Do You Need A License To Sell CBD Oil

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CBD products have been gaining a lot of interest nowadays. Most CBD oil distributors have been active in the market due to continually evolving regulations about the cannabis industry legalization. CBD products are used to treat anxiety, stress, and pain. There is no doubt that you can make a great profit selling CBD products. But how do you get started?

Sell CBD Products: A Comprehensive Guide on How to Legally Sell CBD Online

CBD products have been gaining a lot of interest nowadays. Most CBD oil distributors have been active in the market due to continually evolving regulations about the cannabis industry legalization. Are you interested in getting in selling CBD online? This article will guide you through the entire process – from licensure and marketing to order fulfillment and financing.

CBD for Business

Entrepreneurs who focus on CBD Products have infused it into almost everything. The growing popularity of the product is taking the world by storm. You can find CBD for humans, for pets, in your coffee drinks, bath bombs, body creams, chapstick, and a whole lot more. The market sales of CBD in the US are expected to grow by nearly $2 billion by 2022. CBD-infused products have been accessible to the public, and because of the continuous evolution of the industry, they will invent more of these products.

However, before you start to sell CBD oil, you should first know how to sell CBD legally. Knowing things that you need to know and what to expect will help you successfully market your CBD products. Keep reading to find out how to start a CBD business.

What Is CBD?

Cannabidiol, also known as CBD, is a natural substance used to help with various health conditions. It became popular through CBD-infused products like oils, edible food such as gummies, body products, and more.

It’s different from other cannabis because this will not make you high. The WHO (World Health Organization) has stated that CBD has no effects on any abuse and that there is no evidence of public health-related problems associated with its use. With this information, CBD has gained popularity in the market.

You might be one of the people who are thinking, “How can I start my own CBD oil company?” Well, there are few things you need to know before starting the business. Deciding to enter the CBD industry could be difficult and draining, especially if you didn’t research properly beforehand. Nonetheless, with hard work and properly handling the business, you might achieve your goal.

Legal Terms for a CBD Distributor

As we all know, the legalization of CBD usage is still under debate across the world. In the recent issue of the 2018 Farm Bill, the legalization of hemp production across the US was approved; that’s why CBD products are now available to the market. However, serious restrictions on how companies are producing it are still present. Here are a few laws that you need to know:

Federal Regulations

In the US, any type of cannabis plant should contain no more than 0.3% THC. Take safety precautions by being aware of the state of legalization of cannabis products because laws can always change at any time. In addition to this, keep in mind that the Food and Drug Association has also stepped in to call out unapproved products with false health claims.

Statewide Regulations

Statewide regulations on CBD legality are different in each state. Some states allow marijuana-produced CBD, and there are also that only allow the standard choice in this industry, the industrial hemp-produced CBD. The THC level of industrial hemp-produced CBD is not high and is accepted nationally. For extra precaution, try to contact some local representatives to know which type of CBD is allowed in your target state.

How to Sell CBD Online

If you’re interested in selling CBD products, you might be thinking about where to put up listings for your hemp oil for sale, CBD extract for sale, or other business products of the same variation. Online shopping is one of the most popular ways to buy products from the comfort of your own home. You can sell CBD oil products through Shopify, Amazon, or other online shopping platforms. Setting up your shop online and starting selling online is a great way to establish your brand. Here are a few things to take note of before selling CBD online:

Get Licenses

People who are new to the CBD business might think, “Is it legal to sell CBD?” or “Do you need a license to sell CBD Products?” The answer to both questions is yes. To legally sell CBD products, you need a pair of licenses such as a business license and a resale license.

A business license is obviously required for every business. Researching your preference on the business license on your local government website is a great way to know which type will fit your business more. Commonly, small businesses go for an LLC, and it usually costs around $100.

You will also need a resale license if you plan to purchase your products from wholesalers or distributors. Resale license permits are under the state, so handling this license can vary state-to-state. Try to research the requirements on your state ahead of time so you’ll be aware if you still need a resale license and how you can get one. Getting these licenses is important, and you should not skip this step when starting a CBD business.

