Do you want to know if you need a license to sell CDB infused products? If YES, here are types of license you need and how to get them Retailers and distributors of cannabinoid hemp products must obtain a license or permit from the OCM to do business. Navigate the legalities of selling CBD oil online in this complete guide to marketing CBD products and shipping ecommerce store orders.
What Type of License is Needed to Sell CBD Infused Products in 2022?
Do you want to know if you need a license to sell CDB infused products? If YES, here are types of license you need and how to get them. CBD (cannabidiol) is becoming increasingly popular and entrepreneurs are steadily trying to invest in this new market so they they can get a healthy chunk of the market before it becomes saturated.
Anybody that is well informed in the health, wellness, dietary supplements, or holistic medicine industries can very easily start this business. In fact, for sometime now, the growing awareness of the CBD industry made it one of the most talked about topics on social media.
If you plan to purchase your product from a wholesaler and become a CBD oil products distributor, you will need to get a resale license if that is a requirement in your state. CBD is becoming increasingly popular, and adding CBD products for sale in your boutique, clinic, cafe, or practice can be an easy and profitable new income stream.
As long as you’re selling high-quality CBD products from a reputable source and your business stays compliant with any regulatory requirements for your state, you should be able to sell CBD.
Table of Content
If you are selling CBD oil derived from marijuana that has a THC percentage of over .3%, then yes you will need a license, provided it is in a legal state. However, if you are selling compliant hemp-derived CBD with THC percentage under .3%, then that is dependent on the state you reside in.
While there are federal guidelines, each state has its own laws and guidelines when it comes to hemp and hemp-derived products. Purchasing and possessing CBD is legal in California. Retailers do not need any special licensing to sell CBD products there. Though infusing food and beverages with CBD is illegal in California.
Basic Legal Requirements
If you are in a state that requires that you get licenses to sell your CBD infused products, these are the licenses you will be expected to start with.
4. DBA Filing
Your DBA (Doing Business As) allows you to conduct business using a name that’s different than the name included in your incorporation papers.
5. Sales Tax Permit
This is for retailers of physical or digital products or services, both online and offline. If you have to collect state and local sales taxes, you need this permit.
Bureau of Cannabis Control
CalCannabis Cultivation Licensing
CalCannabis operates as a division of the California Department of Food and Agriculture (CDFA), and is responsible for licensing businesses that are cultivating medicinal and adult-use (recreational) cannabis. They also manage the track-and-trace system used by the state to record the movement of cannabis product through the distribution chain.
Application For Licenses to Sell CBD Products
Department of state health services provides an online platform for the registration and licensing application for retailers and distributors for CBD products. These applications are submitted in the business and professional license category. When you apply for licenses, there is a set of documents that need to be submitted with the application.
First, you need to submit the documents online at the Department of state health services website for the license to sell CBD products. The fingerprint submission process will start. You will typically get an email from the fingerprint service code
From the email, you need to print the FBI authorization form and fill it. Then your fingerprint submission appointment is scheduled and this can also be done using the phone number as well. If you are to work from various locations in the state then you need to add them all during the registration process.
Retailers & Distributors
As part of the Cannabinoid Hemp Program , businesses selling cannabinoid hemp products (both online and in person) are required to obtain a Cannabinoid Hemp Retail License from the Office.
Cannabinoid hemp products include many cannabidiol or “CBD” products available for purchase today, including tinctures, oils, topicals, pills, capsules and food or beverages that are intended for human consumption or application, for their cannabinoid content.
Distributors of cannabinoid hemp products must obtain a Cannabinoid Hemp Distributor Permit before selling or distributing cannabinoid hemp products manufactured outside of New York State to licensed Cannabinoid Hemp Retailers. This ensures that cannabinoid hemp products coming in from out-of-state meet all the requirements of the Cannabinoid Hemp Program.
The Office of Cannabis Management is now accepting applications for Cannabinoid Hemp Retail Licenses and Distributor Permits.
*Note this is not a license to sell marijuana. The Cannabinoid Hemp Program only regulates products derived from hemp. If you are interested in the future Adult-Use Cannabis Program, please visit the Adult-Use page here.
