If you are wondering about how to open a CBD retail store, you are not alone! There is indeed no denying the fact that the CBD industry is growing fastest than ever.
CBD, known as cannabidiol is extracted from cannabis or marijuana plant. It is known as a naturally occurring compound that has gained momentum due to the therapeutic properties it has to offer!
Unlike common assumptions, CBD does not induce high in the consumers. This is one of the many reasons responsible for the rise in demand for cannabidiol products.
I know what you might be thinking. Is CBD business worth it? The answer to this question is fairly YES!
As per a recent analysis, 40 percent of US adults are adamant to try CBD products that signal CBD retail profitability. That is not all yet!
The number is expected to rise as support for marijuana legalization continues in the US. The cannabis industry is expanding right in front of our eyes. If you look around, CBD is everywhere.
While it was primarily raved about among young individuals alone now, the consumer demand is representing a shift in perception across generations.
Popular CBD Products in The Market
As the technology is consistently evolving, manufacturers are discovering more and more incredible ways to produce CBD products.
The widespread is such that CBD products are becoming global among other fast moving consumer goods.
But wait! Even though CBD is gaining momentum, your CBD business plan must include a careful selection of CBD products as per the consumer demographics to succeed. The list of most profitable CBD products is as follows:
CBD Tinctures and Oil
The versatility of CBD oil and tinctures has made it a diverse category of its own. CBD oil comes in many different forms and thus is diverse in its useable entity as well.
CBD tinctures are drops of concentrated oil that are dropped under the tongue and get absorbed in the mouth.
Their potential to provide significant relief against pain, anxiety, nausea, and epilepsy has made these products constitute 59% FMCG segment of the US market by 2019.
CBD Beauty Products
As CBD users are expanding worldwide, companies have started to put life into the idea of CBD beauty and skincare as well.
In addition to the benefits mentioned earlier, CBD is said to have anti-inflammatory properties for the skin. It is marketed as highly beneficial for the treatment of acne.
Among all the beauty products infused with Cannabis, CBD oil, lotion, balm and cream have sparked the internet among US consumers. As per the overall analysis, Oils and balms made up 40% of the FMCG in the US market by 2019.
How profitable these products can be? Let me tell you these CBD-infused cosmetic products are now being sold at Sephora. The combination of effects it proposes is tantalizing for the audience.
The idea of bath bombs bringing much-needed relaxation and pain relief, CBD lotions providing hydration and clear skin, and what not! The industry is consistently expanding and is highly profitable.
Let me be honest with you! Although cannabis beverages have not reached the height of CBD cosmetics, however, this domain has now started to get exposure.
As evidenced by the recent report on CBD, several bars in the US provide CBD-infused cocktails. While these beverages are still in their infancy phase, with widespread legalization on its way, this domain could potentially expand quickly.
Moreover, many secret hubs also offer CBD-infused Coffee, which is ideal for inducing calming effects among people. As per the recent statistics, CBD coffee and tea have taken over 45% of the US markets.
Want to display something unique but not chocolates? No need to worry as CBD-infused gummies are becoming one of the most popular CBD products across the globe.
With the legalization process still in progress, gummies are not readily available at every retail store. This signals a great potential to excel by keeping them readily available in your locality.
Moreover, if you are planning to initiate a CBD business in 2021, gummies are one of the most prevalent demands for those looking for a treat.
As evidenced by the research report in 2020, the global CBD gummies market is expected to reach up to 13.9 billion USD by 2028.
How to Open a CBD Retail Store: 12 Simple Steps
Starting a CBD business sounds like a fun and profitable endeavor, but there are certain things that you need to know before jumping on the bandwagon! Read the steps ahead to know more about it.
Draw up a business plan
Jumping into the field without a navigating business plan can cost you a lot. Therefore, a cohesive business plan can act as your navigator in staying updated with regulatory laws, consumer demand, new business opportunities, etc.
Moreover, a well-developed business plan can also help you get financial supporters and CBD retail store insurance for your business.
Get deep into market research
By starting with market analysis, business name, knowing about industry size, competitors and other market variables can help in flourishing your business against your competitors.
Understanding the underlying mechanism of the market could also help you in making informed decisions about the product range, pricing, positioning, etc.
