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Commerce Puzzle

Commerce Puzzle

How To Sell CBD Oil:
Marketing& Regulations

The CBD Market

From the government to the general public, CBD will continue to be the talk of the town throughout 2019 and for a good reason. States such as Colorado have already shown the potential earning power of the medical and recreational marijuana markets. Cannabidiol (CBD), a phytocannabinoid that is non-addictive and lacks the psychoactive impact that tetrahydrocannabinol (THC) is famous for shows the same growth potential as the Colorado market has shown with marijuana. In this article, we will discuss how to go about opening and marketing a brand new business in the hottest U.S. sector currently available; the CBD market. We will not be arguing for, nor against any known or perceived medicinal benefits of CBD. Due to the legal climate surrounding THC, CBD, and Hemp, this article was created for the purpose of aiding entrepreneurs in navigating through the regulated world of CBD startups. When a 22 billion dollar industry is calling, preparation to answer the phone can never hurt.

Mind The Chain

When diving into a business, having an expert understanding of your supply chain is needed. When you own a regulated company, having expert knowledge of your supply chain is nothing short of a necessity. Marijuana, while legal in some states, remains federally illegal as of (2/9/2019). It is important to note that the overwhelming majority of CBD is legally extracted from industrial hemp, thus avoiding the federal grip on marijuana and therefore legitimizing your business. The problem occurs when supply chains are compromised for not doing the right thing, or local and state police illegally confiscate legal shipments due to being unfamiliar with the differences in plants and recent changes in the law. Either way, the result is the same, it is easy for you to end up on the wrong end of a supply chain hiccup in the CBD industry, so be prepared.

FDA Regulations

There is confusion about the position the FDA is playing in the CBD industry, but thankfully there does not have to be. It is a common myth that CBD is out of control and unregulated. We are here to tell you that it is just not true. CBD is regulated by the FDA, and it is regulated to a fairly substantial degree. FDA commissioner Scott Gottlieb released an in-depth statement on CBD in hopes of clearing confusion for entrepreneurs and citizens around the United States. A quote from his statement outlines the primary concern, “the FDA has sent warning letters in the past to companies illegally selling CBD products that claimed to prevent, diagnose, treat, or cure serious diseases, such as cancer. Some of these products were in further violation of the FD&C Act because they were marketed as dietary supplements or because they involved the addition of CBD to food”. Current FDA regulations range from CBD’s relationship to food, all the way to CBD’s relationship with marketing, which is the industry’s current fork in the road. Current law states that it is illegal to market CDB in a multitude of ways, so avenues such as Facebook prevent access to advertisement altogether. We will discuss how to legally get around these marketing woes later in the article. The FD&C Act holds the regulatory measures for CBD and can be reviewed in detail by clicking here.

Merchant Accounts

Taking payments is perhaps the biggest hurdle for the average CBD startup or entrepreneur. The lockdown on merchant accounts has proven difficult to say the least. Due to current regulations and concerns about legal action, some of the most popular credit card processing companies in the world are saying no to CBD. Paypal, Stripe, and Square all have a ban on CBD merchant accounts and will not even accept an application. To make things even harder, shopping cart services are disallowing any CBD related product at all. This means companies such as WIX, Squarespace, Big Commerce, and Weebly are not options. Fortunately, there is not a complete lockdown on the industry, and there are plenty of solutions out there that can enable you to get a store up and running. The unfortunate part is expensive. Virtually every risk-free option is dependent on hiring a development team and spending thousands to get it done the right way.

How To Market

We have discussed the importance of knowing your supply chain, the basics of FDA regulations, and the challenges those regulations present. As we mentioned before, part of the FDA regulatory process that is explained in the FD&C Act hinders marketing and advertising, so what are our options? Let’s review them below:

1.) Search Engine Optimization

Search Engine Optimization (SEO) is the art of increasing the rank of your website through available search engines. For example, when you first register a new domain name, it will take some time for Google to recognize and index your website. After your site is indexed, you then enter an ongoing competition with every other website in the world (that is indexed) that is revolved around the same topic as yours. A positive SEO campaign will increase your ranking on search engines, therefore placing you higher in the page rankings. If your website is highly ranked, you will appear on page 1 of Google and benefit from all of the traffic that comes that way. Sure, you cannot run a Facebook ad. However, if 2,000 people Google search a phrase about CBD every month and you are on page 1 one of Google, 2,000 people got the chance to click on your product. SEO is without a doubt the most reliable way to legally market your new CBD business.

2.) Influencer Marketing/Brand Ambassadors

Some things never change word of mouth remains King for that very reason. Although plenty of mediums will not let you run paid ads on their platforms to market your CBD business, there is nothing that prohibits your CBD business from being ON the platform. This opens up a world of possibility for influencer marketing and brand ambassador programs. Consumers love to indulge in the same things that leaders, idols, or influencers indulge in. If you can introduce a wholistic vetting process to protect your brand and enrich your company culture, bringing on influencers to post and share about your product is a great way to grow your CBD business legally.

3.) Amazon

Amazon leads the pack and opens up its platform for all CBD products that meet the legal guidelines. Although selling effectively on Amazon requires a data-friendly approach that relates to SEO, getting started as soon as possible is better than nothing. Getting your product on Amazon and benefiting from the potential traffic is a great way to increase brand awareness for your new CBD company.

4.) Guerilla Marketing

A house favorite at Commerce Puzzle, deploying a good guerilla marketing scheme can do wonders for the growth of your CBD business. Guerilla marketing can include dropping flyers, partnering with a local company for a coupon deal, or even getting a team out there to shake hands. Yes, it is 2019, and no, digital marketing does not have to kill your business because you cannot fully participate. Brainstorm a local marketing run, and you will surely benefit from it on the front end of things due to the popularity of CBD.

Putting it all together

There is no doubt that opening up a CBD business is a time-consuming and expensive task, but it is possible. If you are one of the talented entrepreneurs that can put together an excellent CBD business using the information that we gave you above, take pride in being one of the few that have the patience and resources to do it the right way. As the government continues to loosen regulations, more opportunities will begin to present themselves and competition will inevitably increase. Good luck with your journey, we hope that this helps!

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