Buying and selling wholesale cannabinoids is mainly a commercial activity undertaken by businesses who want a proverbial slice of the cannabis pie. But this whole avenue of business leaves a lot of people scratching their heads.
Is it even legal? Where does one begin?
The controversies that surround cannabis make the whole endeavor slightly risky and full of potential complications. With all of that said, now is a better time to be involved in the CBD industry than it has ever been.
For the first time in 100 years, hemp-derived CBD is legal across the USA (under certain conditions), is available to the public without a prescription and can be manufactured right on American soil.
To purchase bulk CBD and start a business – or even to re-sell bulk CBD – one has to cover their tracks in every legal sense of the phrase. Legalities must be kept in mind at every step of the process and fundamentally, failing to adhere to policy threatens every aspect of your business.
Once all legal complications have been considered, only then the world of CBD wholesale opens up. Price and quality need to be balanced depending on what kind of business you plan on opening and what your target audience will be. Then there is the matter of finding the wholesaler which can accommodate the price and quality needs you have.
Yes – entering an industry that is growing exponentially is daunting. And yes – you will probably spend a lot of time reading guides and articles like this one. Unlike regular consumer shopping, you cannot purchase CBD wholesale on impulse. It requires some planning, deliberation and good networking.
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Covering the legalities
The first – and arguably the most important – aspect of purchasing wholesale CBD is to understand what is legal and what is not. At the end of the day, you are going to be selling the CBD you purchase wholesale, and if your product is not legal then you have a long and arduous road ahead of you.
Marijuana is still considered to be illegal according to the federal government. This is largely due to the fact that it contains THC. However, in 2018, the US Government signed the 2018 Farm Bill, legalizing the cultivation of hemp and the sale of hemp products. For hemp to be legal under federal legislation, it must contain 0.3% THC or less. This naturally means that all hemp-derived products contain 0.3% THC or less.
In order for a CBD product to be legal, it must be derived from hemp. Because marijuana is still illegal, any CBD derived from marijuana is also illegal. But now that hemp is legal, so is everything that is manufactured from it. So the first step: make sure your CBD product is derived from hemp.
Secondly, you need to ensure that your product and website are very clear about their legal position within the US framework. For example, you must write somewhere on your website that CBD has not been cleared by the FDA. You must also never lie about the ingredients inside your product. Thus, it is absolutely essential to rigorously question those from who you are going to purchase your wholesale CBD.
Who buys wholesale?
It is extremely unlikely for a consumer ever to purchase CBD wholesale; it is the activity of somebody who wants to sell that product as a part of their business. There are multiple different kinds of businesses that may want to buy wholesale CBD such as dispensaries, health food stores, online CBD retailers, herbalists and even beauty therapists.
What is common between all of these businesses is that they are actively involved in the sale of this product, or using it to manufacture other products such as beauty treatments or massage oils.
Those who purchase CBD wholesale generally do so in one of two different ways:
- They buy a white label product
- They buy an already branded product
Those who purchase CBD wholesale as a white label product do so because they are going to use that product under their own branding. Those who buy an already branded wholesale product do so because their business or brand is established and they simply wish to stock their shelves with that particular product.
Therefore, both startup businesses and already established businesses purchase CBD wholesale. The amount that must be purchased for the order and price to qualify as wholesale is generally much more than a consumer would ever have a need for. This is why CBD wholesale is most often a service used by businesses.
How to buy CBD wholesale and set up a store front
You must consider what you plan to do with all of that wholesale CBD that you purchase.
It may be for the purpose of starting an online retail business or it may be for the purpose of opening up a real store front.
You must also consider whether you will be creating your own brand or simply stocking other, already developed brands. Here is the basic outline for buying wholesale CBD and setting up a store front:
- Find your wholesaler
- If you are creating your own brand, you must find a white label wholesale supplier
- If you are just stocking other brands, you can contact the wholesale team of brands that you wish to stock
- Comply with the law
- To be fully compliant with US law, you cannot sell CBD that is derived from marijuana. It must be derived from hemp.
- Create your business plan
- This includes finding someone who is going to process your finance. This is much easier in the hemp CBD industry as hemp is legal under federal law. It is much more difficult with marijuana businesses.
- Build the content of your website very mindfully
- Nowhere on your website can it say that CBD is a fully therapeutic product as this has not been approved by the FDA.
- You must always advise your customers to seek the advice of a health-care professional prior to commencement of treatment using your product.
- You must be fully transparent about what is in your product.
- Set up your store and get selling
- Once you have taken care of the legalities and financing, your store is ready to go.
