CBD oil and products are one of the hottest industries right now. I literally get 4 or 5 emails from PR companies and new brands every week trying to get us to post a story about their new CBD oil. It sounds a whole lot like the energy drink boom 15 years ago when there were literally twenty new brands launching every week…and then disappearing just as fast. So what’s the deal? What’s changed in the hemp industry and legal status that’s causing CBD to blow up? And how hard it is to start a CBD brand and business? What other opportunities are there?
My guest today is Caleb Simpson, founder of Hemp Daddy’s Therapeutics, a premium CBD brand that’s going consumer direct. He tells us why there’s a boom, what sort of growth and regulation might be coming soon, and some tips if you’re looking to get into this fast growing industry!
What’s the status of Hemp and CBD legality?
Caleb says it’s still a bit of the Wild West, but now that Federal Government has eliminated restrictions on growing Hemp and producing CBD oil, leaving it up to the states to govern who and if Hemp can be grown, how much, and where. CBD products have exploded in popularity because it can help some people with ADHD, chronic pain, and other ailments. Or just help them to relax, but without the intoxicating effects. At present, anything with 0.3% or less THC is legal nationwide in the U.S., and products can be shipped interstate.
The other big change to come from the 2018 Farm Bill is the relaxation from banks on financing or lending to companies dealing with hemp and CBD. As with marijuana dealers in states where it’s legal, banks are not always open to letting these businesses set up typical checking and savings accounts, but it seems to be changing in favor of working with the businesses.
Challenges for CBD brands
Challenges still include overcoming objections or false beliefs about what Hemp and CBD are, as well as not knowing what regulation will be coming down the pipes.
One of the key changes Caleb made was how his business is structured. He partnered with a supplier to do the production and packaging of the product for him, and it’s more or less a single-ingredient product…unlike a nutrition bar. The other is that he’s going consumer direct only, with no need to deal through distributors and retailers, which adds layers of complexity and cost. It’s much the same tact we took with our own product, Fast AF Nutrition (a sports hydration drink mix aimed at endurance athletes). There are pros and cons to a DTC-only model, but it’s an easy way to launch and grow with minimal resources and overhead.
Another challenge is finding your suppliers, which is true of any business. Caleb heard about his supplier through a podcast and chance meeting, but he took the effort to visit their farm and does his own third party testing. He liked the way they operate, and how they extract and process the product to get a full spectrum CBD oil. Regardless of what type of product you’re looking to make, it’s worth checking out a few different suppliers even if you’re enamored with your first find. Why? Because everyone’s different, and you may find one that’s more response, better priced, works with better “ingredients”, etc. Once quality is established, the other big thing to help make your decision is how responsive they are to your requests and if they deliver on their promises. Prior guests on the show have elaborated on why you can’t keep working with suppliers that just don’t do what they say they’ll do…it’ll bring your company down.
Some of Caleb’s specific challenges revolve around startup capital, particularly if you’re going to be a grower or extractor.
Other opportunities around CBD
Of course, as with any Gold Rush, there come outside opportunities to explore. Just as denim companies, hoteliers and saloon owners took advantage of the increase in miners, there will be side businesses (or even main ones like growing the actual hemp) that pop up around the CBD business. So, perhaps it’s worth looking at how you can support the CBD brands or users. Or even figuring out a use for the waste material from the hemp plant. Caleb says people are creating Hemp-Crete (like concrete) and paper from the husks and left over plant matter.
Caleb’s parting advice has more to do with trying CBD, which, while not specific advice for launching a company, it’s good advice for getting into anything new. Do your research, learn as much as you can, which, actually, is pretty good advice. It’s easy to jump into the next big idea, but doing a little research on the market feasibility, consumer attitudes, manufacturing requirements, etc., that could quickly derail your dreams. Better to figure that out before you dump a ton of money into it!
LINKS & RESOURCES:
- Check them out at HempDaddys.com
- Find them on Facebook, Twitter, Instagram and YouTube
- Connect with Caleb on LinkedIn
- You can hear my prior interview with Caleb about Bearded Bros Energy Bars here.
- Caleb uses Pro Verde Labs to provide 3rd party testing of his products.
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