According to the Global Industrial Hemp Market – Industry Trends and Forecast To 2027 Report, the industrial hemp market is expected to reach USD $21.16 billion by 2027, with an annual growth rate of 21.02%. The long and short term growth can be attributed to a few factors:
- Increasing global legalization and demand for CBD and hemp-based products
- Growing awareness regarding the health benefits
- Rising applications of hemp in different food and consumer goods products
- Increasing occurrences of chronic disorders that may be treated by the cannabis plant and its derivatives.
The United States and China lead the global industrial hemp cultivation sector with nearly 1 million total acres planted, according to Brightfield Group’s recent Hemp Cultivation Landscape report. The U.S. is the current global leader in this space due to the federal legalization of hemp-derived cannabinoids via The Agriculture Improvement Act of 2018.
An estimated 285,000 acres of industrial hemp were planted in the U.S. last year and projections are showing that as many as 741,000 acres will be planted this year. By 2023 it is forecasted to hit 2.3 million acres.
China has planted over 250,000 acres of hemp in the past year alone. Their output now accounts for over half of the world’s hemp supply.
Other top international hemp producers include:
Cannabidiol (CBD) is one of the numerous compounds found in the hemp plant. Over the years, the demand for hemp-based CBD oil has increased in different parts of the world because of the growing awareness of its health benefits. The latest trend in the CBD market is the growing influence of online retailing. The increasing popularity of e-commerce businesses worldwide has given vendors an opportunity to enhance their profit margins and revenues online because e-commerce channels support both business-to-consumer (B2C) and business-to-business (B2B) operations. According to Global Market Insights, the CBD market is projected to grow at a 52.7% compound annual growth rate (CAGR) between 2020 and 2026.
Below is an overview of all the steps required to open a CBD or Hemp business anywhere in the world. We have a much more detailed and thorough package that will show you everything you need to do – from beginning to end – to start a CBD or Hemp business.
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Choose a CBD or Hemp Business Type
First, you’ll need to decide what type of CBD or Hemp business is right for you and what will fit your overall objectives, experience, wants/desires, and budget. The biggest factor that decides this for our clients is the budget they have available and what CBD or Hemp businesses are legally allowed according to the region’s regulations.
These are the generally allowed business types (which vary based on local laws and regulations):
- Hemp Cultivation or Growing
- Retail Store
- Online Retail or E-Commerce Website
- Manufacturing/Processing (oils, edibles, etc.)
- Transportation or Transport-Only
- Testing Facility
To ultimately determine your preferred business type, see everything involved with starting these businesses, including how much money each cost, via our Starter Package.
Create a Business Plan & Get Funding
Once you’ve decided on the business type, the next step is to create a business plan which will show you how much everything will cost to get started, down to the smallest penny. In our experience, new clients completely underestimate how much money it’s going to cost to start and run their businesses, but they also underestimate how much money it can generate. A business plan also helps keep you organized, make decisions, as well as validates your company and potential in the eyes of investors, lenders, and partners. In most cases, portions of the business plan will need to be included in your license applications, as well. To say they’re one of the most important steps in starting your CBD or Hemp business is an understatement.
Determine if Licensing Is Available
Now it’s time to see if you can get licensed to start your legal business. You’ll need at least one, all the way up to 3 separate licenses to operate legally. So before going any further, you need to research and find the laws for your business and region to see what is legally allowed right now.
If the licensing period has passed, this usually is a temporary matter and most areas open their programs up to new applicants on a yearly basis. If you’re wanting to be well-prepared and assured you’ll be licensed, start preparing now – your competitors for these limited licenses are doing it now, so should you.
Understand the Laws & Regulations
Now that you’ve found an area that is licensing or will be in the future, you need to find the laws for your business type and break them down into plain English. These regulations will dictate most things you can and can’t do, as well as the exact steps for getting licensed. You should know them very well if you want to be in this industry because getting this wrong may result in your business being rejected for licensing, shut down, or possibly even land you in jail.
If you want to save yourself the time and headache of figuring out what the legalese in these legal documents mean, we have custom-tailored regulation breakdown packages.
Install the Corporate Entity
Now it’s time to install a corporate entity (LLC, Partnership, S-Corp, C-Corp, etc) for your CBD or Hemp business in accordance with the requirements set forth in the regulations you’ve found and read through. This step is important for a few reasons:
- Having a corporate entity is required in order to be issued any licenses.
- It protects your personal assets from any potential debts, liabilities, and lawsuits.
- You will need this to open any bank accounts or payment services.
Identify a Business Location
After familiarizing yourself with the rules and regulations of your preferred area, you should be well-versed in the location requirements for your business. It is now time to find a business location that meets all the legal requirements.
By far, this is the biggest hurdle for any potential business owner and is usually the make-or-break step because without this, you won’t be issued licenses to operate your CBD or Hemp business.
We’re often asked by potential clients if they can get licensed before finding a location. The answer is no, and that’s for a few reasons:
- You’ll need to divulge the business location and show proof that you have a lease or own the property already, before getting a license.
- Most cities will require inspections of the potential property during the licensing process, prior to licensing approval.
Submit Licensing Application(s)
In order for your business to operate legally, you need to be licensed by all the governing bodies of your region – federal, state, county, and/or city. Submitting your applications and getting them approved can take anywhere from a few weeks to many months.
You need to ensure you have all your application documents and plans perfectly drafted because any errors in your application will only delay the process or result in a denial – costing you valuable time and money.
Install the Operations Infrastructure
While waiting for your licenses to be approved, or immediately after obtaining the permits and licenses, you need to install the operational infrastructure according to the regulatory requirements. Now is the time to hire people, buy equipment, and set up the internal policies and procedures that will ensure legal compliance. If you’re not operating according to regulations, your business will be shut down.
Market & Publicize Your CBD or Hemp Products and Business
Most CBD and hemp companies live or die based on how quick and easy they are to find online. With competition always increasing, these businesses no longer sell themselves, so you’ll need to ensure you’ve got a great Marketing & Advertising Plan in place to ensure success. Marketing a cannabis business has many pitfalls and hurdles you’ll have to overcome in order to do this legally and effectively – this is one of the biggest areas where hemp and CBD businesses fail, so don’t write this off as unnecessary or needing little attention.
Pay Yearly Taxes & Renew Licenses
CBD or hemp businesses are only allowed to operate because of the tax revenue they’ll bring in. So it’s important to keep your books in order and have a tax professional prepare your year-end taxes and financial statements. Also, be mindful of your licensing renewal deadlines because the governing bodies may not go out of their way to inform you about renewal deadlines and your license(s) could expire and suddenly you’re operating illegally.
That’s everything to know for starting a CBD or hemp company. If you’re serious about getting into this industry and want to know everything you need to do, from start to finish, check out our How To Start a CBD or Hemp Business package and get started right away!