E-commerce is here to stay. Over the past two decades, this fledgling retail method has become an unstoppable behemoth. If we once considered it to be the future of retail, that time is over — it’s retail’s present.
Now that e-commerce is so popular, it’s crucial that every industry have an online retail component, even CBD. In this article, you’ll learn what it takes to start an online store selling CBD products. We’ll explore the current legal status of CBD, the difficulties you may encounter while operating an online CBD store, and other crucial elements of retail:
- The Legal Status of CBD
- Finding a CBD Wholesaler
- Merchant Processor Considerations
- Advertising Considerations
- Shipping Considerations
Finding a CBD Wholesaler
A CBD wholesaler provides you with the products that you’ll sell to your customers. Few elements of CBD retail are as important as your selection of a CBD wholesaler.
When you search for your supplier, ask yourself the following questions to determine your needs prior to signing a contract:
- How will I ship my products?
- Do I want to have custom products?
- What legal restrictions do I need to consider?
CBD wholesalers offer more than just wholesale CBD products. The best wholesalers can develop custom labels through a white label or private label program, assist your operation with flexible shipping options, and carry a variety of products to ensure there’s always something you can sell legally. Carefully consider your choice of wholesaler to ensure that your needs are being met.
Merchant Processor Considerations
While CBD was made legal many years ago, many businesses remain hesitant to be associated with CBD products. One industry that has been especially slow to change its policies towards CBD is the merchant processor industry.
A merchant processor is a company that facilitates the transfer of funds from a customer to a business. They are critical for carrying out online retail operations, and most every company on the web uses a merchant processor.
Many merchant processors still consider CBD a “high-risk” product category. Because it is still closely associated with cannabis, many merchant processors refuse to work with CBD retailers. But this is quickly changing. Some merchant processors, such as Square and SMB Global, have relaxed their previous restrictions as CBD has solidified itself as a profitable and sustainable market.
When building your site, spend some time researching merchant processors and retail platforms. You want to ensure that your processor and retail engine work together and allow for the sale of CBD.
Advertising Considerations
Like merchant processors, many advertising platforms will not advertise CBD products. While this does not impact your ability to sell CBD legally, it can drastically affect your sales strategies. When you develop a marketing strategy for your e-commerce site, you’ll need to explore alternative advertising methods.
Some of the most successful CBD retailers have used a combination of physical advertisements (billboards, park benches, bus stops, etc.) and non-standard advertising to promote their products. Some of the most successful advertising initiatives have involved influencers and affiliate marketing.
These marketing strategies leverage a local or niche celebrity to tap into their preexisting audience. In the case of an affiliate marketer, the personality would promote products on their own media channels for a commission-based payment. This method is most commonly used for minor celebrities who have not reached major influencer status but still have a dedicated following. Influencer marketing strategies function very similarly to affiliate marketing strategies. The primary difference between the two is that influencer programs are typically contract based and are provided to more popular influencers. The contract stipulates a certain amount of promotion in exchange for the payment given to the influencer.
Influencer-based marketing strategies take more time and research than traditional online advertising, but the additional work makes it more likely you will find an audience that is receptive to your products.
Shipping Considerations
Online retail cannot function without shipping. When you’re shipping CBD products, you’ll have to pay special attention to ensure you are not breaking any state laws and that you are working with a carrier or logistics group that is willing to transport CBD.
Another thing to consider is whether you have the storage space to hold products. Many online retailers choose to be online-only because it does not require them to pay for a physical location. However, many forget that you still have to store products in order to ship them. Thankfully, some CBD wholesalers offer drop shipping.
Drop shipping is when a retailer offers a product that they do not physically have on hand, but that a supplier offers. When the retailer receives the order, the supplier directly fulfills order by shipping it straight to the customer. This is a great way for brand new companies to generate sales prior to securing warehouse space.
The Legal Status of CBD
CBD was made legal by the 2018 Farm Bill. While the bill did not explicitly touch on CBD, it did make the sale of hemp products legal so long as they contain less than 0.3% THC.
Recently, new USDA regulations[Link to New USDA Rules Summary] formalized and adjusted the rules from the original 2018 Farm Bill. These rule adjustments relaxed many of the penalties for failing to adhere to the rules laid out in the original Farm Bill, making it safer for farmers to produce hemp at industrial scale.
When you start an online CBD store, you not only need to remain aware of shifting federal regulations regarding CBD, you also need to stay up-to-date on the latest state laws and regulations[Link to CBD Laws by State]. Some states may have restrictions on the delivery of CBD products to residential addresses, and others have restrictions on where the hemp must be produced. In some of the strictest states, there is zero tolerance for any THC content, restricting which products you can sell to state residents.
As an online retailer of CBD, you need to remain aware of the shifting legal landscape surrounding CBD. Doing so prevents costly mistakes and potential legal consequences from state and local governments.
Start an Online CBD Store of Your Own
Now that you know everything about starting up an online CBD retail operation, you’re ready to kick off your own operation. If that’s the next step on your CBD retail checklist, US Hemp Wholesale is here to help. As the largest wholesale hemp supplier in the United States, we have a wide lineup of products and services to help you meet the needs of your customers. Each of our products adheres to the latest federal regulations, and we have helpful experts on hand to guide you through the process of starting your own CBD retail operation.
Don’t let the CBD boom pass you by! Fill out a vendor form today to find out how US Hemp Wholesale can help you get the products you need for a price you’ll love.