There’s no denying that the cannabidiol market is booming, and CBD products are flying off the shelves. Throughout the world, all kinds of people are rushing to get their hands on these products, and businesses that had enough foresight to partake in the CBD movement are raking in profits, especially in the US. But why should they have all the fun? With CBD laws becoming increasingly flexible, the green rush has reached the UK, with a high demand for CBD products. If you’re thinking of getting in on the action and want to start a CBD business UK, here is all you need to know to become a successful CBD business owner.
Table of Contents
What is CBD?
CBD is one of 113 cannabinoids that naturally occur in cannabis and hemp plants. The most famous cannabinoid is arguably THC (tetrahydrocannabinol). This is well known as the euphoria-inducing element of cannabis, often associated with weed/hash due to the high THC levels usually found in street cannabis. CBD (cannabidiol), however, does not produce an intoxicating effect. Instead, it has a range of potential therapeutic health benefits. However, research into its potential medical applications is ongoing.
CBD products are generally created in several steps. First, the raw material must be cultivated and harvested from hemp plants containing less than .2% THC. CBD oil is extracted from the plant using a variety of methods to isolate that compound only.
The extracted CBD oil can be sold as a concentrate or used to infuse various products. Some of the most common CBD products on the market today include sublingual tinctures, infused edibles and topicals.
Types of CBD products
Industry experts predict that the CBD market will reach $42.7 bn in sales by 2024. This would be a significant surge from $1.9 billion in 2018.
Needless to say, society in the UK is growing more open-minded and accepting of CBD. Many individuals are turning to it for pain relief, stress management, and better sleep.
Some trends the CBD market might experience in the near future are increased potency of products, more brick-and-mortar CBD shops, more pharmaceutical CBD products, and more access to products online through CBD websites and e-commerce shops.
In fact, CBD online sales currently account for 60% of the sales channels.
The CBD industry is introducing new products all the time. If you're looking to start a CBD business, you will have a wide range of product types to consider selling.
Currently, the most popular CBD products are:
- Sublingual tinctures: A sublingual tincture is CBD oil in a small bottle with a dropper. You ingest these products by placing them under your tongue and waiting for the oil to absorb.
- CBD edible gummies: CBD edibles are a rapidly growing sector of the industry, including baked goods, candies, and foods. They have faced significant regulatory scrutiny from the US Food and Drug Administration (FDA) but remain a commonly found product.
- Vape concentrates: Vaporiser concentrates, such as CBD oils and waxes, are another common product.
- CBD topicals: These products target a localised region of the body when placed directly on the skin. CBD topicals include gels, creams, and sprays for aches and pains.
- Capsules and pills: Many patients who experience seizures or digestive issues take CBD capsules or pills to treat their conditions.
- Pet CBD products: CBD isn’t just for humans. Animals can also experience calming effects when given small doses, and many businesses offer CBD products for pets, like dogs or cats.
You have nearly endless options when choosing what CBD products to sell. Whether you want to concentrate on one particular product, such as CBD oil, or sell a range of products, the choice is up to you.
CBD market in the UK
The UK CBD market is growing at a phenomenal rate. Surveys conducted in May and June 2019 by Dynata and YouGov indicate that between 8- 11% of UK adults, respectively – approximately 4-6 million people – have tried CBD.
Whether it is just retail or CBD wholesale, now seems to be the time to get into cannabidiol.
The CBD industry’s potential has prompted many people to explore how they can launch a CBD business. The industry is not without its challenges, especially surrounding the evolving legal landscape. But it's a great opportunity that shouldn't be missesd.
Are CBD products legal?
While certain cannabis products may be illegal, CBD is legal if you follow the rules. The UK government and governments worldwide still consider cannabis and products containing significant THC, a Schedule 1 drug. The Drug Enforcement Administration does not recognise any legal use of CBD in the UK for these products and believes they have a high potential for abuse.
