The CBD industry is projected to hit $59.3 billion in sales by 2030. Despite its increasing popularity, running a business selling CBD products is not without its complexities. In addition to all of the standard issues small business owners face, CBD sellers must also contend with a number of challenges, from regulatory loopholes to bans from top payment processors.

What is CBD?

A compound found in hemp and cannabis plants, Cannabidiol (CBD) is a popular ingredient in a variety of products. These products are purported to have therapeutic and health benefits, ranging from edibles to cosmetics and tinctures. Unlike it more popular cousin, tetrahydrocannabinol (THC), CBD, does not produce a feeling of intoxication because it is obtained from industrial hemp plants with low levels of THC.

Federal and State CBD Regulations

The 2018 Farm Bill legalized the commercial production of hemp in the U.S., allowing for both the farming of industrial hemp and the legal sale of hemp-derived CBD products. To be approved by the USDA, the hemp used to produce CBD must contain less than 0.3% of THC. In fact, any cannabis plant with more THC is classified as a marijuana plant, and stronger regulations apply.

However, 15 U.S. states do allow recreational cannabis use and 36 states allow it for medical use. Therefore, CBD may be produced from marijuana plants (the 0.30% THC threshold no longer applies) and sold within these states, though interstate commerce is still illegal.

To complicate matters, the FDA has only approved one CBD-based medication, Epidiolex which is used to treat seizures. Because of this, no other CBD brand is permitted to make any health claims regarding their products. The FDA also forbids the addition of cannabinoids into food or

In 2022, the FDA sent out a number of warning letters to companies selling CBD products that could be easily confused with traditional foods or beverages which may result in “unintentional consumption or overconsumption of CBD.” Currently, FDA regulations are a work in progress, leaving the evolving CBD industry in a gray area where companies must avoid marketing the health benefits of their products, while also holding their breath to what new rules will be put in place.

Some industry professionals predict a change in labeling requirements; for instance, some sellers are already using the term hemp extract on product rather than CBD, but nobody is certain how requirements will change in years to come.

Though there are no federal age limit requirements to purchase CBD products, some states require you to be 18 or 21 to purchase it. If sellers want to ensure they are selling to customers of a legal age, they can install an age verification checker such as BlueCheck to reduce the risk.

Shipping hemp and CBD products internationally is another challenge for a growing business. For instance, Sisters of the Valley endured a painful Etsy store closure in 2016, but they have since pivoted into two storefronts to engage with their U.S. and international customers. One sells CBD products and a new Etsy shop sells hemp-only products. The rules vary by country and credit card processors such as Square limit the sale of CBD products to certain countries. Sellers can expect a steep learning curve when operating a small CBD business that ships globally.

Sisters of the Valley’s Etsy store was closed unexpectedly in 2016. They have since opened two storefronts off the platform to sell their CBD tinctures, soaps, oils and salves.

Sourcing CBD

Though some business owners may have the expertise to grow their own hemp plants, many others will buy the product from a reputable seller, thus avoiding the headaches that come with crop management. Once the hemp is acquired, sellers can purchase the plant and extract the CBD oil at home or outsource extraction to another company.

Learn about a CBD oil supplier’s manufacturing process before choosing; some sellers derive their product from hemp seeds, which contains very little CBD as opposed to the leaves and stalks of the plant. When purchasing oils, the supplier should be able to provide you with the precise levels of THC, CBD, and other ingredients in the product. You can ask for a COA (Certicicate of Analysis) from the testing lab if it is not readily available on the seller’s website. As always, make sure its authentic and not Photoshopped.

Depending on your preferences, you may seek out either CBD isolate, a concentrate with only CBD and no other cannabinoids or terpenes (which create the plant’s flavor profile, aroma, and specific effects), or full-spectrum CBD. The latter does contains other cannabinoids and terpenes, and some research shows that the presence of other ingredients in a full-spectrum hemp extract provides an “entourage effect” with more significant results.

Types of CBD Products

CBD sellers focus on a number of different products, each with its own application. Some are ingested, while others are inhaled or applied to the skin. The most common products are:

• CBD edibles and drinkables include baked goods, gummies, lozenges, and other foods. This group tends to be the most heavily scrutinized by the FDA.
• Sublingual tinctures are oils that come in a small bottle with a dropper. They are meant to be placed under the tongue, allowing the CBD to absorb into the body. These are some of the most popular CBD products.
• CBD topicals are health and beauty items such as creams, balms, and sprays applied directly on the skin.
• Vape concentrates may come in the form of CBD oils or waxes that can be used with an electronic device for inhalation.
• Capsules and pills may be taken with the hope to relieve digestive issues or stave off seizures.
• Pet products are another category that CBD sellers may focus on, offering its to dog and cat owners seeking its reported calming effects.

Marketing and Selling CBD Products

CBD merchants must avoid making claims about their own products, and instead must make vague comments about CBD in general. For sellers who are passionate users of their own products, this can be understandably difficult! Specifically, they should avoid using words like relieve, aid, or enhance. Sellers must also make an FDA disclaimer on their website and product labeling: These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.

Though CBD has become more mainstream in the last several years with stores like CVS and Walgreens carrying products, some major online platforms like eBay, Etsy, and Amazon prohibit the sale of CBD. As a result, successful CBD businesses must rely on their own website or brick-and-mortar store to bring in customers. Social media posts must be organic and fit the guidelines for each platform.

Paid social media ads that make false claims can put sellers at risk for account suspension or, worse, a total ban. Instagram and Facebook will allow you to advertise hemp-based topical products, but you cannot have any mention of CBD in your ad, your product labels, or anywhere on your website. This also includes customer reviews; business owners must take a close look at what their customers are saying before making them visible on the website to make sure they aren’t making any health claims.

Payment processing is another huge concern for CBD sellers because their business falls into a “high-risk” category (along with others like gambling, vaping, and firearms). PayPal, Amazon Pay, and Stripe do not support the sale of CBD products. Square and Shopify however, do have programs for CBD sellers who meet their criteria. There are a number of other high-risk payment processors that are willing to work with CBD merchants, such as Big Commerce, Easy Pay Direct, Payment Cloud, and PayKings. Sellers should do their research and read reviews before choosing a payment processor.

Challenges for CBD Business Owners

In summary, if you want to sell CBD products, you should be aware of the challenges you’re facing. Among the main issues are:

• CBD must be carefully sourced from reputable sellers with verified laboratory testing.
• State and federal regulations regarding selling CBD products limit the claims you can make in regards to a product’s effectiveness.
• Some popular payment processors are unwilling to work with CBD sellers.
• Many banks and insurance companies are hesitant to do business with high-risk CBD companies, causing the rates to be higher.

This is a highly-regulated industry that is still evolving. CBD sellers that are up for the challenge may be able to carve out their share of a rapidly growing market.