What do I actually need to know to start a cannabis manufacturing business?
1. Major marketing roadblocks
Cannabis and CBD manufacturers must deal with something expressly unique that other industries do not – extremely restrictive marketing rules. Before you even begin a marketing plan, the product label can’t even list the function. In other words, depending on the product, you may only list the product ingredients.
This can be more than a hassle for those who manufacture cannabis wellness products, especially if you want to stand out from the other brands. Additionally, there are many digital marketing challenges to face in the cannabis industry. Social media posts about products cannot imply that there are any healing properties, nor can they insinuate that any ingredients can relieve symptoms.
Companies are not even allowed to publish customer testimonials in some cases because they can be viewed as medical claims (according to the FDA). Social media platforms like Facebook penalize cannabis brands often, even when they are not selling physical products. The platforms claim that any ads related to cannabis (even non-plant touching content) violates rules by offering “drugs” to the public.
The regulatory framework of the cannabis industry is constantly changing, and trying to keep up can be overwhelming, to say the least. Each state that allows for medical or recreational cannabis has a different set of complex regulations about packaging, selling, and advertising products. While these states learn how to work out the kinks of a nascent industry, manufacturers must prepare for the changes.
Trying to stay up to date on every change is impossible to do alone, which is why it makes all the difference to align with a workspace that takes care of compliance certification. It can also help to hire a consultant or to add someone to your team who specializes in regulatory updates to save a huge hassle later. Making the mistake of attempting to do it all in-house will only result in a short lifespan for your product line.
Because of federal laws prohibiting the online sale of products containing THC, manufacturers have severe limitations with e-commerce. This means having to count on dispensaries and retail locations, which is already a struggle with packaging restrictions. What this means for companies is a major loss of potential profit, and a tougher journey to become visible as a brand.
Luckily, there are some creative banking solutions becoming more available to entrepreneurs but having access will continue to be a challenge. It helps to have the right consultants and mentors on your team to guide you through the struggles and offer creative alternatives. Being a cannabis manufacturer is hard work, but with the right team and some patience, it can be the most rewarding experience.
Starting a Cannabis business is expensive. You’ll have to think about the cost of licensing, legal consultant fees, property, construction, equipment, marketing, and more. And yes, all that even before making your first product sale.