In order to be legal in the UK, CBD products must contain less than 1 mg THC and be extracted from hemp with less than .2% THC.
In the UK, many counties have passed their own laws contradicting these statements. We will note that the DEA continues to classify CBD under Schedule 1, except CBD found in the epilepsy medication known as Epidiolex.
Epidiolex is a prescription-based CBD medication used to treat seizures brought on by severe forms of epilepsy. Currently, it is the only CBD product approved by the FDA (Food and Drug Administration).
The FDA is still considering where it stands on CBD. Still, because only one product has been expressly approved as a medicine, other CBD products cannot be advertised or represented as having health benefits.
Steps you need to take to start a CBD business UK
It’s time to get down to the nitty-gritty – how to start a CBD business UK.
Starting a CBD business includes all the hard work and effort of launching any other company, in addition to the uncertainty of a shifting regulatory landscape (and all the issues that accompany it).
However, in a fledgeling industry projected to undergo explosive growth, the heavy lifting today might be well worth it tomorrow.
In order to start off on the right foot and set your business up for success, you need to take the following steps:
- Do your research
- Know CBD laws and regulations
- Find your niche
- Create a business plan
- Have an emergency plan in place
- Register name and domain
- Find a reputable supplier
- Find a bank and payment platform willing to work with you
- Choose an e-commerce platform and develop your website
- Market your company, but be careful about what you say
- Stay in the know
The list may seem long and labour-intensive, but it covers everything you need to do to kickstart your business.
Do your research
It is essential to do your research in order to determine whether starting a CBD business is a lucrative option for you. A clear, concise plan will make things less stressful and much more straightforward.
Firstly, you need to research what the startup costs will be. Starting a CBD business can be pretty expensive. You need to estimate your startup costs before starting your business to allocate and use funds wisely, avoiding unnecessary fees and greatly reducing the cost of starting your CBD business.
Next, you’ll need to find out who your target market is. This can be quite tricky with the CBD industry as so many people from different walks of life use CBD products. However, you have to narrow it down and decide on your target market to meet your customers' needs better. Conduct research to find out exactly who your customers are and provide them with precisely what they need and want.
Know CBD laws and regulations
If you want to start a cannabidiol business in the UK, it is essential that you abide by all the laws and regulations surrounding CBD.
Currently, the laws on cannabis in the UK are:
- CBD oil must be extracted from a hemp plant that contains less than .2% THC
- Companies may not make medical claims or market CBD as a medicine
- Medical cannabis is legal in the UK as of 2018
- CBD oil that is sold as medication needs the correct licence from the Medicines and Healthcare products Regulatory Agency
- CBD products may not contain more than 1 mg THC per product
- The amount of CBD and THC in a product must be on the label
- There must be a complete list of the manufacturer's information and ingredients on the packaging
- It is illegal to sell CBD flowers and buds
- New CBD food and drink products must file a Novel Foods Application starting in February 2020.
- You need a licence from the UK home office to produce CBD
- CBD can be used in cosmetics if it meets the criteria
In a nutshell, CBD is legal in the UK as long as it meets the above requirements.
Find your niche
When deciding on your niche, consider all the research you did. You'll want to sell products that will best benefit your customers. There are various niches in the CBD industry you can choose from, such as:
- Traditional CBD products (CBD oil, edibles, topicals)
- CBD for pets
- CBD for libido
- Manufacturing CBD
- Distributing CBD
Choose a niche you know you can succeed in and are passionate about. CBD is super popular, so you're bound to have customers no matter which niche you select.
Create a business plan
No business can truly succeed without a well-thought-out, all-encompassing business plan. Think of it as your blueprint. It covers all aspects of your company, and helps you:
- Outline each stage of your business
- Identify any potential weaknesses
- Make secure investments
- Reach goals
- Get funding
- Stay on top of legal or regulatory changes
Drawing up a business plan is much easier than you may think. A business plan outlines the path you set for your business, describing each step you want to take to grow as a business. To make it even easier, you can divide it into smaller plans for each category, such as sales and marketing.
