How to launch a CBD online business.

Understanding CBD and CBD Products

There is a lot of confusion around CBD products due to its relationship with marijuana, so let's go over the facts. CBD is short for cannabidiol, a compound found in all cannabis plants. What makes CBD oils different is that they do not contain THC (tetrahydrocannabinol) which is the compound responsible for the "high" associated with marijuana. CBD itself is completely non-psychoactive, meaning it does not affect the brain like THC does.

People take CBD for a variety of reasons including severe or painful conditions and anxiety relief. Everyone who uses CBD also has their own preferred method of taking it, which can be anything from vaping it to swallowing a pill. As a CBD seller, it's important for you to understand the types of CBD products available and how they are used, as well as which types of customers the different products appeal to.

CBD Tinctures

A tincture is a concentrated extract made by soaking herbs in very strong alcohol for long periods of time, or in the case of CBD tinctures, by combining natural hemp oil with alcohol or another solvent. Tinctures are administered by placing a few drops of the liquid under the tongue. Only a small amount is needed for a dose because they are so highly concentrated. This method of administering CBD appeals to people who want the fastest way to take CBD and feel its effects quickly.

CBD Isolates

An isolate is a pure substance that has been extracted from its source and refined into a powder. CBD isolate has been processed to remove all the other natural plant substances such as chlorophyll and wax and leave only pure CBD behind. Isolates are colorless and flavorless and can be used in a similar way to tinctures, or can be added as an ingredient to infuse CBD into a variety of foods and beverages. Isolates are popular with customers who like to mix their own CBD products at home.

CBD Topical Formulations

A CBD topical formulation is a cream, salve, lotion, gel, or other preparation made to be rubbed into the skin. These products can be applied directly to inflamed or painful areas similar to other pain relief ointments. They also provide an alternative for customers who don't like to take CBD orally. These treatments can also include other ingredients like menthol to provide a cooling sensation. CBD can also be used in massage oils.

CBD Vaporizers and Vape Concentrates

Inhalation is a popular method for CBD delivery because, much like with tinctures, the CBD is absorbed directly into the bloodstream and so provides immediate effects. CBD concentrates can be vaped similarly to nicotine e-liquids, so vape supply stores often expand into CBD or vice versa (learn more about selling vape online). Traditional smoking methods like water pipes are also popular, but some CBD retailers find these products troublesome due to drug paraphernalia laws (regardless of their use with legal CBD) and the difficulty of shipping complicated glass items.

Choosing a CBD Supplier

Choosing a CBD supplier is a very important decision that will affect the quality of your products, the satisfaction of your customers, and the reputation of your brand. Because of the well-known benefits of CBD, "fake" CBD oils are found in stores everywhere. These oils are considered not to be true CBD because they're derived from hemp seeds — which contain very little CBD — rather than from the stalks and leaves of the plant where the most CBD is found. It's crucial for your business that you choose a manufacturer that makes genuine CBD that will have the effects your customers want. This way, you can immediately differentiate your business from the brands that provide no benefit and only seek to cash in on a trend.

When evaluating a CBD supplier, find out as much as you can about their manufacturing process. Remember that if you want to sell CBD oil products, those products must be derived from industrial hemp with a THC content of less than 0.3%, processed from the plant itself and not the seeds. Here are some other considerations to keep in mind when

Medical Claims

CBD retailers are not allowed to make medical claims on their websites, and neither are suppliers. Even though research shows potential benefits, the Food and Drug Administration (FDA) hasn't yet evaluated these statements. CBD suppliers, including both wholesalers and consumer-level retailers, are required to display the FDA's disclaimer on their website. If you're looking at a supplier who makes medical claims about their CBD products, be aware that these statements have no FDA backing. Don't choose a supplier based on medical claims, and if the supplier has particularly bold claims on their website (e.g., "cures cancer"), you likely want to avoid that supplier entirely, as breaking this rule means the supplier may be breaking others as well.