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Look For a Certified Supplier

A legit supplier of high-quality CBD products is a vital part of the business. In addition to this, they must be certified to sell by the state or nationally. Getting regular tests by third-party companies is required to ensure the quality of the products because it will help you produce high-quality products to achieve your target market.

Accept and Ship Orders From Customers

Whether you build your website or list your products through online shopping platforms, you’ll be needing a warehouse system for your CBD products to effectively manage the inventory. You can start accepting and shipping orders from your home if you’re starting small. However, if your brand is starting to grow, you might need to expand your space and sign a warehouse lease.

With your warehouse expansion, you should also ensure that your shipment methods should also level up. You can do this by sourcing for the best order fulfillment company that will fit your terms and preference when handling the products.

How to Maintain High CBD Online Sales

CBD products are no longer limited in our current time, and you can easily spot them in your local drug stores or online stores. It’s important to know that once you’re aware of how to sell CBD oil online, you need to start making excellent marketing strategies that will help you maintain high sales and outdo your market competitors. Making sure that consumers will buy from your brand instead of the competitor’s product should be part of your priority. So how will you do it?

Tip 1: Produce High-Quality Products

The popularity of CBD products is why many businesses have been popping into the industry nowadays. Aside from the fact that some business-minded people produce low-quality fake CBD products, consumers have been ill severely due to these products. Knowing this, it’s now your part to source proper high-quality products that will make consumers trust you and your brand.

Once you’ve started producing high-quality products, there will be a high chance that your consumers will help you market it by telling their friends and family members. This way, your products will become more popular and will also help your consumer’s health at the same time.

Tip 2: Know How CBD Marketing Works

It’s important to know how to market CBD products. There might be advertisement restrictions with social media networks that you should note. Make efforts in marketing your products by using various marketing strategies such as e-mail, newsletters, discounts, online stores with easy access for consumer’s comfort, and paid advertisements.

Tip 3: Interactive Connection With Consumers

Creating ways to actively interact with your community will help you earn consumers’ trust and know their needs and wants when it comes to the product. Actively interacting with your consumers will help you create a great community and foster good relationships. This strategy will differ from other brands because you’ll be the one in charge of knowing and understanding your community as well as meeting their standards.

Tip 4: Wholesale Selling

If you’re wondering how to become a CBD distributor, this will be the answer. Focusing on business-to-business will help you achieve and exceed your target sales. It’s great to start selling CBD wholesale because you’ll be interacting with fewer people rather than running your online store and spending energy on attending to each product inquiry.

Do You Have To Have A License To Sell CBD?

CBD products are used to treat anxiety, stress, and pain. There is no doubt that you can make a great profit selling CBD products. But how do you get started? Do you have to have a license to sell CBD?

You do not need a license to sell CBD products. However, you must form a business such as an LLC and acquire a resale license if you purchase CBD products from wholesalers. You can legally sell CBD if the oil is sourced from industrial hemp and the THC content of the product is below 0.3%.

Let’s explore the sale of CBD and the requirements to sell these products legally. Learn more about the top three states where the sale of CBD products is skyrocketing, and understand some key factors regarding starting a CBD business. There are important rules and regulations CBD sellers must abide by to run their business smoothly.

Table of Contents

Do You Have To Have a License To Sell CBD?

It is legal to sell CBD products without CBD-related licenses. However, businesses are still required to obtain a business license, and, if you plan to purchase CBD from wholesalers, you need a resale license. These two licenses are mandatory whether you have a walk-in or an online store.

Prospective CBD sellers must research the requirements of selling CBD products since the regulations can vary, depending on the state. However, the sale of CBD hemp products is legal if you comply with the rules and regulations as set out in the 2018 Farm Bill regulations.

Hemp-extract CBD products should contain no more than 0.3% THC. CBD products with more than 0.3% THC are considered to be marijuana and possession of them is a federal crime. [1]

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States With the Most CBD Sales and How To Get the Licenses

It cannot be stressed enough that there is a big market for CBD, and businesses selling these products are growing and expanding daily to accommodate their customers. California, Florida, and New York are the states with the most cannabidiol sales in the US. [2] Here is how you can acquire a license to sell CBD in these three states:

How To Get a CBD License in California

It is mandatory in California to acquire a state license (which allows you to run a CBD establishment) before operating a CBD business. The state also requires approval from your local jurisdiction or proof that you received a Conditional Use Permit. [3]

If the local jurisdiction forbids trading cannabis, it will not provide the licenses. Knowing the state laws and regulations is necessary since they often change, so make sure you obtain the correct permits and licenses if you want to sell CBD in California.

