With the 2018 Farm Bill, it’s now federally legal to consume hemp and hemp CBD. This has led to a surge of CBD dispensaries around the country. If you’re in the early stages of considering one yourself, there are certain things you need to keep in mind. Although some are certainly finding success with this business venture, there’s still hurdles to overcome when it comes to banking, insurance, and advertising.
Here are some things to consider when opening a CBD dispensary!
Insurance – First and foremost, many dispensaries are still having trouble getting insurance for their businesses. Even though industrial hemp is now legal, some insurers aren’t willing to cover these services, or they do so at higher rates. In the future, it seems education will be vital in changing perceptions and finally making insurance affordable for CBD dispensaries.
Banking – Next, the continually shifting regulatory landscape has made it hard to find reliable banking services. Unfortunately, we’ve heard many cases where banks have been reluctant to go into partnership with CBD businesses.
Payments – On a similar note, some dispensaries have lost access to Visa payments, and this means they’re only able to take Discover and MasterCard payments.
Capital – While this isn’t a problem for those with their money, we should note that lenders are also having trouble keeping up with the times. With some issues with the regulatory requirements, most services have had to rely on their own money or other sources of finance.
What does this mean for your own business? Well, you should look into these challenges before making any huge financial decisions. For example, have a conversation with insurance providers and see what options are available to you. Similarly, talk with banks regarding not only the possibility of finance but also the payment processing options available to you once opened.
In the past, we’ve seen many services switch banks or even struggle with the threat of closure because they failed to understand these intricacies before opening. What if a merchant account were to suddenly close? These are all things to remember before opening your doors.
In addition to the four challenges above, we also thought it necessary to touch upon the actual marketing and selling of products. If you plan to sell on eBay or Amazon, know that this isn’t as easy as you might find it to sell other products on the platforms. Even with marketing, social media advertising isn’t likely to be something available to you. For most CBD dispensaries, they rely on word of mouth and organic content to drive growth.
When approaching the topic of marketing, you’ll need to think outside the box. Whether you have a physical location or want to compete in the eCommerce market, we recommend avoiding paid advertising for now. Though this might become available in the future, it’s all about customer loyalty programs and an organic search strategy for now.
Of course, something we haven’t touched on at all is the competition you’ll face in the market. For us, one of the best things you can do is focus on quality – your offering should stand up to the competition, the questions of knowledgeable customers, and the dreaded regulators. To verify your quality, show third-party lab testing results too.
With a small number of brands, they’re adding scannable QR codes on products, and this allows customers to access lab results. The further you go to earn the trust of customers and regulators, the more success you’ll experience.