Pricing

As a business owner, you should always look for ways to lower your costs, as long as you don't compromise on the quality of your merchandise. CBD suppliers' pricing can vary greatly and sometimes this is reflected in the quality of the product. For example, higher-priced CBD products are often more pure and potent — but this isn't always the case. Make sure you learn as much as possible about the supplier so you can learn whether the quality of their products justifies the pricing. Likewise, stay away from suppliers who sell at abnormally cheap prices. These rock-bottom prices are almost always a sign of cutting corners and producing an inferior product.

Extra Services

Some CBD suppliers offer additional services like dropshipping and private labeling. While the quality of the product should come first, it's also very helpful to know if a supplier can provide these services. If you're planning on dropshipping your CBD products, this option is crucial to your business model. In addition, private labeling allows you to sell fully branded products with your own business name and logo, which helps you become established in the industry and start earning the trust of your customers.

Understanding the Legality of CBD

Whether you plan to stock inventory or sell by dropshipping, the quality of your supply chain makes all the difference. It's also vital to choose a supplier that's right for your business and can get your products to you in a timely fashion. Since the CBD industry is growing, it's becoming easier to find good suppliers that will work well with you.

Federal Regulations

The Agriculture Improvement Act of 2018 (commonly known as the 2018 Farm Bill) legalized hemp on the federal level by removing hemp and its derivatives from the federal list of controlled substances. This legalized CBD so long as it derives from "hemp," which is defined as the plant Cannabis sativa L. and any part of that plant, but only if it contains no more than a 0.3% concentration of delta-9-tetrahydrocannabinol (THC), which is the psychoactive component of cannabis.

Any plant that contains a higher than 0.3% concentration of delta-9-THC is classified as marijuana and remains a federally controlled substance and illegal on a federal level. And because it is still illegal, any CBD derived from such marijuana is also rendered illegal. The FDA has determined that CBD constitutes a drug or drug ingredient because a form of CBD is the active ingredient in an FDA-approved prescription drug (the drug EPIDIOLEX, for the treatment of certain seizures). Because of this, the FDA has taken the position that it is not lawful to add CBD to food, dietary supplements, or pet foods, even if the CBD comes from legal hemp. The same is true for other forms of delta-9-THC, since there are two drugs approved for therapeutic uses that contain a synthetic version of this substance.

Accordingly, products containing cannabinoids cannot currently be legally sold as dietary supplements nor can they be added to FDA-approved ingredients and sold legally. The FDA regularly issues warning letters to CBD sellers advising that the FDA considers this the sale of unapproved new drugs in violation of the Federal Food, Drug, and Cosmetic (FD&C) Act. In addition, the FDA considers any claims that CBD can be used to treat medical conditions or for other therapeutic uses as the sale of misbranded or mislabeled drugs also in violation of the FD&C Act. Misleading labels and unsubstantiated claims on products may also be deemed deceptive trade practices in violation of consumer protection laws.

State Regulations

On a state level, there is a vast range of laws, regulations, and treatments of both hemp-derived CBD and marijuana-derived CBD. Caution is warranted because state laws are not always equivalent and do not necessarily allow the same conduct. State laws concerning hemp-based CBD may permit or prohibit one or more of growing, selling, and/or using. States may also treat sales of CBD products differently, whether they are for medical or recreational purposes and whether or not they can be incorporated into foods, dietary supplements, and/or topical lotions.

Many states follow federal guidelines on these issues but many do not. When selling CBD products, it is important to show that the specific CBD products you are selling are lawful within the state in which it operates. Keep in mind that several states also require retail licenses and/or registrations for merchants to sell already-processed CBD products, including Louisiana and New York.

Marketing Guidelines

The FDA has advised that whether a CBD or other hemp-related product may be marketed and sold depends, among other things, on the intended use of the product and how it is labeled and marketed. In particular, ingredients that are derived from parts of the cannabis plant that do not contain THC or CBD might be able to be marketed as dietary supplements and may not require the same type of lab certification. In any case, all products marketed as dietary supplements must comply with all applicable laws and regulations governing dietary supplement products.

In no instance may CBD products be marketed using unsubstantiated claims that the product can prevent, diagnose, mitigate, treat, or cure any diseases, and should NOT contain any misleading claims or statements lacking substantial scientific support.

