If you’re interested in entering the fast-growing online CBD resale market, now is the time. By the end of 2020, the U.S. CBD industry is expected to pull in a record $4.7 billion in sales, according to research done by Brightfield Group. By 2025, estimates point to an industry worth $16.8 billion annually. The COVID-19 pandemic pushed 47% of CBD sales online in the second quarter of the year, as brick-and-mortar stores closed, and wary consumers chose to shop from home instead.
With an opportunity like this calling, it’s an exciting time to answer. In this post, we lay out the details of what it takes to buy, sell, and ship CBD online. We also explore the basics of how to sell CBD online, including how to get the right licenses, popular CBD products to sell, what to look for in a wholesaler, and how to explore opportunities with white labeling.
Federal and State Laws
As with any new product, government regulations are in a state of flux. From a federal regulatory standpoint, selling CBD is legal provided that the THC content of your products stays below 0.3%. You don’t currently need a license at the federal level to sell CBD.
Other laws vary from state to state. Some states do not allow the sale of CBD derived from marijuana plants. So to be on the safe side, stick with hemp-produced CBD products. Since each state has a unique set of regulations regarding CBD sales, check your state’s laws before you open up shop to make sure you’re complying.
Business and Reseller Licenses
Your first step is to establish your business as a legal entity in your state. In most cases, this can be done through the Secretary of State’s office. You’ll need to select the type of legal structure to operate your business under. There are a handful of choices, but the two most common are an LLC or S Corp. Some local governments also require a business license. Check if yours does, and if so, be sure to secure one before you get started. Lastly, many states require a reseller license if you’re buying wholesale.
Setting Up an Online Shop
With all of the licensing out of the way, you’re ready to set up an online CBD business. Step one is buying a domain name. GoDaddy is one of the largest domain registrars in the U.S., and their internet domain selector tool makes it easy to see what domain names are available for purchase.
Next comes setting up your e-commerce site. There are a number of vendors to choose from, but BigCommerce and Shopify are two of the most popular. Finally, you’ll need to select a payment processor. Many of the traditional payment processors like PayPal won’t allow CBD payments to be processed on their platforms. However, Shift Processing has a service specially designed for CBD vendors who sell CBD online.
Choosing the right CBD Products to Sell
CBD comes in a wide range of forms: tinctures, edibles, isolates, capsules, topicals, patches, and pet products, just to name a few. Choosing the right CBD products to sell online is important, especially if you’re going to be targeting a specific niche audience. Do some market research to figure out what type of CBD products appeal to the consumers you’ll be selling to.
Finding a Quality CBD Wholesaler
Partnering with a quality CBD wholesaler is essential. Before placing your first order, you’ll want to do some homework.
First, examine the quality of the products. Find out where they source their raw hemp. Is it produced domestically or in some other country? If in another country, what are their safety and quality regulations like? How do they extract the CBD from the hemp? There’s more than one method of extraction, but Co2 extraction results in some of the highest quality finished products. You should also ask to see a copy of the wholesaler’s Certification of Analysis (CoA). A quality producer will hire a third-party testing company to analyze their products and produce a CoA that details the levels of CBD, THC, and other compounds found in the product.
Next, look at the CBD wholesaler’s product offerings and pricing. Do they carry a wide enough range of dosage levels and product choices? Being able to offer a wide range of options to your customers can supercharge your efforts to sell CBD online. What is their pricing structure? Do they have a minimum order? Do they have a reputation for being easy to work with, efficient, and fair? If you’re interested in white labeling, are they set up for that?
Read How to Choose the Best CBD Wholesale Partner for more on this important step.
Benefits of Selling White Label CBD Products
White labeling gives you an opportunity to take your CBD online business to the next level. With white labeling, you create your own brand and product names, product labels and packaging, and marketing. White labeling can set you apart from other CBD online sellers, offering the potential for higher profits and greater control over the branding.
Options for Shipping Your CBD Products
When it comes to fulfilling orders sold on your CBD online marketplace, you have three main options. First is in-house order fulfillment. That means you’re packaging and shipping the products yourself. While that may work when you’re just starting out, you’re likely to need some help as your online CBD business grows.
The second option is dropshipping. Some CBD wholesalers will package and mail your orders for you directly from their warehouse. And the last method is third-party fulfillment. This is the most expensive option but by far the most convenient. A third-party fulfillment company warehouses, packs, and ships your products for you. Many of these companies offer handy add-on services like handling customer returns and customer service requests.
The Time is Ripe for Selling CBD Online
Now is an exciting time to be entering into the online CBD marketplace. As demand continues to grow and consumers steadily shift their buying habits to online sources, the potential for growth in the CBD industry is tremendous. By investing the time to set up your online CBD business the right way today, you’ll be well-positioned to take advantage of this emerging market for years to come.