Are you planning to start your own business as a distributor of CBD products? How much do you need to get started? Is it profitable? Today we are going to answer all these questions. But one thing we can be sure of: the cannabis industry will be one of the most profitable by 2024.
In fact, it is expected to reach $22 billion by 2024. So, the demand is progressive due to the price-quality ratio of the products. Whose margin of acceptance is higher than that of chemical-based biopills.
However, it is always important to delve into the pros and cons of any business. Because once we determine the initial and operating costs, we can make smart decisions based on our investment plan.
Costs for CBD start-ups
While many costs are subjective, there are a few things we can track to get an estimate of how much it costs to start a CBD business.
- Training and consulting: If you’re new to cannabis, you’ll need professional advice on cannabis products. And in the case of CBD in particular, courses can cost around $500 or less.
- Business formation: A legal professional is important for business formation. And although some entrepreneurs can start their LLCs on their own, the minimum investment for this service is $500.
- Installation: Product manufacturing space is optional, especially if you plan to sell established branded products. However, production of CBD products requires rent and security deposit. The price of this is subjective.
- Seller’s permit: Permits depend on the city. Some cities do not charge anything, while others require the respective tax.
- Business License: Business license fees also depend on the city where you live. Fees range from $0 to $500.
- Insurance: Although it is not mandatory for online businesses and small businesses, physical establishments and large businesses do require it.
- Bank Account: You will need to open a CBD business bank account. This can cost anywhere from $0 to $250.
- Commercial Processing: Requiring a security fee of approximately $500.
- Trademark logo: A professional design can cost between $250 and $500. If your products are not trademarked, you will need to create one.
- Trademark: The trademark process can cost about $250 if you do it yourself. A professional service, on the other hand, can cost about $2,000.
Product costs for CBD start-ups
The business plan should also include product costs for new businesses:
- White Label: You can turn to white label products from a CBD manufacturer or an established brand to save time and money.
- Custom formulations: If you plan to create your own product formulations you will need to include costs for CBD ($15/gram for 100 grams small orders), additional ingredients (approximately $500), packaging ($500 to $2,500), lab testing ($300 to $800).
- Equipment: You will probably need special equipment for custom formulations. This ranges from $200 – $100,000.
Marketing costs for CBD start-ups
The planning and management of marketing strategies will depend on the new entrepreneur. But, in general, you will need an action plan to manage:
- Social Networking
- Content Marketing
- Sales funnel
- Web design.
Total start-up costs for CBD businesses
Adding up all of the above and excluding certain fundamental variables, the total expense ranges from $9,500 to $10,000. Every day there are new discoveries about CBD, laws that are friendly to medicinal products and therefore, greater profitability and safety.
There are many tasks that companies and freelancers can do on their own to save money on licensing and trademarks. So the investment can be lower and the benefits even more profitable, as long as you structure an objective and solid business plan.