The CBD industry has been witnessing tremendous growth over the past few years due to its amazing health benefits for humans and pets.
However, like any other industry, there are still a lot of challenges that CBD business owners face, especially due to the fact that cannabis is not legal in many countries.
Here is a quick overview of the most common challenges that retailers in the CBD business are facing:
Slow And Expensive Licensing
While many states have legalized medicinal cannabis, there are still significant barriers to entry for people who want to start CBD dispensaries and other related businesses.
According to IHF CBD LLC, some of the costs that business owners need to take care of include:
- License application and maintenance
- Maintaining their businesses without turning gainful profits due to long license application wait times.
- Bearing the application costs and other license-acquisition costs with no guarantee of receiving the license.
All these costs translate to high startup costs for any entrepreneur who is willing to try his or her hand in the CBD industry. Even worse, getting a loan for anything related to weed is very difficult in most states.
Negative Public Perception
Another serious challenge that CBD business owners face is the negative public perception of CBD and other related products. Since marijuana is illegal in most states, most businesses that deal in it or related products are still socially unaccepted.
Most people fail to understand that while marijuana and hemp, for instance, are derived from the same cannabis plant, hemp-derived CBD (which most CBD businesses deal with) has low levels of THC.
This misconception is a challenge that CBD businesses face currently and will continue to deal with even in the future.
Stringent Weed Market Regulation
Weed market regulations are ever-evolving and to operate legally in most states, you have to be up-to-date with a wide range of regulations, which can be a costly and time-consuming task.
For starters, some states’ regulations require that CBD businesses follow certain packaging regulations and track their products from seed to sale.
This means that business owners have to invest in expensive tracking software and meticulous documentation process. Besides, adhering to all these regulations may necessitate hiring more employees, which can be costly to startups.
What’s more, getting quality CBD products on the shelves may require third-party lab testing, which can be expensive to new business owners given that many regions have a shortage of weed-related test labs.
The lab tests themselves aren’t always positive and are associated with long wait times. This means that most products get rejected which is a big blow to anybody who is trying to start a CBD business.
This is one of the biggest challenges that CBD business owners face. To begin with, most credit card vendors are often reluctant to allow CBD businesses to transact through their platforms because of the risky nature of the business.
Business owners in the CBD industry are, therefore, forced to resort to cash-based transactions, which carries with them a lot of risks.
Secondly, credit vendors that allow CBD businesses to use their platforms, tend to favor virtual payment gateways for processing the card payments.
However, due to the perceived high risk of the CBD business, banks or established merchant services are still unwilling to approve these payment gateways or simply charge exorbitant fees for their approval or per transaction.
This dents the profits of CBD business owners and discourages them to use such gateways.
There is a huge opportunity in the CBD market, which simply means that it is attracting more and more investors today than ever before. Although this is the nature of any other industry, the CBD industry is a bit different given that it is highly regulated.
Stringent regulations, for instance, often adds another layer of the uncertainty of small business owners who are trying to navigate the industry.
There you have it: some of the most common challenges that CBD businesses face.
If you have been thinking of investing in the CBD industry, at least now you understand the challenges that you will have to deal with before your business becomes profitable.