After implementing the 2018 Farm Bill, California instituted the AB 228 Bill, which affirms the legal status of hemp-derived cannabis and CBD without limitation. Nevertheless, this bill prohibits the sale of unregulated CBD products that do not adhere to the FDA cannabis regulations.

How To Get a CBD License in Florida

Florida does not require a license to consume CBD hemp products, but licensing is necessary if sellers grow and sell CBD hemp products. If you plan to sell edible CBD products, you must obtain a food establishment permit. [4]

You may also be required to register for additional licenses if you sell frozen or dairy products. Cultivating hemp plants means you must be willing to provide your fingerprints, transportation plans, and environmental containment plans, and obey hemp cultivation site statutes.

How To Get a CBD License in New York

To sell CBD hemp goods in New York, you must apply for a Cannabidiol Hemp Retail License. You can easily apply for the license via the New York Business Express website. [5]

Distributors of CBD hemp products require a Cannabinoid Hemp Distributor Permit before selling and distributing CBD produced outside of New York to CBD hemp retailers. This requirement guarantees that all outside CBD products meet the requirements of the Cannabinoid Hemp Program. [6]

What About Delta 8

Delta 8 is made from CBD, so you may be wondering if your CBD license will work for delta 8. Many but not all states have similar licensing rules for delta 8 as CBD. Follow this link if you’re wondering, “do I need a license to sell delta 8?”

States That Prohibit Hemp- and Marijuana-Based CBD Products

Unfortunately, in nine US states, you are not allowed to start a CBD business. All states have their own Controlled Substance Act (CSA), but these nine states prohibit the sale of CBD products, making it illegal to consume or distribute CBD products in that state. These states are:

  1. Texas
  2. North Carolina
  3. Kansas
  4. Indiana
  5. Kentucky
  6. Tennessee
  7. South Carolina
  8. Mississippi
  9. South Dakota

You must have a valid reason to use cannabis products, including CBD, which means you can only use them for medical purposes in these states. Doctors who approve the use of cannabis and CBD will provide you with a licensed medical card for purchases. In these nine states, you cannot obtain licenses to sell CBD online or in-store. [1]

The remaining states have legalized the sale and purchase of CBD products, allowing businesses to open CBD stores and pharmacies to sell CBD. In these states, you can possess, buy, and use hemp-based products without restrictions. Products that can be legally sold in these states include hemp capsules and CBD oils.

However, states such as Nebraska and Michigan are in the process of making regulatory decisions and evaluating the 2018 Farm Bill changes. Therefore, sellers and consumers in these states cannot open or purchase CBD products from stores, but luckily consumers can legally buy CBD from online retailers.

Essential Licenses That May Be Required To Sell CBD

It is mandatory to obtain a license to sell CBD hemp products in some states. If you have a CBD store in one of these states, it is important to familiarize yourself with what you need to acquire when establishing a business: [7]

  • Tax ID Number – An Employer Identification Number is a tax ID number that assists the IRS in recognizing your business for tax-related matters.
  • Business License – We have already established that a business license is required to operate your CBD business. The license is renewed annually and is proof that your business is legally allowed to operate in the country. Though this license has nothing to do with selling CBD, it is required for all businesses.
  • Business Formation – A business formation with the state aids in protecting potential liabilities and debts that may occur. It also protects your personal assets.
  • Sales Tax Permit – When collecting local sales and state taxes, you must have a permit.
  • Permits – Businesses need different permits depending on the products and services they offer. For example, a CBD business might need a permit from the health department if they sell food or treats.
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How To Obtain a CBD Certification

A CBD certification signifies that the CBD products you sell to your customers have been third-party tested, are safe to consume and use, comply with FDA regulations, and adhere to the legal level of THC (0.3%). This certification assures buyers that the CBD is of a high standard.

