With thousands of products on the market, standing out in the highly competitive CBD industry is tougher than ever.
Since cannabidiol (CBD) is still relatively new to the mainstream, many entrepreneurs have considered making a name for themselves within this industry. However, though the market is projected to reach $20 billion in sales by 2024, newcomers may have more difficulty than that optimistic number suggests.
“This industry needs people everywhere,” Franny Tacy, Chief Creative Officer, Owner & Operator of Franny’s Farmacy, tells us. “So, I always say, look beyond just CBD. Because hemp is the only crop that can feed, cloth, shelter, and provide medicine. There are so many different opportunities within this industry.”
As with any fast-growing industry, competition is tough. There are hundreds of reputable CBD companies already out there — and plenty more which don’t meet industry standards (i.e. third-party laboratory testing). Being as hemp production continues to skyrocket, the number of CBD companies is only bound to grow as resources become unbounded.
The current story of the CBD industry is one of contradictions: rapid growth, but falling profits for many companies, including some of the original players.
To get a clearer picture of the current state of the CBD industry, we asked some leading industry professionals what it takes to stand out in this highly competitive field.
Chronic fatigue diagnosis leads to CBD business
Ken Lawson, CEO of FOCL, spent much of his twenties grinding to get a start-up going. After years of strenuous work hours, his body was in a state of constant exhaustion. Partly from stress, partly from unhealthy eating habits, but mostly from not taking care of his mind and body.
“One day my body just shut down,” Lawson tells us. “I couldn’t function. Doctors couldn’t figure out what was wrong and, after a couple of years, I was diagnosed with chronic fatigue syndrome.”
For many, a chronic fatigue syndrome diagnosis can last a lifetime. However, if you’re young enough and make drastic changes, you can make major steps towards recovery. Lawson took full advantage of this opportunity. Through this journey, he began exercising and taking all-natural supplements. Eventually, he stumbled upon CBD.
“At that time, CBD was still illegal and, though there were people selling it, it was still very much a grey market. So, it was hard to start a real business” Lawson explains. “When the farm bill passed in December 2024, I was ready for a new [business] venture. I decided that was my time to jump in and show my passion for wellness and my experience for online marketing.”
Passion is ultimately what it takes to start a business of any sort. If you’re not passionate about CBD or health and wellness, what’s the point in adding your name to a list of other products already out there? Just because CBD is popular doesn’t mean it’s quick cash-grab. There are a lot of CBD businesses out there — many of which think hemp is the next cash crop. Maybe it will be on a national economic scale, but that doesn’t mean it will be for you.
The right timing
Admittedly, Lawson got into this industry at a prime time. When hemp and CBD were legalized on a federal level, the public began to notice. With proper education, the demand grew higher than expected and, with that, so did the number of entrepreneurs trying to make a name for themselves.
Since this time, the CBD industry has changed drastically. And it continues to change.
New regulations are on the horizon. The federal government has reacted promptly to the large demand for CBD and is devising new rules for the industry. One of which includes federal backing on insurance and loans for CBD companies.
Of course, it can be expected that the Food & Drug Administration will soon create regulations concerning CBD production. Though this is more beneficial for consumers as it will provide us with safer CBD, it’s also going to have an impact on businesses. New regulations mean new practices within the industry all of which are going to come out of a business owner’s bottom line.
With that, it’s safe to say Lawson had the advantage of getting into the game and learning the market before these regulations become a reality. Not to mention, those who made their name before Lawson.
A blueprint for success in CBD industry
So, what does this mean for someone who didn’t make it into the market early on? It means there’s a lot of information out there concerning what is expected within the CBD industry.
With the right research, you’re given a blueprint for what is necessary to run a successful CBD company. Remember, when Lawson had first begun, the CBD industry was very wild west. Many companies took their attempt and failed because they didn’t have the knowledge of what people are looking for when purchasing cannabidiol. There were no standards such as testing or using only all-natural ingredients.
We now have the knowledge and standards and it is one of the most valuable tools you can use to build a company.
There’s no ‘business as usual’ in CBD industry
Not to mention, there are a lot of veterans of this industry who are happy to spread knowledge of this industry. One of the biggest out there is Franny Tacy, who was the first woman to legally plant hemp in the state of North Carolina in over 70 years.
For over 12 years, she worked within various sections of the pharmaceutical industry. At one point working directly with corporate America and running a $10 million territory.
“I worked on the farm for 3 years before I was able to quit my job,” Franny tells us. “And it was the next year I started planting hemp. I didn’t even know if it was having any impact.”
She would soon find out it would. She grew her business to heights any entrepreneur would dream about. Now, Franny’s Farmacy is a staple within this industry and has become one of the largest white/private label products suppliers.
Of course, this isn’t to say it was easy for Tacy to get to this point.
“This is not business as usual. We are entrepreneurs,” she proclaims. “My husband and I have started many different ventures, from restaurants to real estate. Cannabis, hemp, CBD — nothing business as usual. Your banking, your credit card processing, advertising, marketing, media – all of that got shut down time and time again.”
But she didn’t give up. Like Lawson, Tacy had a passion for helping better people’s lives through the right medication. And that passion is what instituted Franny’s Farmacy as one of the best known CBD businesses currently out there.
Advertising the unadvertisable
If you’ve ever started a business online, you know well that one of the biggest ways to get eyes on your company is through paid advertisements. Whether it be through Google, Facebook, or other social media platforms.
The thing about CBD and hemp is these products are practically banned. Most who attempted a paid advertisement of a CBD product had that advertisement taken down. Many even got banned from the advertising platform as a result, even if they’re trying to advertise a non-CBD product.