White label vs. branded wholesale CBD
Prior to shopping for wholesale CBD, you really have to know whether you’re looking for a white label product or a fully branded product. This is important because not all wholesalers provide white label products.
There are multiple benefits to both avenues. To start with, white label products give you a chance to build a brand with what is hopefully a high quality product. Essentially, somebody else has put the hard work and effort into manufacturing a good quality product. You just need to put the effort into branding.
With white label products, you also have the freedom to use that product to manufacture other products. For example, if you purchase a white label CBD oil wholesale, you may use that to manufacture CBD topical lotion which you can then brand with your own label. As rebranding is an aspect involved in white label purchases, this is usually an acceptable practice.
Buying branded wholesale CBD is a different story. The brand has already been developed, and you are probably purchasing it because you are familiar with the brand, trust it and think it’s going to sell easily without you having to do marketing. You also may not necessarily have the freedom to use the product to manufacture other products, but this will depend on the wholesaler and their terms.
Where to buy CBD wholesale
Finding your CBD wholesale supplier may be the most tedious task of your entire CBD distribution endeavor. This is because you have to consider the price, the quality and of course, whether it is white label or branded. Wholesale shopping is not like consumer shopping: you have to know what you want before you step out there instead of letting the market dictate what you want.
So first, make decisions about what you want. For example:
- White label or branded?
- CBD oil or distillate or isolate?
- High quality or low quality?
- High price or low price?
Almost every CBD manufacturer has a wholesale policy, although few skip this part and simply have an affiliate program. If there is a CBD company that you trust, they almost always have a wholesale team you can contact to buy their products. These are things you must consider:
- Does the company provide a third party laboratory report?
- Where is their CBD grown?
- What concentrations of CBD do they offer for wholesale purchase?
Because it is so easy to find a wholesaler, you have to really knuckle down on what you want to provide to the public. Not everybody provides a third party lab report, meaning you might have to. Do you want to obtain it on your own or would you prefer that the wholesale company provides it for you? Also, not every company sells white label products, so this is something you must inquire about with the wholesale team of your chosen company.
It is not hard to find a CBD wholesaler. As mentioned, almost every single CBD manufacturer offers a wholesale service. It is simply about finding the one that matches your needs in terms of price, branding, quality and the form of the product (e.g., isolate, oil or distillate).
Most of the time, the process happens entirely online. You simply apply to your chosen brand to become a wholesale partner. After being accepted, you are given a promotional code which refers specifically to you as a wholesale customer. You then simply purchase the products using your promotional code.
What is the price of CBD wholesale?
In general, across most industries, the wholesale price of a product is 50-60% of the full recommended retail price. In the cannabis industry, this does not always translate. You may find that CBD oil is sold at wholesale price for 50-60% of the RRP, but this is definitely not the case for CBD isolate or distillate.
Most CBD isolate prices start a wholesale cost of between $7-$8 per gram, usually requiring a minimum 100g purchase. However, CBD isolate can be sold for anywhere between $30-$50 per gram. In terms of bang for your buck, this is a great deal.
But before you decide whether a price is good or not, you need to think about what you are going to do with your wholesale product. If you sell all of your CBD isolate at $46 per gram, then buying 500g for $3650 is a great profit margin.
But if you choose to dissolve your CBD isolate into fractionated coconut oil for example, and sell the 1000mg bottle at $57, then your profit margin is even better – especially because fractionated coconut oil is an extremely cheap overhead cost.
The wholesale price of products varies between companies for the following reasons:
- Whether the hemp has been grown in the USA or overseas
- What cultivation practices were used – e.g., organic, pesticides etc.
- What services are provided by the wholesaler such as a third party laboratory report
- The extraction technique used
- The overall quality of the product
At some point, the price point needs to match your expectations of quality and reliability. You may find a cheaper deal at one wholesaler, but may have to compromise on quality or being locally grown, for example. These are the kinds of things that affect the wholesale price, and need to be factored into how much you plan to sell the product at a retail level.
Jumping the desk – How to become a CBD wholesaler
So what happens if you want to be the CBD wholesaler? Well, for that you have to come into contact with a lot of CBD raw products. And for that, you usually have to be teamed up with a hemp farm or otherwise have your own. Essentially, wholesalers make money by moving a lot of product, where most of the time, that product comes directly from the source.
Note how this is different to being a CBD distributor. Distributing simply means acquiring a volume of product from a certain company and distributing it for a commission or a fee. Being a distributor means selling direct to the public whereas being a wholesaler means supplying businesses and participating in B2B sales.
To become a wholesaler, the most important thing is networking. You have to be properly connected with the source of your product. Then, you have to be properly connected with people who want to sell that product.
Want to know more? Contact us and we will be happy to assist you!