Wholesale hemp flower could be a key part of your business
Business owners and entrepreneurs are reaching out to wholesale CBD companies to include hemp flower and other related CBD products as part of their product offerings, but is it the right business for you?
The simple fact is CBD has proven to be a moneymaker and seems like it will continue to be for the foreseeable future. According to Grandview Research, in 2018, the global cannabinoid market was valued at $4.6 billion and is expected to grow at a compound annual growth rate of 22.2% from 2019 to 2025. Obviously, this is a huge marketplace! However, does it make sense for the average small business owner or entrepreneur to enter into this market?
In today’s article, we’re going to discuss the benefits and pitfalls of wholesale hemp flower booming marketplace and what you need to know to get started in the CBD business. We will suggest a reputable hemp company with a great wholesale program for you to contact and give some tips to help jumpstart your new business venture.
We’re going to kick things off with benefits.
Benefits of a wholesale hemp or CBD business
The CBD market is an emerging market with a great deal of potential for existing business owners seeking additional products to offer, or for those interested in starting a new business venture. Either way, CBD might just be a perfect choice.
Let’s look at 4 key benefits.
There is money in selling CBD products. For example, the profit margins on hemp flowers are around 50%! And with the average sale around $100, that’s a net profit of $50.00
- Helping people
CBD is making a real difference in people’s lives. Owning a business that contributes to helping people is a business worth having.
- Low cost of entry
It doesn’t take much upfront cash to get started in the CBD business. We’ll touch more on this further down, but realistically, a few thousand dollars can get you started.
- Minimal inventory
You don’t need much inventory to get started in the hemp or CBD business. In fact, only a small amount of inventory is needed.
Not that we’ve touched on the key benefits of getting into the CBD business, it’s time to address the potential challenges.
State law versus federal laws
Of course, it’s important for any business owner to obey the law. Depending on where you live, hemp flower may exist in a kind of “gray area.”
You see, in 2018, the production and marketing of Hemp were made federal legal via the 2018 Farm Bill. However, although federally legal, states have something else to say.
Some states allow retailers to sell CBD and hemp flowers freely but impose testing or labeling requirements. Other states prohibit the distribution, marketing, sales, and use of CBD or hemp flower (smokable hemp). You can see a full breakdown of states where CBD is legal, published by Leafly.
It’s up to each business owner to learn the state and federal laws, consult an attorney and move forward accordingly.
Banking, social media & the legal gray area
Even if CBD, hemp flower, or anything related is legal, that doesn’t mean you can easily run a successful hemp business. The state/federal ‘gray’ area doesn’t make things easy for resellers. It can be challenging to open a bank account or accept credit card payments. While not easy, it’s not impossible. There are options available.
It’s up to you to investigate the options available to make the best decision. It’s important to plan in advance for how you’ll handle the flow of money, before investing in the business.
You’ll also need to be a bit more creative about advertising than with other products. Both Facebook and Twitter largely ban openly advertising hemp products, but sometimes there are workarounds. You’ll need to be flexible and use organic marketing techniques (word of mouth, etc) to promote your products.
Finding a wholesale hemp flower partner
It is much easier to find a CBD wholesale partner than it was just a year or so ago. However, it’s up to you to perform your due diligence to find a reliable and trustworthy partner. The last thing you want is to invest time and money with the ‘wrong’ wholesale CBD/hemp company. Below are some key points to focus on when researching CBD companies.
- Review: This is a pretty obvious one, but reviews can tell you a lot about a company and its products and service offerings. Make sure to really dive into reviews to read what others say. Also, take notice of whether the company responds to negative reviews. Everyone makes mistakes; it’s how a company handles its error that makes all the difference.
- MOQ (minimum order quantity): Some wholesale programs require their customers to order a certain number of products or spend a set dollar amount each month to do business with them or qualify for discounts. So, those on a tight budget might not have the ability to meet MOQ requirements.
- COA (certificate of analysis): A COA is a document issued by an accredited third party laboratory that outlines the makeup of the CBD products and any possible contaminants. This includes the percentage of CBD and other cannabinoids (including THC) and the terpenes profile, as well as contaminants, heavy metals, etc. It is vital to conduct a thorough review of a potential vendor’s COA’s during your due diligence.
Choosing wholesale CBD & hemp flower products to sell
The CBD market has become a competitive market. And while that’s not necessarily a bad thing, it’s something that a potential CBD business owner needs to be aware of. Like all competitive markets, to be successful, business owners should focus on what makes them different than their competitors, and one way to do this is with the products being offered.
Existing businesses like to stay with what works, and CBD companies are no different. The vast majority will sell their CBD tincture and other similar oils but may be missing the boat on other items like Delta 8 or hemp flower. Both of these products are getting a lot of attention in the market and might be a good entry point for a new CBD shop owner or someone interested in expanding their product offerings.
Hemp flower, for example, is gaining traction in the marketplace because of its effectiveness and versatility compared to CBD oil. Hemp flowers are unprocessed; they will have a full profile of cannabinoids, terpenes, flavonoids, and other compounds like chlorophyll. Depending on the extraction method, CBD may not contain this same full profile. Hemp can be vaped, smoked, used in cooking, and to make tinctures. CBD oils do not have the same level of versatility.
Of course, this is not to say one shouldn’t offer tincture oils or CBD isolate products, but maybe focus more on emerging market products. It’s also important to note that emerging product sales typically lead to larger profit margins — another plus.
Really, this section should probably be at the very top because determining a working budget is going to dictate so much. Many of the areas shared already will be determined by how much working capital is available.
The great thing about the CBD business is that it can be started with a relatively low budget. For example, Mr. Hemp Flower has a good reputation for its quality products and competitive wholesale hemp flower prices, with a point of entry around $500.
In addition to inventory, there will be other business costs that need to be taken into consideration. One such cost is a marketing budget.
Sometimes business owners forget to include marketing into their budget calculations, and this can prove to be a costly mistake. You can have the greatest product in the world, but you still need to sell it.
When doing your due diligence, make sure to look at the different marketing opportunities available and dedicate a portion of your budget to marketing.
Realistically, a $500 – $1000 marketing budget should get you started. These funds can help with:
- Store signage
- Magazine advertising
- SEO (for online stores)
- And many others
So make sure you don’t forget about this important piece of business.
Can wholesale hemp flower work for your business?
Getting into the CBD business can prove to be a moneymaker for many would-be entrepreneurs. With a sound plan, due diligence, and some hard work, who knows what could happen.