The cannabis industry has become one of the fastest-growing businesses in the United States. One of the industry’s most popular products is CBD, or cannabidiol, an extract of marijuana and hemp. CBD can be used for medical purposes and has been proven to help with physical ailments, such as arthritis, and mental illnesses, such as anxiety and depression.
Because of its many health benefits, CBD has blossomed into a profitable industry. BDS Analytics has predicted that the CBD industry will reach $20 billion in sales by 2024. However, starting your CBD business presents its own unique challenges.
About the CBD Industry
Before starting your business, it is important to have some background information about the CBD industry. In order to sell CBD, you need a license. The state of Colorado offers licenses for both recreational cannabis and medical marijuana.
Unlike other forms of recreational cannabis, hemp and hemp CBD are classified as medical marijuana and were legalized by the Farm Bill of 2018. If you’re working in another state where cannabis is still illegal, be sure that you’re only using CBD from hemp.
There are many types of CBD products. Here are some popular examples:
- Pure CBD oil: Taken directly from hemp plants and usually more expensive than other products.
- CBD oil tinctures: Like CBD oil, except tinctures are usually mixed with alcohol or a flavored oil.
- CBD topicals: Form of CBD that can be applied directly to your skin. They are the easiest to use.
- CBD pills: Taken orally and typically last longer than other forms of CBD.
Keep in mind that the list of CBD products only continues to grow as the industry expands and evolves.
Furthermore, while the production and selling of CBD oil has been decriminalized, the industry remains young, which can make advertising and financing your business difficult. One way that you can get your business off the ground is by taking out a loan from a private lending firm.
Getting a Loan for your CBD Business
Although CBD from hemp is legal, the prohibition of marijuana makes it difficult to obtain Colorado cannabis business loans. For this reason, it is improbable that you can get a loan from a Colorado bank even though marijuana is legal in the state.
However, you can still get a loan for your CBD business if you work with a private lending firm. Many of these firms have appeared in states like Colorado to serve the needs of new cannabis businesses.
As you’re researching lending firms, be wary of predatory lenders. Because it is often difficult for cannabis businessowners to obtain the funds that they need, predatory lenders attempt to take advantage of them. Here are some tips to avoid falling into their trap:
- If a lender tells you that your customers can pay for your products with credit cards, do not work with them. Remember that banks cannot work with cannabis products and therefore cannot process credit purchases.
- Avoid high interests rates on your loans. If your interest rate is above 40 percent, walk away.
- Make sure the loan is realistic. Lenders who do not require banking statements or background checks are likely trying to scam you.
Getting a trustworthy loan is not impossible! Be sure that you’re getting the fairest deal possible.
Obtaining a trustworthy loan is the perfect first step to getting your business off the ground, but it is important that you secure the right loan. Your CBD business can help bring relief to your customers while also earning a big profit. Make sure you begin your small business journey on the right foot!