CBD Business Types: Wholesaler Vs. Retailer
CBD business types – There are many ways one might enter the cannabis space, the most common of which are CBD wholesalers and CBD retailers. But what is a CBD wholesaler? And what is a CBD retailer? Finally, which is the best option between wholesaler vs. retailer when starting a CBD business?
Things to Consider When Starting a CBD Business
CBD is an incredibly lucrative industry. Countless businesses and shoppers are interested in buying specialized CBD products. As such, those who can reliably secure quality products can generate a considerable profit in the space.
However, one must understand the complex nature of the hemp industry to launch a CBD business successfully. For example, CBD is only legal if sourced from hemp, which guarantees no more than 0.3 percent THC content in the product. This is crucial as the US government considers anything above 0.3 percent “marijuana” and therefore federally illegal. As such, companies must always source their CBD from reliable distributors with clear proof of federal product compliance.
Moreover, labeling and product packaging must also be federally compliant, including information about ingredients, cannabinoid levels, net weight, and the manufacturer’s name and address. Labels should also include an FDA disclaimer and avoid any medical claims whatsoever. Finally, some areas require scannable barcodes that consumers can use to determine things like batch numbers, production and expiration dates, and Certificates of Analysis.
CBD businesses must meet all regulatory requirements in their distribution areas. In addition to compliant products, branding and packaging must also be on point. As such, it may be wise to hire a hemp industry consultant to ensure consistent CBD business compliance and offer targeted advice related to a specific business model.
CBD Business Types: Wholesaler Vs. Retailer
The two primary ways to sell CBD products to the public wholesaler and retailer, both of which are advantageous for different reasons. Companies may choose one or both methods to sell their CBD products and clearly outline these strategies in their business plan.
What is a CBD Retailer?
A CBD retailer is someone who sells CBD directly to the public. This business-to-consumer (B2C) model is ideal for those who wish to interact directly with the end-user. They are the final link in the supply chain, focusing closely on marketing and public relations.
CBD retailers acquire their products from wholesalers or manufacture their own products in-house. They then sell relatively small quantities to the public through e-commerce platforms, boutiques, and other physical locations.
Notably, retailers dictate a product’s final cost, giving them more control over product margins and ROI. However, they must also pay for things like marketing and shelf space and invest more effort into product promotion and user experiences.
Importantly, hemp CBD laws vary by location; those who operate in specific areas should always refer to local regulations before selling CBD products in those locations.
What is a CBD Wholesaler?
A CBD wholesaler is someone who sells items in bulk to retailers. Wholesalers generally design and produce the products, then sell them at a discounted price for bulk purchases – the larger the order, the cheaper the cost per item. Consequently, they may turn a profit quicker, especially considering the money they save on things like marketing and retail space.
Importantly, most wholesalers don’t spend excessive time and money on promotions and public interaction. Instead, they spend their time managing the logistics of the CBD supply chain. They must also oversee manufacturing and inventory and establish clear expectations for all members of the supply chain. There are many moving parts here, and wholesalers must ensure that they all consistently spin smoothly.
The best candidates for CBD wholesalers are farmers and product manufacturers. However, it is quite possible to outsource these steps to a third party, as well. For example, CBD supply chain managers can develop custom products for their clients then produce them in high enough quantity to serve the client’s wholesale market. Essentially, those who can create an awesome product and mass-produce it can be a CBD wholesalers. Experienced CBD supply chain managers can help.
Choosing a CBD Product Distributor
There are a few different business models entrepreneurs can adopt to sell CBD products for profit. For example, they can become retail distributors and CBD products directly to the consumer. Alternatively, they may become wholesale distributors, selling branded CBD products in bulk to retailers who will turn around and sell the same product for profit to the public.
Regardless of which CBD business model one chooses, they must immediately secure reliable product management. A qualified supply chain manager should have years of experience developing compliant CBD products. They should have a firm understanding of all components in their products and maintain strong connections with any entity contributing to their development. Finally, a great CBD supply chain manager should understand the complex legal landscape of the hemp industry and offer guidance to see that their clients understand the same.
VCM is proud to be a leading CBD supplier for retailers and wholesalers alike. We can produce all of the products your customers need to feel their best in the hemp CBD space.
Abby is a freelance cannabis writer and Founder of Cannabis Content, a marketplace and training platform designed to connect cannabis creatives with businesses that need their services. Learn more at CannabisContent.net