If you’re here, you probably know that dropshipping is a great way to do online business, and you also probably know that CBD is a quickly growing industry that has massive profit potential. Therefore, something you might want to do is start a CBD dropshipping business, and this is exactly what we’re here to teach you today. Let’s get to it and determine everything there is to know about how to start a CBD dropshipping business properly.
Everything You Need to Know On How to Start a CBD Drop Shipping Business
Dropshipping is the new and improved way of selling online. Instead of the old way, where you have to buy tons of inventory and pay to store it, here you simply have someone else store it for you, which in this case is the CBD dropshipping supplier.
With dropshipping, customers visit your website to place an order, but instead of you having to send it from your warehouse, you relay that order to the CBD dropshipping supplier who has the product stored in their warehouses. The CBD dropshipping supplier then fulfills the order for you. It’s just something that makes life a whole lot easier.
Dropshipping CBD – Legal Issues to Consider
Understandably, many people wonder if dropshipping CBD in the United States is legal. At this time, technically speaking, CBD dropshipping should be legal at the federal level.
This is because in the USA, any hemp products that contain less than 0.3% delta 9 THC, which includes CBD products, are legal at a federal level. This means that technically speaking, you should be able to ship CBD products anywhere in the United states. With that being said, different states have different laws on this front.
Remember that in the USA, the state governments and the federal government may have conflicting laws, which is unfortunately often the case for hemp and marijuana products. In other words, even though the federal government has technically legalized CBD products, this may not be the case in all states.
Furthermore, shipping such products may also not be legal in all states. Therefore, the most important thing that you need to do here is some in-depth research in terms of the legalities of CBD and dropshipping in the various states you plan to supply.
Is Dropshipping CBD Profitable?
Yes, dropshipping CBD can be very profitable. Dropshipping is still a growing type of business, and moreover, it’s predicted that the CBD industry alone in the USA will be worth roughly $16 billion in just a couple years from now.
Three Types of CBD Dropshipping
What we quickly want to cover is that technically speaking, there are three different types of CBD dropshipping businesses that you can form in the USA.
CBD Dropshipping White Label
White label CBD dropshipping is a business model where a retailer or reseller purchases CBD products from a manufacturer or supplier and sells them under their own brand name. The retailer does not have to handle the production, packaging, or shipping of the products, as that is handled by the manufacturer. This allows for a more efficient and cost-effective way for retailers to enter the CBD market and offer high-quality products to their customers without the hassle of managing inventory.
With white label CBD dropshipping, retailers can focus on marketing and building their brand while leaving the production and logistics to the experts. This can be a mutually beneficial partnership for both the manufacturer and retailer, leading to increased sales and customer satisfaction. If you form a CBD dropshipping white label business, this means that you are dropshipping generic products that are supplied to several different retailers. You can then price and brand them for your own customers.
CBD Dropshipping Private Label
We then had the CBD dropshipping private label businesses, which is when you drop ship for one specific retailer and nobody else. If you’re looking to provide products with your own brand name, then you have to do so using a private label.
Black-Owned CBD Dropshipping
Although this might not be legally recognized as such, there are also black-owned CBD dropshipping businesses which are run by African-Americans, and they have the goal of destigmatizing CBD in the country.
How to Start a CBD Dropshipping Business
To start a CBD dropshipping business, there are five specific steps that you’ll have to follow. However, as you’re about to see, these steps are not overly difficult, and as long as you follow the tips that we provide you with below, you should have no problem completing them in order.
Register the Business
The first step to starting a CBD dropshipping business in the United States is to register your business. In the vast majority of cases, any business that is selling a good or service and that is turning a profit must register with their specific state of residence.
Although some people might not think that dropshipping businesses need to be registered, this is not the case. All businesses in the USA must be registered with both their own Secretary of State and with the Internal Revenue Service. This is because all businesses in the USA must pay taxes.
