The craze and demand for CBD businesses are spreading like wildfire across the globe, and due to the immense potential health benefits of CBD products, people have started to adopt them into their daily wellness routines. Rightfully so, this has opened a new business avenue for budding entrepreneurs. Day after day, new CBD brands are entering the market. But is this business profitable?
Well, yes,!! The global market for CBD products reached a new milestone of $7.6 billion in 2023, and the continuous surge in global demand in the industry is projected to grow by approximately 17% in the next 10 years, which will take the valuation to a whopping $36.6 billion. Yes, these are some amazing numbers, and today we will discuss how profitable this business is, what you need to enter it, and what the future holds.
What are the Profit Margins in the CBD Business?
The long-term profit margins for CBD retail stores are around 12% to 15%, which is similar to the margins in the liquor business, but for online CBD brands, this number is much higher and comes in the range of about 20% to 35%, due to the absence of costs related to building a physical facility and keeping the staff there. This number, however, depends on various factors like your location, tax rates in your state, your average order ticket size, your procurement and labor costs, logistics, etcetera. But to answer the question, yes, the CBD business is definitely profitable. You can click here to visit the reviewed best CBD companies and learn more about established CBD brands in the market.
According to the reports and surveys, the salaries of CBD brand and store owners range from $250,000 to $600,000 annually. But then again, this is just a rough figure and will differ from business to business depending on the scale of their operations.
Opportunities in CBD Business
Now that we know that CBD businesses are profitable, let’s take a look at the various business opportunities in this space. Who knows, you might end up picking an idea from the list and starting your own CBD business!
Distribution: You can become a distributor for CBD products; the wholesale markup price ranges from 18% to 40%. Via this method, you can directly sell to various retail stores in your area and even tie up with brick-and-mortar stores in other states. You’ll need a distribution license along with sharp negotiation and networking skills.
Review Website: People are always on the lookout for well-reviewed CBD products on the web. If you are someone who is good at building narratives and telling stories, then you can start your blog or review website and build your traffic through SEO tactics. Once you’ve got enough traffic on your blog site, brands will definitely reach out to you to review their products, and you can earn commissions on every sale made through traffic coming from your site. You can also start a CBD product review YouTube channel, as engagement with visual content is much higher than with written material.
Start Bottling Facility: You can provide bottling and packaging services to various CBD brands; the production cost for making such bottles comes as low as 2–5 cents, which you can sell to companies at a much higher rate. Branding plays a crucial role in placing CBD products in marketing. If you have good design and art skills, then you can offer label and package design services to various new brands that are trying to penetrate the market.
CBD Delivery Business: Every CBD store, dispensary, and online brand requires a robust shipping network to deliver their products. You can become a logistic partner that specializes in the delivery of hemp and cannabis-related products. Many people and brands are not happy with the reckless services offered by giants like FedEx and UPS, so there’s a huge vacuum for CBD-specific delivery partners.
Pet CBD Products: People love their furry friends, and the market for CBD products is in great demand right now. The number of pet-specific brands is still limited, so there is ample space for growth in this space. Accessories like collars, leashes, and CBD-infused vests can also be added to the portfolio to bring in more revenue.
Conclusion
There’s a lot of opportunity to make money in the CBD business. If you plan to launch your own brand, do your research properly, be confident and transparent when placing your product in the market, build a solid narrative around your brand, and keep yourself updated with the latest developments in both rules and regulations and new developments happening in this space.
You can take inspiration from brands like Colorado Botanicals, which started in 2017 and has now become a household name owing to the quality of its products and its transparent and sustainable manufacturing practices. Colorado Botanicals thrives to bring a positive change in the lives of as many people as possible by making CBD products accessible and affordable for people from every walk of life.
