Cannabis Life Style

CBD Entrepreneurs: Opportunities & Threats

CBD’s popularity has shot through the roof, exploding in demand like few supplementals ever have. Indeed, survey data shows that nearly 1 in 7 Americans have actually tried the substance, despite the fact that it was only legalized in late 2018. All of this demand has fueled a gold rush-like atmosphere: Some estimates now believe that CBD will generate $22 billion in total economic activity by 2022.

This is a staggering number, but one which is driven by both demand and the ability to entrepreneurs to meet it. This begs an important question: Who are the people who are driving the CBD boom? What kind of companies, famous people and ordinary citizens are fueling CBD’s popularity? And what are the threats and opportunities within this industry? Here’s a look.

CBD Entrepreneurship

The internet is replete with stories of individuals forming their own CBD companies and striking gold. Many businesses have seen an explosion of growth as a result of legal changes. This has not only earned more money for them but resulted in a boost of employment: Jobs within the CBD industry are in high demand and pay 11% higher than the median wage in the United States.

Celebrities have also gotten into the act of endorsing CBD products or forming their own brands. Household names like Martha Stewart, Mike Tyson, Gwyneth Paltrow, and Melissa Ethridge have all formed their own CBD lines or are doing so in the very near future. This reflects a trend: As CBD becomes more mainstream, more and more people and businesses will jump on the bandwagon and use CBD to increase their bottom line.

CBD also has another factor working in its favor: It’s easier to grow than marijuana. This is for reasons related to both legal concerns (CBD is unquestionably legal according to the federal government, while marijuana is not) and agricultural, as CBD requires less agricultural effort and resources than marijuana.

Threats to the Industry

The entrepreneurs who have successfully overcome the uncertainty in the market have made a good deal of money. However, that’s not to say that future problems don’t remain. Indeed, as noted by CNN, the CBD industry will have to face down numerous threats in order to be successful and stabilize.

First, there are threats within the industry itself. While many vendors are high quality and dedicated to ensuring that their customers get nothing but the best CBD products at the most affordable prices, there are also many unscrupulous vendors who just throw together the cheapest product to maximize their bottom line. These vendors give the entire industry a bad name and could open the door towards less customer trust and harsher government regulation.

Unfortunately, that government regulation produces another threat. Yes, CBD is now legal nationwide now, provided that the CBD manufactured falls in line with already existing state and federal law. However, the door is wide open for enhanced regulation from the U.S. Food & Drug Agency. While regulation is expected and necessary in a variety of ways, harsher regulations could always be forthcoming that would change industry trends and hurt CBD vendors who have already invested significant financial capital into their business.

Financial challenges also create a threat to this industry, as banks and credit unions are reportedly uncomfortable doing business with CBD businesses, despite the fact that CBD is completely legal. This comes out of fear of doing business with any marijuana-based organization. This can cost a CBD business access to credit, capital, and even basic banking services.

CBD Opportunities

While the threats above are significant, that’s not to say that they are anywhere close to overriding the significant opportunity in the industry.

First of all, many popular, mainstream stores are starting to sell CBD. This runs the gamut, with high-end retailers like Barneys New York selling the product. Retailers like CVS, Target, and Walmart are now either investigating selling CBD or doing so at select stores.

Furthermore, remember, the industry’s economic growth is not isolated to industries that are directly related to CBD manufacturing, processing and selling itself. Like all industries, CBD requires assistance from outside, related businesses in order to be successful. Examples include:

  • Construction and related fields in order to build farms and indoor farms which will be necessary to grow hemp.
  • Testing technicians to examine the CBD and confirm the veracity of its labeling.
  • Manufacturers of related business products, such as containers and labeling.
  • A variety of business support services, including human services, accounting and legal. All of these areas are particularly important, given the newness of the industry and the need to ensure regulatory compliance.

All of this is to say that the rapid growth of an industry like CBD has tremendous potential for anyone with the expertise, resources, and courage to seize it.

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