Whether you’ve been thinking about opening a CBD store yourself, or you’re just researching the industry, the information about the regulation of online CBD eCommerce will be invaluable to you.
The eCommerce business has been booming, with its newest addition being the hemp industry, as medical marijuana treatments are gaining in popularity. A market analysis of the cannabis industry done by BDS Analytics in 2019, has shown that it’s expected to exceed $20 billion in the United States by 2024. So read on to find out how you can get on board the CBD eCommerce train, as well as what documents and licenses you’ll need in order to start selling CBD products.
What Is CBD and What Kind of CBD Products Are There?
CBD or cannabidiol is a compound of cannabis plants that is responsible for the sedative effects of marijuana. Together with THC or tetrahydrocannabinol, responsible for the “high” you get when consuming marijuana, they form the main cannabinoids found in cannabis.
Compared to THC, CBD isn’t psychoactive and is therefore used in medical treatments. Some positive health benefits of CBD include anxiety and pain relief. For that reason, a lot of people have started consuming CBD products, and the most common ones include:
- CBD tinctures – concentrated extracts made by soaking natural hemp oil in alcohol or another solvent;
- CBD edibles – food that contains CBD like gummies, hard candies, chocolate, and cookies;
- CBD capsules – softgel capsules that contain CBD;
- CBD isolates – pure substances extracted from the plant and refined into a powder;
- CBD vape concentrates – cannabis concentrates that are used by inhaling with a vaporizer or vape pen;
- CBD topicals – creams, salves, lotions, and gels made with CBD which are meant to be rubbed on the skin;
- CBD patches – similar to nicotine patches, these patches provide CBD absorption through the skin.
What Do You Need in Order to Have a Successful CBD Market?
A High-Quality Product and CBD Suppliers
The quality of the product is the most important thing in any business, and the same goes for the cannabis industry. In order to do well in the CBD market, you must provide your customers with high-quality CBD products. It’s extremely important to choose the right supplier which will provide you with good CBD products in a timely fashion.
Since the rise of the CBD industry, there are a lot of “fake” CBD oils that are circulating on the market derived from hemp seeds that contain very little CBD compared to products made from the stalks and leaves of the plant, and you should be careful which products you choose.
Make sure your supplier provides you with a certificate of analysis (CoA) for your product which will list the levels of CBD, THC, and other substances. This is important because you’ll know the results from the pesticide testing, testing for mold and bacteria, residual solvent testing (that identifies if any chemicals remain from the extraction process from industrial hemp). This is also important for labeling since you can list the ingredients of your product precisely.
Payment Processors and Age Verification
As this industry is considered a high-risk industry, you’d need to verify the age of the people shopping in your store, as well as provide a high-risk payment processor for the orders. These high-risk payment processors are willing to accept the additional risk that comes from payment processing for online stores in this industry.
And in order to verify that the people shopping in your store are of legal age according to state law to be able to order your products, you must have an age verification tool on your website. With age verification, you’ll comply with the FDA regulations and your payment processor, as well as limit the potential for fraud.
What License Do I Need to Sell CBD and Cannabis Products Online?
Basic Legal Requirements
When starting an online cannabis store, the legal requirements you’ll need to follow are similar to other businesses. It doesn’t matter if you have a home-based or online business, the same rules and regulations apply to traditional companies, as well as for selling CBD online. Those include the following.
- Business formation – people that start with CBD generally form LLC’s but an accountant can advise the best method for you and your situation.
- Tax ID number – is used by the IRS to identify your business for tax-related purposes.
- General Business License – is needed to legally operate in your country, and it’s renewed annually.
- Business license for cannabis – this will vary from state to state depending on the state’s regulations.
- Permits – are needed if your business needs additional services (for example, you’ll need a food permit if you’re making edibles).
Is It Legal to Sell Weed?
When talking about the legality of weed in the United States, the federal laws and the state laws are different. Federal laws are against the production, consumption, and commerce of cannabis products. They enforce the FDA requirements, who don’t tolerate unapproved products that market false health claims.
On the other hand, state laws vary from state to state. While some states allow marijuana-produced CBD, others only allow industrial hemp-produced CBD. When selling and marketing CBD products, the products that are marketed should contain less than 0.3% THC in order to be legal. That is the result of the 2018 Farm Bill that legalized hemp production in the US in order to sell CBD oil products online that are derived from industrial hemp, so wholesalers and retailers are required to comply with the FDA’s regulations.
It’s also important to note that cannabis products can’t be sold or advertised on traditional websites like Facebook, Instagram, and Amazon. For that reason, people opt for different marketing techniques and aim to have content that is medically backed up on their website.
How to Sell CBD Online – Tips and Tricks About Your Online CBD Store
While starting a CBD Business may seem easy, marketing is what makes it tricky. Cannabis businesses can legally sell CBD products online, but they can’t advertise them. That’s why people in this industry use several techniques.
When popular methods like Facebook Ads, Instagram Ads, and Google Ads don’t work, the hemp industry turns to SEO or Search Engine Optimization. SEO is responsible for your site getting ranked above other search results on Google which gives you an advantage compared to the competition.
Built-In Blog and Content Pages
Apart from SEO, people that start dabbing into the cannabis industry develop a blog or a page that has content where the recent news concerning cannabis is posted. This content provides an added value to the customers and potential buyers who may be looking for information about the topic.
Use Email Marketing
Since CBD advertising is restricted on social media and search engines, people who market CBD need to be careful about the medical claims they make about their product. Consequently, CBD marketers turn to email marketing which can be a more effective route to get more customers. You can get the email address of your potential clients by offering discounts, free information, and promotions that will help you sell more.
Your online CBD business may be closer to realization than you think if you follow these simple tips in order to start your first CBD online shop and get into CBD marketing. It’s a fact that the CBD market is booming in recent years and it’s expected that by 2024 this business will be worth as much as $20 billion dollars in the US only.
If you’re looking to become a business owner, and your business niche is the hemp industry and selling CBD oil online, fear not – you won’t need as much documentation and licenses as you may think. The licenses needed to start an online CBD store are similar to the licenses and documentation you’d need to start every other business. The only difference will be the particular legalization laws in your state. Make sure you follow those to a T so that you can make the most out of your online eCommerce store.