The following information should be in your business plan:
- Company summary
- Market research
- Management
- Product selection
- Unique selling points (USPs)
- How do you plan to handle competition
- Goals
- Objectives
- Possible issues and their resolutions
- Financial planning
With a good business plan, your company is already headed in the right direction.
Have an emergency plan in place
Dealing with regulatory uncertainty is never easy. Especially when you’re in an industry that’s still grappling with misleading social stigmas.
A cloud of uncertainty has descended over the larger cannabis industry, and it’s unlikely to go away anytime soon. This shouldn’t thwart your commercial ambitions to launch a thriving CBD company.
However, you should be aware that it won’t always be easy to be a part of this still-maturing market.
It’s best to have an emergency plan in place in the event that your financial partners bail on you. Many financial institutions and banks won’t do business with cannabis companies, for example. This means you can over-depend on payment processing providers, who may pull the rug out from you at any moment.
Be able to accept a wide variety of payments from customers. This is the only surefire way to establish financial sustainability. At least until banks and traditional financial institutions embrace the cannabis/CBD industry.
Register name and domain
One of the most critical tasks in launching a business is selecting and registering a business name. As the first thing a customer sees, your company's name has a significant impact on how people will perceive it and who it will draw in. Your company's name should encapsulate what it stands for and draw loyal clients.
Once you have a name for your company, register a domain and create social media profiles matching your business name.
You must come up with a name and register it as quickly as possible. You will need it for several company-related procedures, such as opening a bank account.
Find a reputable supplier
Whether you're creating your own CBD products or reselling another company's, you need to find a reliable supplier.
To ensure that the CBD products you will be selling are legal and high quality, you need to find out more about the supplier's manufacturing process, where they get their CBD, cultivation methods, extraction methods and whether they follow laws and regulations. Fortunately, it is quite easy to get this information.
You will find all this information in the Certificate of Analysis.
CBD white label
If you're considering getting involved in white label with the CBD industry, you first need to understand more about cannabinoids and the products that utilise them. We have shortlisted approved suppliers and can help with:
- CBD tea and coffee with a variety of blends
- Tinctures of multiple flavours
- Edibles, vegan, vegetarian and standard infused gummies
- Soft gel capsules
- Skincare range of 345 products from cleansers and toners to facial creams and luxury oils
Use our contact white label form and start your business immediately.
CBD wholesale
Just like other product wholesalers, CBD wholesalers deal primarily with bulk orders, typically for online stores. There are many CBD wholesalers in the UK. These wholesalers allow CBD businesses to purchase products in bulk at a discounted rate that they can then sell directly to consumers. These wholesalers sell a range of different CBD products, such as tinctures, oils, edibles, and more. The more products a CBD wholesaler supplies, the more opportunities they have to earn revenues and build a bigger clientele base.
CBD wholesalers sell to various CBD retailers and businesses for onward sale. By simply selling CBD products in bulk for a lower unit price, wholesalers can avoid spending time and money preparing goods for sale to the end customer.
The demand for CBD wholesalers is rising exponentially, so now is an excellent time to enter the UK’s CBD business.
If you’re considering getting involved with CBD wholesale, use our contact CBD wholesalers form to get started.
Find a bank and payment platform willing to work with you
Traditional banks see CBD businesses as “high-risk” businesses. This means that the systems in the bank cannot cost-effectively manage the risk, causing these banks to refuse to work with companies in “high-risk” industries. Basically, these banks don’t want to associate themselves with what they see as controversial products that are relatively new.
There are a number of obstacles you will have to face financially when trying to sell products as a “high-risk” business, and it can be tricky to find a suitable bank willing to work with a CBD company. But it is not impossible.
