get hands on, ask questions and collaborate to see your vision through.
6. Design Your Logo
Logos are almost more synonymous with a brand than their name. Everyone knows Nike from the swoosh. Therefore, designing your logo is one of the most important steps for starting a CBD business.
Through the Joy Organics White Label Program, we’ve learned a lot about what looks good on tincture bottles, and what doesn’t.
Here are some tips for design a good logo:
- Keep it simple
- Avoid shadows
- Make it large enough to stand out
You can try to find your own professional designer online. If you want a few options to choose from, you can sign up for the gig auction site, 99Designs.com . For a more collaborative effort, you can also work with Joy Organics. We have state-of-the-art design programming that makes unique and eye-catching logos.
7. Build Your Website
Your online presence depends on a high-functioning website. Thankfully, building a website yourself is easier than ever. Choose a template you’d like to download from ThemeForest and integrate it with WordPress, Shopify, GoDaddy, or another host.
It’s important your website is responsive, meaning it’s optimized for viewing on:
Of course, you can always hire a professional. This is where your “why” comes into play. If you want to start a CBD business as a hobby, then don’t use your resources to hire a professional. Build the site yourself.
Make sure you have high-quality product shots on your website with easy navigation. People shouldn’t have to search for what you’re selling.
Also, keep up with content. Content is an opportunity to inform, and ultimately, convert your customers. It allows people to connect with your brand.
Plus, Google considers the amount of time people spend on your site. If you create engaging content that holds people’s attention, Google is more apt to recommend your page to others.
If your goal is to create a multi-million dollar company, hire a professional. They will optimize your site for functionality, searchability, and aesthetics.
8. Apply for Your CBD Merchant Account
You can’t just go to your bank and get a merchant account that does CBD. Apply for a CBD merchant account in advance. It takes around four to six weeks.
In the United States, there are currently around seven banks that do CBD processing. If you apply for one that doesn’t do CBD processing, they’ll cut you off without advance notice. Email [email protected] , and we’ll be happy to tell you which banks accept CBD merchant accounts.
9. Select Your CBD Partner
There are two main questions you must ask yourself when you start a CBD business:
- Do I want to partner with an existing brand?
- Do I want to create my own brand?
Partnering with a reputable brand like Joy Organics is an excellent way to start a CBD business without incurring too many costs upfront. You can order products in bulk and don’t need inventory on-hand. Plus, our tinctures and Jarred salves are now USDA certified organic, so you get an even better product when you partner with us.
However, creating your own CBD brand offers you more autonomy. You have more control over creating brand loyalty. While the risk is greater, you might reap even greater rewards.
10. Advertise Your Business
Even if you hire a professional, be sure to educate yourself on how to advertise your business . You’re creating the brand that’s fostering a connection with your target market. Research how to forge that bond, so you can make educated decisions about spending your resources on advertising.
Make sure you’re specific and strategic. Hire marketers who specialize in your needs. Hire writers who are well-versed in search engine optimization (SEO). If you’re looking at pay-per-click (PPC) campaigns, hire somebody with a record of success in that avenue. Your business’ success lies in their hands.
CBD is a different animal than other products. Don’t hire an advertising agency that’s not familiar with the legalities and nuances associated with the CBD industry. If you need references that our partners love, just ask. We’d love to help!
Connect with Joy Organics
If you are serious about starting your own business, reach out to one of our wholesale and private label specialists. Everyone on the team has helped hundreds of people start their own CBD businesses and would be happy to give you advice and guide you through the process. Fill out our contact form and someone will be in touch shortly.
Thanks for reading! To show how much we appreciate you, we’re going to give you 16% off your next order. Just use code READER16 at checkout!
Todd Smith is Joy Organics Chief Partnerships Officer and Co-founder. Before Joy Organics, he worked in the wellness and nutritional industry for over three decades and helped generate over 1 billion dollars in supplement sales. He has applied that knowledge and experience to empower over 1000 businesses through Joy Organics’ partnership programs. Todd is also the author of a book, podcast, and blog titled Little Things Matter.