If you are not registered with the IRS, and if you have not obtained your employer identification number, then you are not legally allowed to operate federally or statewide. You need the employer identification number to pay taxes, to hire employees, to open up a business bank account, to take out loans, and to get business insurance.
On that note, if you are starting a CBD dropshipping business, getting company insurance is quite important, as it will help protect you from liability potentially caused by the sale of your products. Furthermore, if you want to avoid liability, both financial and legal, then we recommend starting an LLC or limited liability company.
Starting a limited liability company is a little bit harder than starting a sole proprietorship or a partnership, but it also provides you with both legal and financial liability protection in the event that something goes wrong.
Whatever the case, you need to create a business and register it in your state, which means that you also need to file certain articles of organization.
When you register your CBD dropshipping business, you’ll need to follow all of the requirements of the state that you are operating in, you’ll need to obtain all necessary licenses and permits for retail and resale, and you’ll also have to get your tax ID number.
However, keep in mind that every state in the USA may have slightly different requirements, so you need to do research for the specific state that you reside in and that the company is based out of. Once your business is registered and considered an official legal entity, you can proceed to the next step.
Choose a Good CBD Dropshipping Supplier
The whole point of dropshipping is of course that you don’t have to store all of your own inventory, but rather have a supplier do it for you. Once again, in dropshipping, the supplier holds on to all of the inventory for you.
This means that you don’t have to purchase and store vast quantities of CBD products on site. Rather, you can just take orders from your customers and then relay them to the suppliers, who will take care of the fulfillment. However, this of course means that you have to find a good dropshipping supplier that meets all of your needs.
This means that you need to look out for when choosing a reliable CBD dropshipping supplier. For instance, you first want to take a look at all of the different options they have available in terms of product. A good CBD dropshipping supplier should have a variety of CBD flower, vapes, concentrates, topicals, edibles, beverages, capsules, and more.
Furthermore, any CBD dropshipping supplier worth their money should also supply very high quality products that follow strict production and manufacturing standards to ensure that customers get the best possible products. Of course, this isn’t just about CBD contents and potency, but also about safety. A good CBD dropshipping supplier absolutely has to comply with all legal standards, which includes testing.
All products that are sold in the USA must be tested by a third party laboratory to ensure that they are completely safe and do not contain any toxic substances. Another purpose of third-party testing is to ensure that the CBD products in question do not contain more than 0.3% delta 9 THC, which is the legal limit of THC allowed in CBD products as set out by the 2018 Farm Bill.
If a CBD product in the USA contains more than 0.3% delta 9 THC, it is technically considered legal. You don’t want to work with any dropshipping suppliers that break the laws, or else you might become liable, both legally and financially.
You then also want to consider shipping and payment options. Not all CBD dropshipping suppliers provide you with the same benefits. Some may force you to purchase some of the product, whereas others may simply hold on to it and to fill your orders.
Of course, different dropshipping suppliers may also charge different monetary amounts for their products, which you need to take into account when building your online store. Choosing the right dropshipping supplier for your needs is perhaps one of the most important steps of all here.
Partner with a Payment Processor
The whole point of setting up a CBD dropshipping store is for you to make some money. After all, CBD and the hemp industry in general is rapidly growing, and it’s providing people like you with the opportunity to make massive profits.
With that being said, this means that people need a way to pay for the products that you plan to sell them. If people can’t pay for your products, then how are you supposed to make money?
What this really all boils down to is finding a good payment processor that is willing to work with you. Now, the big problem here is of course that many payment processors in the USA, and across the world for that matter, are not willing to work with CBD companies, or really anything to do with hemp or marijuana at all.
This has to do with legal issues, because CBD, hemp, and marijuana are very strictly regulated. Once again, although CBD that does not contain more than 0.3% delta 9 THC is technically considered legal at a federal level, it may not be 100% legal in all individual states. This can therefore cause some legal problems.
For this reason, big payment processors, especially credit cards like Visa, MasterCard, American Express, and others do not work with cannabis or hemp companies, which includes CBD dropshippers. This means that you therefore need to find a different way to allow people to purchase your goods.
