With the 2018 Farm Bill, consuming hemp and hemp CBD is now federally legal. 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 a cannabis business venture, there are still hurdles regarding banking, insurance, and advertising.
Things to Consider When Opening a CBD Dispensary
Here are some things to consider when opening a CBD dispensary!
Insurance – First and foremost, many dispensaries still have trouble getting business insurance. 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, 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 partner with CBD businesses.
Payments – On a similar note, some dispensaries have lost access to Visa payments, which means they can only take Discover and MasterCard payments.
Capital – While this isn’t a problem for those with their money, we should note that lenders also have trouble keeping up with the times. In addition, 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? You should look into these challenges before making any important financial decisions. For example, talk with insurance providers and see what options are available to you. Similarly, talk with banks regarding the possibility of financing and the payment processing options available 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 close suddenly? These are all things to remember before opening your doors.
In addition to the four challenges above, we thought it necessary to touch upon products’ actual marketing and selling. 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 available to you. Most CBD dispensaries 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, it’s all about customer loyalty programs and an organic search strategy.
Of course, we haven’t touched on 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. Of course, to verify your quality, show third-party lab testing results.
With a few brands, they’re adding scannable QR codes on products, allowing customers to access lab results. The further you go to earn the trust of customers and regulators, the more success you’ll experience.