When applying to a bank, put your best foot forward and provide all requested documents they require. You may need to show:
- ID
- Proof of address of owners
- Business registration
- Proof of where you purchased your wholesale products from
- Proof that CBD Products contain no more than 1 mg of THC
Despite a few banks declining applications from CBD companies, a number of others are happy to work with companies in the CBD industry. Try applying to smaller or online business banks, as they are more likely to approve your application.
Another thing you might want to consider is using an online payment processor such as LumiPay.
LumiPay
LumiPay specialises in “high-risk” industries, such as the CBD industry. It securely authorises credit card details and direct payments for online businesses.
The online payment processor looks after the business and customer’s security, acting as an interface between the company website and its acquirer. Think of LumiPay as the middleman, carrying out payments securely and quickly, simplifying your company’s role when it comes to any transaction.
There are many reasons to use an online payment gateway:
- It’s easy: Setting up your own payment system can be confusing, time-consuming, and require constant maintenance. By using a payment gateway, you will save time and effort.
- Security: The most important reason to use a payment gateway is security. An online payment gateway will ensure payment processing is secure and decreases the chance of fraud taking place. LumiPay uses Payment Card Industry Data Security Standards (PCI DSS). It lists down all the guidelines needed for secure payment gateway processing.
- Experience: Online payment gateways are great for customer satisfaction, making them more likely to purchase from your company again. Global payment preferences and convenience will keep them coming back.
Choose an e-commerce platform and develop your website
Next, you’ll want to set up a website. There are plenty of services that will help you register a domain name. However, tools to build your site are going to be even more important.
Companies like Shopify and Squarespace are well-known providers of e-commerce websites that are beginner-friendly, which is immensely helpful if you’re a first-time entrepreneur. Take some time comparing the benefits of different platforms: who’s got the easiest store to set up? Where can you get the best deal on credit card processing fees? How hard is it to change the site if you decide to expand or switch to a new product line?
Once your site is online, you’re going to have to promote it. There are literally libraries full of books on marketing schemes, and a lot of how you market and to whom will depend on your own personality and drive.
Whether it’s through word of mouth, Facebook posts, Google Ads, or something else, you’re going to have to market a LOT. But the good news is that once you get a few sales under your belt and the (hopefully) positive reviews start flowing in, it’ll all be worth it.
Market your company, but be careful about what you say
You need to be extremely cautious when marketing CBD. Many businesses make the mistake of promoting CBD as a miracle substance for health conditions like arthritis, Alzheimer’s disease, and even cancer. However, the FDA requires that businesses refrain from making disease-curing claims that are not backed by reliable and legitimate research.
Since cannabis has not been legalised on a federal level, reputable research on the purported benefits of cannabis is more limited. Making unsubstantiated medical claims about your CBD products is illegal and could put consumers at risk.
It is in your best interests to avoid making any medical claims. Instead, shift your language to the quality of your CBD and the potential benefits of incorporating CBD into a wellness routine.
Since advertising CBD products is restricted, you may need to employ a marketing company with a track record in CBD. The marketing company needs to produce engaging content, a large social media following or access to people with the influence you will need. Influencers can be key to success, but finding one as invested in your business as you will be difficult.
Stay in the know
Keep a close eye on CBD-related news to keep your finger on the pulse. Know which athletes, celebrities, and prominent influencers are lauding CBD products in order to capitalise on their social buzz. This is essential in starting a CBD business.
Furthermore, changes in the law are constantly happening, and it’s crucial to stay on top of them. Even the guidelines for promoting on social media platforms like Facebook are subject to change at the drop of a hat. Tenuously regulated and subject to constant changes, a commercial danger exists in the larger cannabis-product industry.
Key takeaways
Starting a business is always tricky, but with CBD, you have a lot of things going for you. You have a product with a buzz surrounding it that’s only growing stronger. You also have the opportunity to establish yourself as a reputable source. Currently, the CBD world is a lot like the Wild West, so you need to rise above. On top of that, it’s a product built for online retail. And there has never been a better time to operate online.
So what are you waiting for? Get in touch with us today.