This is not business as usual.
Franny Tacy, founder of Franny’s Farmacy
Some companies have worked around this issue. Recently, Facebook has relaxed their rules concerning CBD brands in some ways. You’re allowed to run an ad that links back to landing pages featuring hemp and CBD products. However, these ads aren’t allowed to feature the products. Their main reason for limiting ad runs is due to the fact that different states have different regulations concerning hemp.
Due to these limitations, CBD business owners have had to get savvy with their advertising. Some have taken advantage of the numerous hemp and CBD publications appearing across the web, supplying these companies with a product to review for their readers. Regular hemp/CBD events are also a great way to get the word out.
Marketing CBD means creative branding
But truth be told, in order to market a CBD product, you really need to get creative. And this all comes down to branding.
“The brand is everything,” Tacy says. “What are you looking for in brands out there? They’re all trying to sell the benefits of CBD. Well, where’s the person behind that?”
What Tacy is talking about are the stories behind CBD. The founders of some of the top companies have had their struggles with a particular ailment — Lawson’s story, mentioned above, is simply one of many. These people needed CBD when all seemed lost. They know other people out there are also in need. By telling us of their own struggles through life, the customer has a story to relate to. The brand is no longer just another CBD company.
This is what Franny means when she says, “the brand is everything.” Beyond traditional marketing strategies, you need something that’s really going to make people think. We can’t forget that even though CBD has hit the mainstream, we’re still coming out of a nearly century long prohibition on hemp products. Public opinion is still changing.
White/Private Label Companies: CBD Industry Friend or Foe?
One way many entrepreneurs have entered the CBD industry is through white/private label companies. Though these are great for cutting costs for new businesses, they do take away from the personality of a brand.
“[The CBD industry] has become very competitive,” Lawson details. “[CBD] came, sort of like a Gold Rush, and the market got saturated fast. Largely due to these white label companies.”
A white/private label company is a CBD business that provides products (i.e. CBD oils, CBD topicals, etc.) to various brands within the industry. Since the white label company is producing the product, they are the ones responsible for many of the regulations surrounding this industry. This includes regulation fees, extraction costs, and testings.
Since the 2024 Farm Bill, white label companies have appeared all over the market. For people who develop their CBD business through a white label company, the cost and barrier to entry are greatly reduced.
For example, testing for pesticides alone can cost upwards of $40,000 a month. This doesn’t even include all of the testings we’re used to seeing within a Certificate of Analysis. Even still, investing in the CBD industry through white labels is expensive.
“There’s two huge manufacturing companies out of Colorado that white label probably 80% of products,” Franny explains. “They have a $20,000 minimum per product you wanna launch. So, that takes most of your entrepreneurs — your working class American — out of the picture. Because if you want to have 10 products in your product line, you’re looking at a $200,000 investment right off the top.”
Most people just don’t have this kind of capital. And, for those that do, a white label company can very much appear to be a friend. But as Lawson suggests, there are some downsides to working through a white/private label.
“These manufacturers made it really easy for anybody to get in,” he explains. “And a lot of people got in. So, I think there’s going to be a big shake out over the next couple of years. Especially, as regulations kick in.”
What makes a customer want your CBD?
Currently, there’s numerous near-identical CBD products for sale. CBD oil (tinctures) alone are almost identical from brand to brand, with only slight variations that help them stand out.
If you think you have what it takes to start a successful CBD business, it’s vital you ask yourself, “Why would a customer want to buy my CBD?”
Due to a flood in brands, what was once an innovation is now the standard. The majority of reputable CBD companies have a Certificate of Analysis. Many are switching to extracting CBD from organic hemp, and they make sure their products meet various customer necessities (vegan, gluten-free, cruelty-free, etc.).
For some time now, CBD companies have looked identical to one another. Some have tried to innovate with different products. Others capitalize on a compelling story.
Growth will slow as market expands
Cyrus Partow, CEO of CBD Nerds, has been around this industry for some time and is keen on what customers are looking for. “I’ll look for brands that have longevity and a good reputation,” he tells us. “Typically, I do some research into the ingredients and avoid brands that are clearly just white labeling. I much prefer seeing a brand that’s seed-to-sale.”
Having control over what’s happening seed-to-sale is a vital attribute. Though it costs more in the long run, it shows customers your care and passion for hemp and CBD.
“The market will continue to grow, but probably at a slower pace than what we’ve seen,” Partow continues. “I see smaller brands entering the market and diluting existing brand’s customers.”
Live your story to stand out
CBD companies that are just getting their feet off the ground have a sharp understanding of much of the knowledge discussed within this article. The foundation for the CBD industry was laid down throughout the past few years. This offered a solid blueprint to people with new innovations in mind.
“Companies are coming out with new, creative products to capture different parts of the market,” Partow goes on. “You’ll see companies offering things like CBD face masks, inhalers, bath bombs, and so much more.”
These innovations matched with a solid brand are what will make you stand out. The market is already flooded with tinctures and gummies — why not compel long-time CBD veterans and those who have just heard of it?
Still, even with an innovative idea, one of the most important things is you must have passion for CBD. Customers aren’t ignorant and can tell when someone genuinely cares about their product. In a market that’s centered around health and wellness, this care is an essential.
The people with this passion usually have a story about how CBD has affected them. If this story is powerful and relatable, you’re going to naturally grab attention.
“Everyone’s trying to create their story,” Franny proclaims. “We live our story every day.”