Any marketing of CBD across state lines (which includes most eCommerce merchants) will implicate federal regulations in addition to the laws and regulations governing each state involved in the transaction. CBD sold within a state will be governed primarily by that state's laws, although some federal regulation may still be a factor.

Selling CBD Through
Shift4Shop

Some eCommerce providers won't allow you to sell CBD, but with Shift4Shop this is not a problem! In fact, Shift4Shop has more built-in features to help a CBD business than any other shopping cart software.

Here are some of the reasons Shift4Shop is the best eCommerce platform for an online CBD store:

Support for High-Risk Payment Providers

While CBD is legal to sell, it's considered a high-risk industry by payment processors and many providers won't work for sales of these products. Shift4Shop, however, provides a seamless payment experience for Shift4Shop customers.

Easy Tax Setup

CBD is subject to taxes that vary from state to state, including sales tax and sometimes a state-specific cannabis-related tax. Shift4Shop makes it simple to automatically charge the correct tax rates — no matter where your customers are located.

Full Suite of Powerful SEO Tools

Many of the most familiar online advertising methods aren't available for CBD sellers — for example, Google and Facebook will not run CBD ads. Therefore, a strong search engine optimization (SEO) strategy is crucial. Shift4Shop has the best built-in SEO features in the industry, all geared toward helping your website get listed fast and start gaining rank immediately.

Built-In Blog and Content Pages

Since SEO is so important for CBD sellers, you need a way to fill your website with high-quality content that will rank well in searches. With Shift4Shop, you can instantly add a blog to your site for posting the latest CBD news, studies, homemade edible recipes, product updates, and anything else you see fit. You can also create unlimited extra pages to provide vital information like your store policies, product purity guarantees, general CBD educational information and FAQs, and much more.

CBD Labeling

Merchants must label CBD products in conformance with applicable regulations and in a manner that mitigates risk of regulatory agency enforcement actions. As each state may have its own laws that govern labeling (and sometimes these laws can conflict with one another), there is no one-size-fits-all approach. If a particular state is a relevant jurisdiction, its laws should be more thoroughly examined. Below is a summary of general guidelines that pertain to federal labeling requirements. Generally, labels should include:

A statement of identity identifying the product.

Net quantity of contents.

Intended use or directions for the product.

A list of all ingredients, including hemp extract and/or CBD as appropriate. Ingredients are generally supposed to be listed in descending order of prominence.

The name and address of manufacturer or distributor.

The concentration of CBD or other present cannabinoids (if advertised) in milligrams.

A URL link to certificate(s) showing legal status of the hemp batch from which the CBD was derived. This can be displayed as a barcode or QR code linking to the manufacturer's or laboratory's website.

Disclosure statements, including:

This product has not been evaluated by the Food and Drug Administration.
This product should not be used to diagnose, treat, cure, or prevent any disease or condition. Consult a physician before using CBD products.
Keep out of reach of children.

Labels should not include any claims relating to treatment of any medical condition or its effects on the human body.

Lab Certifications and Testing

Laboratories

Laboratories are required to meet Unites States Department of Agriculture (USDA) standards for testing samples, including with respect to testing methodologies, protocols for ensuring accuracy, disposal procedures, and remediation measures in the event a sample is found to have higher than the allowable concentration. Under Laboratory Testing Guidelines issued by the USDA in January 2021, laboratories must report all results, whether passing or failing, to the producer, the USDA, and the appropriate state agency. Laboratories will also need to be registered with the Drug Enforcement Administration (DEA) to handle controlled substances. Shift4Shop will not be able to accept any lab in the U.S. that provides merchant's with certification of their products, ingredients, and THC levels if they are not registered with the DEA. You can find a list of DEA-registered laboratories here.
Producers usually conduct informal tests throughout the growing season to measure THC levels. These results do not need to be submitted to USDA, but records must be kept for compliance purposes for three years from the date of analysis. Only the official test result for compliance testing purposes need be submitted to the USDA. For retailers purchasing hemp ingredients from the producer or grower, this is usually the report that they will receive for the batch.

