Starting a CBD Business? How to Select Your Wholesale Provider

If you’re an entrepreneur looking for a growth industry, starting a CBD business is one of the better bets. After breakthrough years in the late 2010s, the market has continued to grow exponentially. Sales are projected to soar to $16 billion by the middle of this decade. Hemp-derived and seemingly in everything from pills to pet snacks, CBD offers a lot of creativity and possibility to start-up mavens.

While there are many steps and considerations you need to make before launching your own CBD business, the most important is the quality of your product. Most specifically: who will you use as your wholesale provider of CBD?

Let’s look at this decision. First, why is it so important, and second, what factors should you prioritize when choosing your wholesale partner.

 WHY IS YOUR WHOLESALE PROVIDER SUCH AN IMPORTANT PARTNER?

  • YOU’RE IN GOOD (BUT CROWDED) COMPANY
  • BEWARE THE PRETENDERS
  • YOUR CUSTOMERS WILL COUNT ON YOU

IN GOOD BUT CROWDED COMPANY

First of all, unlike THC-infused products, CBD is legal in all 50 states in the U.S. (as long as the THC level is at or below 0.3%). That means the barrier to entry for a new company is lower. There are hundreds of places to buy CBD products, from small e-commerce businesses to big-box drugstores.

In such a crowded field, it’s essential that you offer a great and effective product. All the fancy product types and names in the world won’t help you find a market niche if your CBD is of poor quality.

BEWARE THE PRETENDERS

It may be hard to believe, given how much CBD-related press there is, but a recent poll showed that more than half of Americans don’t understand CBD. Naturally, that leads to distrust, and unfortunately, there are always businesses that will sow confusion.

Companies that sell useless products or try to cut corners when it comes to their suppliers fill the market with CBD products that don’t work. For a population that is only beginning to grasp the health benefits of the product, quality is critical.

If you have a great wholesale provider that you can tour on your website or in your store, you will go a long way towards helping prospective customers trust you.

YOUR CUSTOMERS

And that word—trust—is essential when you’re choosing your wholesale provider. CBD sales are different from many other businesses. You will be selling a product that has been shown to help lives, and with that comes a higher responsibility.

People suffering from maladies from anxiety to chronic pain will count on you and your product. You’ll need a wholesaler that helps you make good on that trust.

WHAT ARE THE MOST IMPORTANT FACTORS IN CHOOSING A WHOLESALE PROVIDER? 

GENUINE & LEGAL

Once the Farm Bill of 2018 made CBD legal in the U.S., many wholesalers jumped into the market. Of course, as with any new and lucrative business, not all were genuine.

A few years past the Farm Bill, and there is a lot more information that can guide you to a great wholesaler. First of all, make sure that your wholesaler can provide lab testing and certificates of analysis, otherwise known as COAs.

COAs can tell you many things about the product you’re buying, but you must first look for THC level. CBD derived from hemp plants, not marijuana plants, and the THC level must be underneath 0.3% for you to sell it legally as CBD.

EXTRACTION: METHOD AND RESULT

There are a number of extraction methods and a few different types of CBD that can you can get. Right now, the generally accepted “best method” of extraction is via CO2. CO2 extraction leverages the versatility and cleanliness of carbon dioxide to extract botanical oils.

CO2 extraction also allows for a more targeted product; wholesalers will be able to focus on the compound they are providing with accuracy.

Be careful of wholesalers that use solvent extraction. Solvents can be toxic and risky to a user’s health (and can change the flavor of your product).

There are three different kinds of extracts:

  • CBD Isolate
  • Broad-spectrum CBD
  • Full-spectrum CBD

CBD Isolate: the purest form, contains no THC

Broad-spectrum: has other compounds from the plant, contains no THC

Full-spectrum: also has other compounds, including THC (less than 0.3%)

While there is some evidence that spectrum CBDs are more effective than isolates, there have been no definitive studies. Some customers have specific preferences and will ask—have that information at your fingertips!

BEST PRACTICES—FARMING

Good CBD comes from good farming. With the industry’s relative lack of regulation and oversight, it’s up to you to find the wholesalers with the best growing practices. That means avoiding pesticides and staying organic.

Chemicals are not only unhealthy—they can also damage the end product.

Analysis can show if there are pesticides or other damaging chemicals or natural growths like mold. A solid wholesaler will have no issues with their product getting tested!

BEST PRACTICES—SHIPPING AND SERVICE (AND PRICE!)

Not all companies handle orders the same. Once you have your business plan in place, make sure that you’re partnering with a wholesaler whose shipping practices and services fit your needs.

You may notice that we listed the price (almost) last. Good wholesale CBD is not cheap, nor should it be. If you see a price that looks “too good to be true,” it probably is. Trust your instincts and the documentation, and don’t let a chase for discounts sink your product quality and, with it, your company.

DUE DILIGENCE

Finally, you should research beyond scientific analysis and services. While the CBD marketplace is relatively new, it’s been successful—which means that wholesalers are gaining reputations, good or bad.

Explore reviews, reach out to other CBD makers if you have contacts, and pay close attention to anything negative.

Finding a great wholesale supplier is not necessarily easy. But armed with the right knowledge and a willingness to dig deeper to find the best for your prospective customers, you’ll kick off your business with the most important ingredient in place: quality CBD.