The Fundamentals of Building a CBD Brand on Shopify
Since the passage of the 2018 Farm Bill in December of last year, hemp-derived CBD has become one of the fastest growing retail sectors in the United States. No longer limited to the shelves of dispensaries, consumers can find everything from CBD-infused dog treats to skincare products at pharmacies, grocery stores, and cafes.
A report from BDS Analytics and Arcview Market Research estimates that CBD sales in the United States will exceed $20 billion by 2024.
The CBD industry represents an immense opportunity for savvy merchants, many of whom are likely turning to Shopify for their e-commerce stores.
What to Know: Shopify for CBD Merchants
It’s been about a month since Shopify announced that the commerce platform would support CBD merchants in the United States. Here are some key rules and considerations for anyone planning to launch a CBD store (or already running one) on Shopify should keep in mind:
All Merchants Must Complete the “Attestation for the Sale of Hemp and Hemp-Derived Products”
In order to ensure that all CBD merchants on Shopify are compliant with federal and state regulations, as well as Shopify’s own rules, each merchant must complete the attestation.
Merchants must agree not to indicate that their CBD-derived products have any health benefits (a common practice in the industry) unless those benefits have been evaluated by the FDA. They must assume responsibility for understanding the jurisdictions where they are and aren’t allowed to sell CBD products.
Hemp-Derived CBD Is Allowed, Marijuana-Derived CBD Is Not
The chemical Cannabidiol (CBD) can be derived from two different plants, hemp and marijuana. The key difference between the two plants is that hemp-derived CBD contains less than 0.3 percent Tetrahydrocannabinol (THC), the chemical compound with psychoactive effects often associated with cannabis.
According to federal regulations in the United States, only the production and sale of hemp-derived CBD and CBD-products is allowed. At the state-level, there are still some states that do not allow the production or sale of hemp-derived CBD.
Merchants who want to sell CBD on Shopify must be located in one of the states where the sale of hemp-derived products is legal.
Marketing Channels Are Limited
In the increasingly competitive and complex world that is e-commerce marketing, CBD merchants are essentially playing with one hand tied behind their backs. The largest paid advertising platforms used by most e-commerce merchants, namely Amazon, Google, and Facebook/Instagram, do not allow ads for CBD products.
However, with a combination of high-quality content and some creativity there are plenty of ways for CBD merchants to get the world out about their products without using those ad platforms.
- Education: Creating high-quality content on a blog is a great place to start. Because CBD is a new product, there’s a big opportunity to educate potential customers through thoroughly-researched articles.
- Email: Without paid ads, email marketing is probably the most important marketing channel for CBD merchants. Through email, retailers can showcase new products, run promotions, and ultimately drive traffic back to their site.
Design Is a Differentiator
Although CBD merchants may be at a disadvantage when it comes to marketing, one area where CBD brands have made a concerted effort to stand out is with beautifully designed e-commerce experiences.
Standard Dose does an exceptionally good job of capturing a natural, healing aesthetic throughout their website and tying it back to their line of CBD products. Populum on the other hand puts education at the forefront of their site, even offering new customers 30-day risk free trial.
In order to compete with brands like these, it’s imperative to have a Shopify store that is designed specifically for the unique space that CBD occupies in the e-commerce world.
If a merchant doesn’t have an in-house developer, they can use the Shopify Experts program to bring on agencies like ours, Simplistic, to help design stores that handle the unique ins and outs of a new CBD brand.
This blog was contributed by Scott Cohen, the Director of Optimization and Analytics at Simplistic, a Shopify-centric design and development agency.