Retailers

Retailers who purchase hemp for resale are responsible to ensure that the lab certification is valid, reliable, and not fraudulent or counterfeit. There are a few key items to check for:

Make sure the Certificate of Analysis (COA) batch number matches the product's packaging or label. Most labs print a barcode or QR code on their certificates so buyers can verify the authenticity of the COA. You should ensure that the paper certificate is identical to the PDF linked to through the barcode on the lab's website.
Verify that the calculations on a COA are correct. COAs should include both the raw measurements and the equations used to arrive at the total THC and total CBD. This is particularly important since some states count the related substance Tetrahydrocannabinolic acid (THCA) to measure compliance, and others do not. (Note that when determining the legality of cannabis, it is the total concentration of delta-9-THC that is measured, not the overall weight of the product listed on the label.)
Check the date to confirm that the results are recent. If a certificate has an old date, this may not be a disqualification per se, but it may indicate that the certificate was issued for a different product or batch.

Shift4Shop Acceptance

For the convenience of their CBD merchants, Shift4Shop accepts product certifications from any industry-recognized U.S.-based third-party laboratory. All ingestible products for sale by a CBD retailer must be certified. (Products such as hemp bracelets or clothing or hemp-based facial creams do not need laboratory certification.)

Shift4Shop requires that all CBD retailers post all product certifications on their websites so that consumers can verify compliance.

Insurance

The CBD industry is constantly evolving, making it tricky for CBD retailers to stay in line with the ever-changing legal landscape. For this reason, it is strongly encouraged that you invest in insurance to help navigate the liabilities that come with selling CBD products. With guidance from advisors who possess industry knowledge, you can avoid publishing misleading information pertaining to the products the business sells.

Below is a list of firms who provide insurance for those in the CBD industry:

Shipping

Shipping and logistics for CBD can be a complex matter, as retailers must comply with shipping carrier requirements as well as the applicable law from both the place of origin and the destination. CBD merchants must obey all state laws and refrain from shipping any product to a jurisdiction where that product is banned. Typically, if you are shipping non-vaping related CBD products, you are permitted to ship if you:

Have all requisite business licenses (including a grower, processor, or retail license).
Sell CBD that is compliant with state and federal law.
Only source from growers operating a legitimate, licensed business.
Have a third-party testing process.
Have documented results from this testing.

Due to the unclear laws and regulations, shipping to these states is prohibited through Shift4Shop:

Iowa
Kansas
Mississippi
Michigan
South Dakota

Vaping-Related Products

The Preventing Online Sales of E-Cigarettes to Children (PACT) Act was amended in December 2020 to include almost all vaping products in the definition of Electronic Nicotine Delivery Systems ("ENDS"), effective March 28, 2021.

The definition of ENDS is extremely broad and includes any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device. An item can qualify as an ENDS without regard to whether it contains or is intended to be used to deliver nicotine (thus the definition encompasses CBD and other non-nicotine liquids/oils) and also includes any component, liquid, part, or accessory of such device (even if sold separately).

Online sellers of ENDS will be required to register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (AFT), the U.S. Attorney General, and the tax administrators of each state in which they do business. These retailers will be subject to extensive regulation, including tax reporting obligations in multiple jurisdictions. The PACT Act also imposes additional labeling, delivery, and recordkeeping rules. As an online seller, your failure to comply with such requirements could result in severe criminal penalties that can include fines and imprisonment.

Shipping Vaping-Related Products

As of April 27, 2021, there is a complete ban on sellers shipping any ENDS products to consumers through the U.S. Postal Service. While the law does not prohibit private carriers from delivering vaping products to consumers, the regulatory requirements are burdensome and there are severe penalties for noncompliance. Not surprisingly, many carriers do not want to undertake this risk, and many large carriers (including FedEx and UPS) have announced that they will cease shipping any vaping/ENDS products before these regulations go into effect.