Check out your finance options
Determining your financing in the CBD industry is a tricky process. But you can always make it work by being prepared for the unplanned!
Begin with breaking down your finance requirements into multiple phases, then look into how much cash you’ll need to launch each operation.
Subsequently, you may look into CBD retail store costs and how much time and sales are required to head in a positive direction.
Organize your business licenses
As mentioned earlier, CBD is a high-risk business due to its regulatory laws.
Thus as per the regulations within your region get all your licenses and documents aligned together before you formally inaugurate the business.
Choose your channels
With more and more people jumping into the CBD business, it has become even more important to choose influential channels for marketing. Websites, social media, and collaborative campaigns are a few examples to name.
Define your branding
Let me tell you, only strong branding can yield the most money out of marketing. To put it simply, focusing on the brand description, logo, packaging and other essentials make your brand unique to the audience.
Thus, it needs to be focused and seem relatable to the audience. With respect to CBD, unique branding could be associating it with soft, soothing, and healing properties rather than branding it as non-addictive.
Think about the customer experience (target audience)
It's nearly impossible to reach out to every demographic, thus mapping out who you are going to cater to is important.
Determining the target audience would navigate you about the type of packaging and advertising strategy you may need.
Find your location
After knowing the target audience, reach out in their geographical proximity to find an appropriate and appealing location for your store.
Build your retail tech stack
Retail involves a lot of scattered parts that need to be run into a cohesive system.
Thus building a retail tech stack for your business can help reduce the staff, meaning that more focus can be made on providing excellence in their designated role while other tasks are handed via tech programs.
Start marketing your store
Once you have sought out other operations, focus on acquiring customers.
Unlike the assumption that CBD is in demand and common thus, people will come running after it, you need to draw the right marketing plan to attract the audience.
Prepare a soft opening
Prepare for a soft opening via affiliate and influencer marketing.
It is so because digital influencers hold power and impact over a broad customer base that you didn't have before nor were they aware of your retail store.
Get ready to launch your store
Once you have dealt with all challenges and procedures, it’s time to formally inaugurate your Cannabis store and generate customers!
Legal Obligations: Understand and Obey
- As per the regulatory boundaries proposed by FDA, businesses in California and Washington need to get themselves registered within the state to get CBD retail license.
- Only with the access of a retail license would you be allowed to lawfully sell CBD products.
- If you plan to transport CBD products within the state, you need to get an additional federal transport license as well.
- If you wish to purchase from wholesalers for your retail store, you need to get a reseller license as well which may then legally permit you to ship the products and resale.
- Common trends in marketing and labeling the product to be the cure of a particular disease are strictly prohibited in many US states.
- Many US states such as California, Michigan, and Washington also prohibit and restrict the use of smoke-able hemp which vaporizes into the air. It is so because smoking and vaporizing CBD is hazardous to health.
- Failure to follow the state laws for the retail store may result in administrative penalties, product bans, and many other consequences.
Gain Competition Advantage
While many retail stores rely on the manufacturers and product labels alone, you can gain an edge over other competitors by running a third-party lab test to ensure the remarkable quality of your products.
Sounds interesting, right? Many states in the US are now emphasizing product safety features, thus recommending sophisticated testing before the product makes its way to the shelf.
To further surprise, this process would not only validate your business but could also signal the transparency and authenticity of your store.
Finding the right banks that accept CBD business in the USA for this “high risk” business can be quite challenging.
Since CBD is a questionable niche, therefore many banks do not cater to CBD companies. The only gateway is to find CBD-friendly banks that may support your payment process.
Just like banks insurance for CBD companies is another challenging task to obtain.
While having an insurance plan for the business is extremely vital, thus never hesitate to look for CBD-friendly insurers until you find one.
Payment processing hasn't been easier for CBD businesses either.
Without a proper processing mechanism, the transfer of money from the customer’s bank account to that of your business account becomes almost impossible
Get prepared to do extra struggle to maintain capital for your business. Securing extra finances can be stressful with high-risk businesses.
But no need to worry, as there are some investors and friendly bank that doesn’t disappoint!
Though stepping into the CBD industry is a tough battle, however, this is an interesting product indeed.
While efforts for its legalization are paving the way to the future, launching your own CBD business at this time, can make you part of its great revenue team!