starting a CBD business

5 Things to know about when about starting a CBD Business

Starting your own business can be incredibly rewarding, both personally and financially. As a matter of fact, according to a recent study by cloud accounting software company FreshBooks, the number of self-employed Americans could triple to 42 million by 2020.

However, becoming your own boss is a lot harder than most people think. When it comes to planning a new venture there are so many things to think about, and so many decisions to make, that it’s very easy to miss something. And as the old saying goes: “Fail to prepare and prepare to fail”. Getting off on the wrong foot can result in lengthy and costly setbacks, or even failure.

When it comes to setting up a new CBD business, things can get even more complicated! Due to the lack of understanding surrounding CBD and its legality, planning a foray into the CBD industry can prove to be incredibly challenging. However, if you get things right you could be in with a chance of securing a share of the multibillion-dollar pie.

So, before you dive head-first, you might want to check out this list of 5 Things to know about of when starting a CBD business.


  1. Finding a CBD merchant account and payment processor

When it comes to accepting payments on their website, most new CBD business owners instinctively think of PayPal, Stripe, Square or However, few people actually know that these “mainstream” payment processors don’t accept CBD businesses as clients.

Unfortunately, it’s often when vendors already have their brand, products and site finalized, that they have the shock of finding out that their application has been turned down. In other cases, start ups see their applications accepted and they begin taking payments, only to get shutdown a few days later. This can happen overnight, without prior warning and result in your funds being frozen.

Therefore, one of the first steps you should consider before launching a CBD business, is to find a payment processor who specialises in CBD merchant accounts and payment solutions for the cannabis industry.

For the unacquainted, the payment solutions correspond to the actual gateways which integrate with your website and enable it to take payments. The CBD merchant account is where payments received from your clients are then held prior to clearance.

It’s also good to know that these companies can offer payment solutions to medical marijuana and recreational cannabis dispensaries, in the form of cashless ATMs for cannabis businesses for example.


  1. Choosing your CBD ecommerce Shopping Cart

Shopify, BigCommerce, Woocommerce, the list of online shopping carts for CBD are endless however, your choice in a shopping cart will make a huge difference in what payment solutions you can use and the transaction rates and fees you are charged.

Shopify is loved for its’ ease of use but it’s a closed system.  A closed system means that all payment gateways are controlled by the platform.  Shopify has been known to remove payment gateways for high risk merchants as well as close down CBD stores with no notice.   For this reason we recommend performing regular backups and downloading all your sale information.

Recently Shopify just rolled out adding transaction fee if you are not using their payment gateway.   On their most basic plan, you will  pay a 2% fee per sale.  It’s reduced to 1% on their middle plan and .5% on their Advanced plan.

Bigcommerce is also a closed system and currently unless you have 20K+ monthly volume there is no payment solution for those on Bigcommerce except for e-checking.

Woocommerce is, IMHO, the best of the bunch.   As a business, you should own your assets.  When you build your site on someone else’s platform, they get to decide what products you can carry as well as what fees you will pay when you sell a high risk product.   When you build your website on WordPress and use Woocommerce, you own your business.

There are some myths floating out there about WordPress so I’m going to share from truths.  When I am referencing WordPress, I am talking about the NOT  You can not build your CBD business on the free hosted version of WordPress.

WordPress and Woocommerce do allow you to use their open source downloadable products but they will not provide support nor sell any products to any businesses in the CBD industry.  Thankfully there are developers who create plugins  that can replace the ones that are branded under Woocommerce.   Wordpress/Woocommerce is an open system and you can utilize the most payment solutions with this shopping cart.

As website developers, InclusivePay can custom build your CBD WordPress website.  Feel free to contact us to get more information on our CBD Website packages. 

  1. Getting insured

Entrepreneurs like the adage: “With high risk comes high reward”! Unfortunately, insurers don’t look at things the same way! As a matter of fact, insurance companies are totally risk averse…For this reason, getting your CBD business insured can be difficult and very costly.

However, the cost of not having the appropriate insurance can far outweigh the cost of the insurance premium itself. Indeed, most retail chains, drug stores or websites will require that you have appropriate insurance in order for your goods to be listed. No insurance = no business! Also, failing to have insurance can expose you and your business to costly claims and suits.

There are generally three main types of policies recommended to cover the most common risks: public liability, product liability and employer’s liability (if you plan on hiring staff). You can also seek to cover your stock and/or equipment for example.

Often, insurers will want to know things such as who your CBD suppliers are, if they are accredited or GMP certified, and if laboratory reports are available for their products for example. They will also likely ask if you have an internal traceability process, a product recall process or prior trading history for example. The more boxes you tick off, and the better you can prove that you are trading responsibly, the lower your premium should be.


  1. Marketing your business

Advertising via pay per click (PPC) on Google or purchasing Facebook ads is often a first step when it comes to marketing a business online. However, as I’m sure you will have guessed by now: it’s a non-starter when it comes to the CBD industry.

Indeed, these internet giants (as well as many others, such as Amazon or eBay for instance), have taken the view that anything related to cannabis in general – and CBD products in particular – do not meet their terms & conditions.

When it comes to traditional marketing channels – such as TV or billboard for example – the picture isn’t much brighter either. Recently, one might recall that CBS turned down a commercial for Acreage Holdings (an American cannabis company) which was to be aired during the Super Bowl.

The truth is that the media haven’t really kept up with their times, due to fear, ignorance, misunderstanding or a combination thereof. But despair not, other solutions exist!

In today’s world it has actually never been easier to bypass the middlemen and get in touch with your target clientele directly. Our advice is to focus your efforts on search engine optimization or SEO. With a good website and solid SEO efforts, your rankings in the search engine results page (SERP) should improve and in turn your organic traffic should grow. You won’t have to go after your clients anymore, they will come to you!


  1. Selling outside of your state

As you probably know by now, the laws and regulations surrounding the sale of CBD or cannabis products in the USA are very convoluted, to say the least. This complexity can make selling and transporting CBD across state lines a risky business!

Whilst cannabis is now legal for medical use in 33 states and for recreational use in 10 states and Washington DC, it’s still illegal under federal law.

When it comes to CBD, the situation is perhaps even more confusing. Up until recently, hemp – from which CBD is commonly extracted – was illegal to sell or grow in the US. However, it was legal to buy it from abroad. Then, at state level you have different laws which determine if and where a CBD product can be distributed and sold. Go figure! Therefore, trading legally in this judicial haze can be a daunting task.

However, things might be about to change. Late 2018, Trump signed the farm bill into law – including a provision to legalize hemp in the USA. Eventually, the hope is that all states will have a unified system which will enable hassle free sale and shipping of hemp-derived CBD products across all 50 states. But this may take time.

Until then we recommend that you first focus on building strong sales in your domestic state. Then, seek solid legal advice before you begin shipping your products across state lines. The last thing you want to do is to be charged with drug trafficking!


We hope that this short guide will have prompted you to consider some of the pitfalls of opening a new CBD business, which you might not have otherwise considered. And above all, we wish you the best of lunch with your new venture. Welcome to the Green Rush!