Shift4Shop cannot support shops that ship vaping products through the mail to consumers. These products must be pickup only at the merchant's location. The merchant must reference this under their store to ensure that there is no confusion when the merchant goes to check out via the online store. We do not want the consumer to assume that the product is being shipped, as they truly will have to pick it up at the store.

Frequently Asked Questions

Is it legal to sell CBD online?

Yes. It is legal to sell CBD products, as long as the oil is sourced from industrial hemp and the THC content is below 0.3%. However, laws and regulations vary in each state, so it is important that you understand and comply with the federal, state, and local laws where you operate your business.

What is the difference between hemp-based and marijuana-based CBD products?

The difference is based on the level of delta-9-tetrahydrocannabinol (delta-9-THC) found in the plant Cannabis sativa L. If the concentration found is equal to or less than 0.3%, it is considered hemp-based. Anything higher than 0.3% is considered marijuana-based.
Remember that marijuana-based products are still considered a controlled substance and are illegal at the federal level.

What is the legal limit of THC in CBD products?

0.3%. Anything over that is considered illegal.

How do I start a business selling CBD?

Your first step is to register your business in accordance with state and local laws (i.e., meet the standards for incorporation in your area or in the state in which you decide to incorporate your business). You must also obtain any licenses or permits required by the state your business is located in. These can include state licenses for selling cannabis products, local permits for keeping these products in stock, and others.
Once you have completed the steps above and have ensured that you are in full compliance with appropriate laws and regulations, you can then set up your online store through Shift4Shop.

Can I sell CBD on Amazon, eBay, or other marketplaces?

CBD and related products are not allowed for sale on Amazon or eBay. You can occasionally find CBD products on eBay, but don't take this to mean that the rules have changed — CBD product listings are taken down as soon as eBay notices them. Trying to sell CBD on eBay can cause problems for your account. Other marketplaces also forbid CBD products. This is why your most important tool for selling CBD online is your own fully branded eCommerce website.

What products can I sell through Shift4Shop?

CBD tinctures, isolates, topical formulations, vaporizers, and vape concentrates are all allowed to be sold through Shift4Shop. Items that are not ingested or consumed, such as hemp bracelets and hemp clothing, are also acceptable.

If I only sell hemp products that are not ingestible or consumable, do I need to register as a CBD merchant?

No. If you only sell hemp products, such as hemp bracelets or clothing, that are not consumed nor ingested by the end user, then you do not need to register as a CBD merchant.

What should I keep in mind when looking for a CBD supplier?

Don't choose a supplier based on medical claims. If the supplier lists such claims on their website, keep in mind that these statements have no FDA backing. Furthermore, if they post bold claims, such as "cures cancer," you should avoid them altogether.
Pricing can vary greatly and sometimes this is reflected in the quality of the product. Make sure you learn as much as possible about the supplier so you can learn whether the quality of their products justifies the pricing. You should stay away from suppliers who sell at abnormally cheap prices. These rock-bottom prices are almost always a sign of cutting corners and producing an inferior product.
Check to see if the supplier offers additional services such as dropshipping or private labeling. While the quality of the product should come first, it is also very helpful to know if a supplier can provide these services.

Why is it important to understand my state's laws and regulations regarding CBD?

There are a vast range of state-level laws and regulations regarding both hemp-derived and marijuana-derived CBD. Caution is warranted because state laws are not always equivalent and do not necessarily allow the same conduct.
State laws concerning hemp-based CBD may permit or prohibit one or more of growing, selling, and/or using. States may also treat sales of CBD products differently, whether they are for medical or recreational purposes and whether or not they can be incorporated into foods, dietary supplements, and/or topical lotions.

How do I market a CBD business?

Currently, you cannot use Google or Facebook ads to sell CBD products. However, you can still maintain a strong social media presence by creating your store's Facebook page and interacting with customers as much as possible. Also devote time to SEO, including content marketing (e.g. blogging) to help your business rank higher on search engines. Don't become discouraged just because you can't advertise on the two biggest online networks — there's plenty more out there. Advertising isn't completely shut off to you, as some providers do accept CBD ads and many websites will display them. You'll just need to do a little research to find the right provider for your needs.

