TMCnet Feature
September 03, 2020

What Are the Challenges of Running a CBD Brand in the United States?

With the worldwide CBD market predicted by some to reach $23.6 billion in annual sales by 2025, it should come as no surprise that entrepreneurs all over the world are jumping in and launching CBD brands of their own.

When you begin researching the CBD industry, you’re going to find that it’s surprisingly easy to start a CBD brand even if you have no specialized knowledge or connections whatsoever. That’s because there are several companies that are happy to manufacture finished CBD products for you. They’ll even provide third-party test results verifying the purity and potency of the products. All that you need to do is put your label on the products and start selling.

If you’re an experienced entrepreneur, though, you know that nothing in business is quite that simple. Even if you’re not the one making the product, building a successful brand is an extremely difficult proposition. That’s especially true when you’re dealing with stiff competition, and the CBD industry has no shortage of that.

These are a few of the biggest challenges that you’ll face if you want to run a successful CBD brand.

Product Differentiation Can Make a CBD Brand Stand Out

Have you ever searched for CBD online and taken a good look at the various results? There are hundreds upon hundreds – and quite possibly thousands – of different CBD brands in the United States alone. If you study those websites, you’re going to find that at least three quarters of them look virtually the same as one another. Their product selections are identical, and it’s likely that they get almost no business at all.

Lack of differentiation is a huge problem within the CBD industry. There are dozens of brands, but most of those brands have done almost nothing to help consumers tell them apart. If you’re thinking about launching a CBD brand, you should have a clear idea of how you’re going to differentiate that brand before you even get started.

There are three primary ways in which you can differentiate a CBD brand.

  • You can develop products that aren’t available elsewhere. Crescent Canna, for example, put itself on the map by developing the strongest CBD oil on the market.
  • You can create a unique marketing message. If you look at most CBD brands’ websites, you’ll find that many of them use virtually the same language when describing their products. There are many things that you can’t say when marketing a CBD brand, and that means you’ll need to have a little creativity here. Come up with a story that’s truly your own.
  • You can build a website that doesn’t look like every other brand’s site. E-commerce platforms like Shopify and WooCommerce have made it incredibly easy for people to sell products online even if they have no web development experience. The consequence, though, is that many of the websites using those two platforms look the same as one another. If you develop a website that doesn’t look like the rest, you’ll have a much easier time standing out.

The Easiest CBD Supply Chains Aren’t Always the Best Ones

As mentioned above, it’s quite easy to obtain finished CBD products that are ready to sell. There are several major hemp processing companies that can help you build an entire CBD product line ranging from oral tinctures and gummies to topical lotions and gels. These companies make it possible for you to customize the potency of your products and can even infuse your products with custom flavors and terpene blends.

The best part of getting your CBD products from a white-label manufacturer is that the minimum order quantities are often quite low, which means that you can launch your brand on a shoestring budget. The problem, though, is that there are dozens of other CBD brands that have already done the same thing. Product differentiation becomes an even greater concern when your products are fundamentally the same as everyone else’s.

Full vertical integration in the CBD industry – starting your own hemp farm and processing the hemp yourself – is probably unreasonable at this point. Getting the proper permits for an industrial hemp farm, learning how to grow hemp for its CBD content and ramping up production until you’re growing a significant volume of material can take years – not to mention a huge monetary investment. By the time you really ramp things up, your opportunity to claim a large share of the industry will probably be over.

You can, however, strike up a relationship with a hemp farm and secure your own supply of material. That’s a good step in ensuring that you aren’t selling the same product as everyone else.

There’s No Easy Way to Market a CBD Brand

One of the most important things to know about running a CBD brand is that many traditional online marketing avenues aren’t available to companies in the CBD industry. Popular advertising networks such as Facebook (News - Alert) and Google AdWords treat CBD and marijuana as if they’re the same thing and do not accept advertisements from CBD companies. In addition, influencer marketing on social media is being watched more closely than ever by agencies such as the Federal Trade Commission.

The main avenues for advertising in the CBD industry are paid display ads, content marketing and relationship marketing with other website owners. Before you launch a CBD brand, you must familiarize yourself with those three forms of marketing and set aside an appropriate budget for pursuing them. There is a great deal of competition in the CBD industry, and breaking through the static won’t be easy or cheap.

Legal Compliance Is a Constant Concern in the CBD Industry

The final thing that you need to know about running a CBD brand is that legal compliance will be one of your greatest concerns as long as you’re in this industry. Having an attorney with experience in cannabis-related matters is a must if you want to make sure that you’re not running afoul of any regulations.

These are just two of the compliance issues that you’ll face in the CBD industry.

  • You want to use marketing language that stands out, and you want to tell people how much your product will enhance their lives. However, you can’t say that CBD treats any medical condition or will provide any health benefit.
  • You want to differentiate your products, but there are some types of products that you can’t sell. CBD, for example, isn’t a permitted additive for foods or beverages. The FDA regulates the food industry, and they will catch you if you try to skirt that law. The FDA also regulates the supplement industry, so you can’t market your CBD products as nutritional supplements.

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