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Published On: Mon, Jul 27th, 2020

3 Steps to Take When Starting a CBD Business

You certainly hear the loud excitement of economic growth blossoming from investing in the cannabis business, and particularly with the expansion of Cannabidiol (CBD) products.

CBD is a compound located in cannabis and hemp plants that is rising in popularity and, along with hemp itself, is federally legal since the signing of the 2018 Farm Bill.

Back in 2018, America’s legal hemp market was already forecasting projected growth from $688 million in 2016 to $1.8 billion by 2020. What was the jet engine fueling the fire of these rapid expansion projections? It was the explosion of hemp-derived CBD products.

As a matter of fact, the growth of CBD oil products has prompted industry analyst BDS Analytics to predict that the United States CBD market will drive all the way up to $20 billion in sales by 2024.

This is why savvy entrepreneurs are scattering to get started, if they haven’t already, to get a foothold in this business. Let’s take a look at the 3 steps to take when starting a CBD business to help ensure you can get approved for those desirable cannabis business loans.

cd oil

Imagine de Julia Teichmann de la Pixabay

Establish your Business Structure

Set up your LLC or your corporation as soon as you have your business plan, procured your business name and legally established it to do business under it. If your budget permits you to be able to hire a lawyer to get your limited liability company (LLC) and name set up, go that route.

If you are looking for a more affordable method of trademarking your business name and setting up your business structure as an LLC, there are online services that you can pay to process your paperwork for you.

Know Your Legal Obligations

The 2018 Farm Bill federally legalized industrial hemp and hemp extract, like CBD oils. But there are still significant regulatory considerations that anyone building a brand in the industrial hemp industry needs to be well aware of.

CBD was removed from the federal Controlled Substances Act and the oversight of the Drug Enforcement Agency. Governance of the hemp industry and CBD oil became the responsibility of the FDA. This federal agency isn’t currently allowing CBD products to be marketed as having health benefits yet. The same holds true for CBD-infused foods and beverages.

The last thing you want to have happen is investing a whole heap of non-recoupable resources into a CBD business that blows up in your face because you didn’t know what you are legally responsible for. Play it safe and don’t craft your marketing strategy around the supposed benefits of CBD as the regulations are continuing to change.

Choose Your Name Wisely

In this growing industry that is becoming increasingly crowded at all levels of quality and quantity, what you decide to name your CBD business will be a big determining factor on your success. Not every angel investor and financial lending source is likely to want to be in business with a company that has “CBD,” “hemp,” or “cannabis” directly in its name just yet.

Choose a company or product name that you can quickly expand upon. Try to imagine your business 10 years into the future. Will the name still apply if you have to adapt to new trends or products in the marketplace? Make your name simple to remember and spell, and one that can include products that have nothing to do with CBD just in case you create entirely new product extensions.

Get all of your preliminary efforts in order to give your CBD business the best fighting chance to survive, thrive, and come alive with the activation of economic loans and funding opportunities.

Author: Jacob Maslow

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