What are the marketing guidelines associated with CBD products?

When it comes to marketing CBD products, there are a few things to remember:

In no instance may CBD products be marketed using unsubstantiated claims that the product can prevent, diagnose, mitigate, treat, or cure any diseases and should NOT contain any misleading claims or statements lacking substantial scientific support.
Any marketing of CBD across state lines (which includes most eCommerce merchants) will implicate federal regulations in addition to the laws and regulations governing each state involved in the transaction. If you sell within state lines, state laws will be the primary source of governance.
Products marketed as dietary supplements must comply with all applicable laws and regulations governing dietary supplement products.

What should generally be included on labels of CBD products?

Generally, labels should include:

A statement of identity identifying the product.
Net quantity of contents.
Intended use or directions for the product.
A list of all ingredients, including hemp extract and/or CBD as appropriate. Ingredients are generally supposed to be listed in descending order of prominence.
The name and address of manufacturer or distributor.
The concentration of CBD or other present cannabinoids (if advertised) in milligrams.
A URL link to certificate(s) showing legal status of the hemp batch from which the CBD was derived. This can be displayed as a barcode or QR code linking to the manufacturer's or laboratory's website.
Disclosure statements, including:
- This product has not been evaluated by the Food and Drug Administration.
- This product should not be used to diagnose, treat, cure, or prevent any disease or condition. Consult a physician before using CBD products.
- Keep out of reach of children.

Labels should not include any claims relating to treatment of any medical condition or its effects on the human body.

As a retailer, what should I check for to ensure that lab certifications on products are valid and reliable?

Make sure the Certificate of Analysis (COA) batch number matches the product's packaging or label.
Verify that the calculations on a COA are correct
Check the date to confirm that the results are recent.

Additionally, you should ensure that the lab itself is registered with the DEA and meets USDA testing standards. You can view a list of DEA registered laboratories here.

What product certifications are accepted by Shift4Shop?

Shift4Shop accepts product certifications from any industry-recognized U.S.-based third-party laboratory.
Additionally, Shift4Shop requires that all CBD retailers post all product certifications on their websites so that consumers can verify compliance.

Do all products in my shop have to be certified?

All ingestible products for sale by a CBD retailer must be certified.
Products that are not ingested or consumed, such as hemp bracelets or clothing or hemp-based facial creams, do not need laboratory certification.

Is insurance required in order to sell my products through Shift4Shop (or online in general)?

While it is not mandatory, it is strongly encouraged that you invest in insurance to help navigate the ever-changing CBD industry and the liabilities that come with selling CBD products.

Is the use of an age verification tool required when selling CBD products online?

Yes, an age verification tool must be enabled for your store if you are selling CBD-related or vaping-related products. Shift4Shop integrates BlueCheck age verification directly into your shop.

Can I ship CBD products that I sell through my shop?

If you are shipping non-vaping related products, you are permitted to ship if you:

Have all requisite business licenses (including a grower, processor, or retail license).
Sell CBD that is compliant with state and federal law.
Only source from growers operating a legitimate, licensed business.
Have a third-party testing process.
Have documented results from this testing.

You must also be sure to comply with shipping carrier requirements as well as the applicable state laws from both the place of origin and the destination. This is especially critical to remember if you are shipping between states.

Are there any states that I cannot ship CBD products to?

Shift4Shop prohibits CBD retailers from shipping to the following states:

Iowa
Kansas
Mississippi
Michigan
South Dakota

What is considered a vaping-related product?

Most vaping-related products are defined as an Electronic Nicotine Delivery System (ENDS). The definition of ENDS is extremely broad and includes any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device.

Can I sell vaping-related products through my online shop?

Yes. You can sell vaping-related products through your online store, but you must be registered with the Bureau of Alcohol, Tobacco, Firearms and Explosives (AFT), the U.S. Attorney General, and the tax administrators of each state in which you do business.

Can I ship vaping-related products?

Shift4Shop cannot support retailers that ship vaping-related products through the mail to the end consumer. While these products can be ordered online, they MUST be picked up at the retail location from which it was ordered.

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