If you’ve been paying attention, you’ve likely seen the rise of companies and advertisements focused on promoting CBD oil. What was once seen as an outlier industry has become mainstream.
Customers and businesspeople alike are ravenous at the possibilities surrounding selling, buying, and using CBD oil in new ways. This, of course, promises lots of business opportunities — if you know where to look and have a good strategy. As the enthusiasm for CBD oil continues to grow, it’s interesting to note that 70% of Americans use cannabis to feel relief/pain-free and relaxed, underscoring the potential market demand for products that cater to various wellness needs. Understanding these consumer preferences can be a key element in developing a successful business strategy in the expanding CBD market.
CBD Oil Basics
In case you aren’t familiar, CBD oil is made from cannabidiol (CBD), a specific chemical compound found in the cannabis plant. Yes, “that” cannabis plant. Smoking cannabis exposes the consumer to a variety of different cannabinoids, including CBD, but Delta-9-tetrahydrocannabinol (THC) is the compound responsible for producing the signature “high.”
CBD, by contrast, is thought to produce relaxing and anti-anxiety effects. Accordingly, CBD oil and related products are thought to have a therapeutic effect, reducing anxiety and allowing consumers to relax.
Why is it suddenly so popular? That’s probably due to the passage of the U.S. Farm Bill of 2018, which legalized industrial hemp. It also allowed medical and recreational cannabis to be regulated at the state level. CBD oil became much easier to produce and distribute as a result.
Over the past couple years, brands like Kanibi have begun to specialize in offering the best (i.e., most concentrated) CBD oil to consumers for the lowest possible price. With CBD projected to be a $22 billion industry, it’s no wonder so many entrepreneurs are jumping aboard the trend.
But how can you get a piece of this pie?
There are several ways you can take advantage of the CBD oil trend:
Production and wholesale
If you feel ambitious, you could try to produce your own CBD oil products. That would require some combination of farming space and manufacturing equipment; even if you partner with an organization that already has access to one or both, this is still legally tricky and capital-intensive.
More likely, you’ll be interested in distribution. Here, you’d buy CBD oil products wholesale from manufacturers, brand or transform them in some way, and then sell them for a markup to customers. You could also work with retail outlets to connect them to CBD oil suppliers.
You could start a drop shipping business. You’d advertise CBD oil products, sell them to online customers, and then buy the products wholesale and have the manufacturer ship them directly to your end customers. It’s mostly passive, but it can also be risky — you won’t have much control over operations.
Information and guides
As an alternative approach, you could work on providing more information and resources to consumers interested in CBD products. Starting a blog, an infographic series, or a review site could be lucrative.
CBD oil is getting all the attention, but there’s room for experimentation with other types of CBD-related products. Depending on local laws, you may be able to incorporate CBD oil into other mediums or other types of products. You could also invent something wholly new that contains CBD. You could consider selling CBD-related merchandise to superfans already evangelizing the product.
Key Tips for Success
If you decide to engage with the CBD industry and launch a business of your own, there are some tips you’ll need to follow to succeed:
Do your research.
There’s a lot of talk about CBD oil as a potential “gold rush” opportunity, and you likely know a lot of people who use the product or are interested in it. But don’t let this anecdotal evidence fill you with false confidence. It’s still important to do market research, invest in competitive research, and carry out other forms of due diligence. Make sure the numbers are on your side before moving forward, and double-check your math.
Differentiate your brand.
There are already thousands of companies moving into CBD oil territory, producing, distributing, and innovating with it. To be successful, you’ll need to have some means of differentiating your brand. What is it that makes your CBD oil product better than a competitor’s? Why would someone buy from your online platform and not someone else’s? There are many viable options to consider, including differentiating by price, target demographic, and location — but you need at least one factor that sets you apart from other brands.
Pay attention to laws and regulations.
CBD oil may be legal to produce and distribute in the United States, but there are still plenty of laws, regulations, and restrictions to follow. Make sure you invest time in learning about these restrictions, and work with a lawyer to make sure your interpretations are correct.
Starting a business in or around the CBD oil industry isn’t a guarantee of success, but CBD is projected to be a big hit. If you do the grunt work and are willing to take a risk, it could be a lucrative opportunity. Just don’t get so caught up in the hype that you forget the fundamentals.