What this really all boils down to is the Square payment system, as this is an online payment processor that does work with CBD companies. For anybody out there who is currently using PayPal, unfortunately for you, PayPal does not work with companies and will not allow people to pay for any type of CBD product.
Create an Online Store and Add Products
Now that you’ve chosen your CBD dropshipping supplier, you have your payment gateway figured out, and more, it’s time to build your online store. Now, just like with setting up payment processors, one of the big issues with creating an online store for CBD dropshipping is the simple fact that many online stores won’t allow for it. For instance, eBay and Amazon, two of the biggest retailers out there, don’t allow for CBD sales, or marijuana sales of any sort for that matter.
However, one of the best offers that you have at your disposal here is Shopify. Yes, Shopify is at this time actually the number one top platform for all CBD dropshipping needs out there. Shopify has positioned itself in such a way that it is now the leading authority in terms of online CBD dropshipping stores, and of course, they are making a healthy profit off of it as well.
Therefore, we recommend using Shopify and building a store with them, or even using WordPress to build a great website and blog, and then integrating it with a Shopify e-commerce application. The simple reality here is that you need to create an attractive online store that is going to drive traffic in and allow for great sales.
Yes, when you are building an online store, whether for CBD dropshipping or otherwise, there are many considerations to take into account.
You need to consider what kind of bandwidth you need, how fast your website needs to be, how many products you plan to sell, how many visitors at once your website should be able to handle, how your pages look, and much more. There is a reason why so many people out there turn to professional website developers and creators to make their websites, because it’s actually quite a difficult task.
The main point, however, is that you need to create an online store for your CBD dropshipping business that makes it easy for people to view and buy your products.
A big part of this is choosing a good business name and domain name as well. Obviously, you want your business to stand out in the world of CBD and hemp, so it needs to be catchy, short, and memorable. However, the name you choose should also have a free domain name, by which we mean that the domain name for your business name should be available.
You don’t want to have to choose a totally different and unrelated domain name that doesn’t resemble or closely match your business name, or else people won’t know what you’re doing or who you are.
A big rule of thumb when starting any business website is that the name of the website should have the exact same name as the name of the business. This will help ensure that people know exactly what you’re about and what they can expect when they visit your website.
Once you’ve started building your online store, the next step in this process is to choose all of the products that you want to add. Exactly which products you add depends on which states you are selling to. Remember that not all forms of CBD, whether flower, vapes, edibles, topicals, and anything in between, are not legal in all states.
Different states have different restrictions on CBD products, with some being very relaxed and others being very strict. Therefore, you need to do in-depth research to determine which products are legal to sell in the states you are planning on selling to. If you do not do this, and even mistakenly sell CBD products in areas where those specific types are not legal, you can land yourself in some very serious trouble with the law.
Engage in Marketing Practices
Although technically not 100% necessary to start a CBD dropshipping business online, engaging in marketing practices is essential for success. You need to be able to drive traffic to your website, because if no one visits your website, then you won’t be able to make any sales.
Unfortunately, advertising CBD products and any kind of hemp on various social media platforms is extremely difficult, if not impossible. The vast majority of online social media platforms do not allow for hemp or CBD advertising of any kind.
What this really boils down to is that your website needs to feature a good blog for search engine optimization purposes. If you can increase your search engine rankings, then when people search for CBD products, it’s your website that will come up above all others. Optimizing your website in terms of written content, visuals, taglines, and more is therefore essential.
Your Journey to Dropship CBD – Conclusion
As you can see, starting your own CBD dropshipping business is technically not all that difficult. Yes, there are quite a few steps you’ll have to follow, especially in terms of actually registering a business, finding CBD dropshipping suppliers, and choosing products.
That said, as long as you follow all of the tips and rules we’ve right above, especially in terms of the legal context of it all, then you should be totally fine and more than able to turn a quick profit.
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