If your business complies with the certification requirements, you will get a stamp of approval featured on all your CBD-infused goods and/or your CBD website. Many organizations, such as NSF, US Hemp Authority, and BSCG, provide sellers with CBD certifications. Let’s look at one top-rated organization that can thoroughly assist you:

LegalScript for CBD Certification

LegalScript is meticulous when it comes to product credibility. The organization evaluates and ensures that you have the necessary documentation to start the application process for running a CBD business. [8]

Sellers must prove that their CBD products meet the federal and state regulations to be certified, and product labeling should accurately state that the goods contain CBD. To meet the standards of LegalScript’s certification process, you must always be transparent with customers and regulators.

The content of the products must not consist of ingredients that LegalScript has prohibited. To have the LegalScript stamp on your CBD website, your domain name must be clear and accurate and not be privacy-protected. Your website must be simple and easy to navigate so that customers can easily find your contact information and location of your CBD store (if applicable).

LegalScript only allows applicants to market LegalScript-certified CBD goods. There are numerous standards CBD sellers must be willing to meet, including agreeing to on-site inspections by LegalScript, supplying unexpired and usable samples for testing, and consenting to background and history checks for criminal offenses or civil violations.

You can simply apply on the LegalScript website to create an account and pay the once-off application fee (the annual subscription fee is only payable after sellers have been successfully certified). [9] Applicants must complete a questionnaire (you can return to the questionnaire anytime you want), and the LegalScript team will review it.

LegalScript may ask for additional information, underline flaws in the application, and have CBD sample products at their disposal for testing. Once the grueling process ends, you pay the subscription fee and become certified.

It is important to have all the required documents ready before starting the application process, be completely clear and truthful in the questionnaire, quickly respond to the company’s requests, and instantly pay the subscription fee.

Investing in CBD certification is costly. Be prepared to pay a substantial fee for LegalScript’s services.

Total of CBD Products Application Cost Per Product Annual Monitoring Cost Per Product
1-5 $1,495 $3,495
6-10 $1,395 $3,295
11-20 $1,295 $3,095
21+ $1,095 $2,895
CBD Website Once-Off Application Fee Per Website Annual Fee Per Website
Website $1,495 $3,495
Probationary Website $1,495 $4,995

Disadvantages That CBD Businesses Face

CBD businesses must deal with a few hurdles that other companies typically do not face. So, consider these challenges before you make your final decision to sell CBD products: [10]

  • Insurance – CBD businesses have difficulty finding affordable and quality insurance. Even though it’s legal to sell CBD and hemp products, insurance for such a business is expensive. Many people are not adequately educated about CBD and hemp products, making certain aspects of running the business challenging.
  • Banking – Another challenge for CBD sellers is access to reliable banking services. Banks are hesitant to provide services and capital to CBD businesses due to the probability of facing issues and risks associated with CBD sales. Owners of CBD companies face unexpected hurdles because they may have to switch to another bank or deal with the sudden closure of merchant accounts. These problems can be time-consuming and interfere with day-to-day work tasks.
  • Payment Processing – Recently, Visa announced that it would not do business with CBD companies and sellers. Payment processors ask for hefty fees. A few of the best payment processors include Mastercard, Discover, SMB Global, PayWize, and USAePay.
  • Funding and Resources – Funding and resources are difficult to acquire from banks, mainly because banks believe the CBD business is too perilous and there are no apparent regulatory requirements. Sellers have turned to outside investors or willing lenders to obtain the desperately needed growth capital.

Conclusion

The CBD industry is booming. You can make a large profit from selling these products. California, Florida, and New York are the states that have the most CBD sales. If you are opening your own CBD business, research the requirements of the state where you plan to sell the products. Not all states have favorable laws regarding the sale of CBD.

There is no specific license required to sell CBD products; however, a business license, sales tax permit, business formation, other permits, and a tax ID number may be necessary to obtain. A resale license is required if you’re planning to resell CBD products from wholesalers. There are no definite costs for the permits, licenses, or additional paperwork necessary for CBD sales.

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