How to Start a CBD Oil Business
A CBD oil business will sell and/or manufacture CBD oil for a variety of purposes. This may happen either online or in stores, though most people won’t open up a specific retail location selling CBD. Most businesses will sell the oil for general purposes (e.g., anxiety, chronic back pain, etc.), though some will concentrate purely on cosmetic uses, with others even blend CBD oil and coffee.
Learn how to start your own CBD Oil Business and whether it is the right fit for you.
Start a cbd oil business by following these 10 steps:
- Plan your CBD Oil Business
- Form your CBD Oil Business into a Legal Entity
- Register your CBD Oil Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your CBD Oil Business
- Get the Necessary Permits & Licenses for your CBD Oil Business
- Get CBD Oil Business Insurance
- Define your CBD Oil Business Brand
- Create your CBD Oil Business Website
- Set up your Business Phone System
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your cbd oil business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
Luckily we have done a lot of this research for you.
What are the costs involved in opening a cbd oil business?
If you grow your own hemp and turn it into CBD oil, then your costs to start will be low. You can begin selling your product online with little more than a website made for a few hundred bucks with Squarespace and commercial liability insurance in case a customer sues you after using your product. You can also consider partnering with an established farmer to grow their business and your own.
What are the ongoing expenses for a cbd oil business?
Owners need to account for the cost of farming, insurance, and staff salaries. They may also want to hire a lawyer to keep up on the rapidly changing laws.
Who is the target market?
Practically anyone can use this product. CBD oil is used to relieve anxiety, soften skin, and reduce chronic pain. Most famously, it’s given to kids who have severe seizures to reduce their frequency and severity. It can even be taken by people for general relaxation at any time. CBD oil is derived from cannabis, but it does not cause a psychoactive effect like THC will.
How does a cbd oil business make money?
CBD oil businesses will create their own profit margin for their products, based on the scope of their operation, quality of their product, and demand for CBD oil among their target demographic.
How much can you charge customers?
It’s not unusual to see CBD oil sold for $60 for just 30 mL. 100 mg in a 2 oz bottle of skin lotion can be sold for $85.
How much profit can a cbd oil business make?
CBD oil businesses can make a good deal of profit once their customer base is established. If you charge an average of $60 per product at a 50% mark-up, you’ll need to sell 200 products every month to make $6,000 in profit. This goal can be easier to meet than you may think given the exceptional demand.
How can you make your business more profitable?
CBD oil owners can branch out to different types of products to boost their profits. From skin care to make-up to tinctures to vaping to edibles, there are a lot of different options available.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our CBD Oil Business Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
- Your state’s business records
- Federal and state trademark records
- Social media platforms .
It’s very important to secure your domain name before someone else does.
Find a Domain Now
Powered by GoDaddy.com
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your cbd oil business is sued.
Read our Guide to Form Your Own LLC
Have a Professional Service Form your LLC for You
Two such reliable services:
- ZenBusiness ($49 + State Fees)
- LegalZoom ($79 + State Fees)
You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It’s really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business’s name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
Besides being a requirement when applying for business loans, opening a business bank account:
- Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Open net 30 accounts
Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.
NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our best net 30 vendors, guide and start building business credit.
Get a business credit card
- Separate personal and business expenses by putting your business’ expenses all in one place.
- Build your company’s credit history, which can be useful to raise money later on.
Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Federal Business Licensing Requirements
Although CBD oil does not produce psychoactive effects like the THC found in marijuana, the two products are associated closely enought that the production and sales of CBD are currently in a legal grey area. Before starting your CBD oil business, it is important that you make sure to read up on both state and federal laws regarding CBD products. This will help ensure your business functions smoothly and avoids legal trouble.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a CBD oil business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources .
Certificate of Occupancy
A CBD oil business is generally run out of a place where the oil is manufactured. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location :
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a CBD oil business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your CBD oil business will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers’ Compensation Coverage.
Recommended: Learn what business insurance for your CBD Oil Business will cost.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren’t feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we’ll give you helpful tips and advice for creating the best unique logo for your business.
Recommended: Get a logo using Truic’s free logo Generator no email or sign up required, or use a Premium Logo Maker.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
How to promote & market a cbd oil business
CBD oil is popular enough that you’re going to have some stiff competition. Most people are going to be looking for CBD oil online — especially if they’re looking for the more concentrated, medicinal products. Paid online ads, organic blog content, and social media can help attract people to your product. If you’re selling general, lower-intensity sprays, then you can develop relationships with general health stores or even grocery stores to stock your products.
How to keep customers coming back
Customers are going to need to feel relief after taking your products. While research is few and far between, you can do your own analysis of which products are working for different demographics by asking for feedback. This can help you suggest the right product so that there’s less experimentation (and frustration) on the part of your customers.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it’s fair pricing.
Start a CBD Oil Business in your State
TRUiC’s Startup Podcast
Welcome to the Startup Savants podcast, where we interview real startup founders at every stage of the entrepreneurial journey, from launch to scale.
Is this Business Right For You?
This business is great for people who have a genuine interest in how cannabis can be used to bring relief to users. Owners should understand the complexities of the plant and how different strains can help treat certain ailments.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a cbd oil business?
It’s rare there will be a ‘typical’ day in the CBD oil business because this business is so new and there are few established business models. An owner may be doing anything from managing inventory to dealing with new regulations to running lab reports for their product. Owners should also be devoting time on a regular basis to keep up with changing trends in their industry (as they can change extremely quickly.)
What are some skills and experiences that will help you build a successful cbd oil business?
People should have some experience with the cannabis market. Owners should understand the basic public demands as well as the public fears and residual stigma of cannabis. There’s a lot to learn about cannabis due to the variety of the product. Understanding the different terpenes and strains can make it easier for your company to stay ahead.
What is the growth potential for a cbd oil business?
Because of its versatility and rapid rise in popularity, CBD oil is predicted to hit $1 billion by 2020 in the US alone (some say even closer to $2 billion.)
TRUiC’s YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a cbd oil business?
Understanding the industry is going to be key to getting started. CBD oil is a legal gray area — no matter how you manufacture it. You’re far less likely to run into authorities if you extract your CBD from pure hemp instead of marijuana, but cannabis can be confusing to people who have no experience with it. This can lead to being taken off the shelves or being shut down until local authorities figure it out — which could be a while.
Hemp and marijuana are both from the cannabis plant, but they’re used for very different purposes. CBD oil has enough legal implications that there hasn’t been a lot of official research on it. While this appears to be changing now that the FDA has recently approved a CBD oil drug, it’s unclear how quickly widespread acceptance will happen. In states like California and Washington, your pushback is likely to be low. But in states like Indiana and Kansas, you may have a very difficult time meeting the official regulations of the state.
You should also be extremely honest with your customers whenever possible. Because there isn’t a lot of research on CBD oil, it’s impossible to really say that CBD oil can ‘cure’ anything. While the evidence may be extremely compelling, you want to present both sides of the story whenever possible. The good news is that side effects are extremely mild and it’s impossible to overdose on CBD oil.
One good way to show people that your business is legitimate from right off the bat is to become Clean Green Certified. This certification is essentially the equivalent of the organic label in grocery stores. You’ll need to go through some rigorous testing in order to pass, but these tests help assure people that they’re getting pure CBD oil and not the synthetic, illegal products that may make them ill.
How and when to build a team
You don’t necessarily need to build a team right away if you’re growing the hemp yourself. However, if you’re partnering with other people, you should consider hiring someone to help you decipher the legal puzzles and marketing strategies of the CBD oil business.