Cannabinoid Hemp Retail and Distributor Application Requirements
Before applying, please review the Cannabinoid Hemp Retail & Distributor application requirements below.
- A summary and description of the type of cannabinoid hemp product(s) you intend to sell (e.g. tincture, food, vape, topicals);
- Source(s) of the cannabinoid hemp products from whom you intend to purchase, which includes the name and contact information of any manufacturer or distributor.
- Proof from the Department of Taxation and Finance that you are registered to collect sales tax in New York State (applicants will upload a copy of their Certificate of Authority for each applicable retail location);
- An attestation that you will comply with the rules and regulations of the New York State Cannabinoid Hemp Program ;
- Submission of a $300 Cannabinoid Hemp Retail License fee for each retail location selling cannabinoid hemp products; or for a Distributor Permit, submission of a $300 Distributor Permit fee. Cannabinoid Hemp Retail licenses and Distributor Permits are valid for one year from the date of issuance.
How much does a Cannabinoid Hemp Retail License Cost?
The Cannabinoid Hemp Retail License costs $300 per retail location and is valid for a year from the date of issuance.
How much does a Cannabinoid Hemp Distributor Permit Cost?
The Cannabinoid Hemp Distributor Permit costs $300 per distributing location and is valid for a year from the date of issuance.
Do I need a license for each retail location?
Yes, each location offering cannabinoid hemp products for sale is required to obtain a license.
How long is the Cannabinoid Hemp Retail License valid for?
Cannabinoid Hemp Retail licenses are valid for one year from the date of issuance of the license.
How long is the Cannabinoid Hemp Distributor Permit valid for?
Cannabinoid Hemp Distributor Permits are valid for one year from the date of issuance of the license.
If I have a Cannabinoid Hemp Retail License, do I also need a Distributor Permit?
It depends. If you sell cannabinoid hemp products to consumers in New York State and sell cannabinoid hemp products manufactured out-of-state to cannabinoid hemp retailers in New York State, you will need both a Cannabinoid Hemp Retail License and Distributor Permit.
Trouble creating a New York Business Express (NYBE) Account?
Call the NYBE Contact Center at (518)-485-5000, Monday – Friday 8:30 am – 4:30 pm for assistance. When you call the help desk you will hear a list of options, you will want to “Press 4” for the Cannabinoid Hemp Program and then “Press 1” for assistance with NYBE profile login.
Cannabinoid hemp applications are available on the New York State Business Express (NYBE) website. Submitting an application through (NYBE) creates a profile for your business or organization. You will be able to reuse the information contained in your business profile to submit future applications when using NYBE . Once you have created a business profile for your business or organization, it will be associated to your NY.GOV login and only you will be able to submit applications for your business or organization. Others using NYBE who try to start an application with your business identifiers, such as the Legal Name or federal EIN , will be prevented from completing the application.
If you are trying to complete an application for your business or organization and are prevented from completing the application because a business profile already exists, consult with those within your business or organization to check if they have started a profile using NYBE . If you do not have access to the NY.GOV account with your business profile or do not know who within your organization created the business profile, you can request to have your business profile linked to a different NY.GOV account. The NYBE Contact Center at (518)-485-5000 can also assist with these login issues.
Join Our Mailing List
Add your name to our mailing list to receive automatic updates on the progress of New York’s Cannabinoid Hemp Program . You may unsubscribe at any time.
How to Sell CBD Online: Information and Tips on Selling CBD From Home
The cannabis industry continues to legalize and explode before our eyes. And it didn’t take long for its more legal archetype, Cannabidiols (otherwise known as CBD), to become a hot commodity.
You can find CBD products in nearly every large retailer these days, including Walgreens, CVS, Ulta, and even teen brands like American Eagle and Abercrombie & Fitch. But just as fast, it’s become a viable ecommerce solution for those who want to sell and buy it online.
If you follow ecommerce product trends, you know that CBD is everywhere — for humans, for pets, in your drinks, in your chapstick. It seems as though there is CBD-infused everything.
Of course, it’s not as simple as throwing up a website and watching the buyers flood in. If you decide to sell CBD at all — let alone online — you’ll face a complicated industry with complex legal and marketing challenges.
Before you start selling CBD products online, you should know exactly what to expect and how to prepare. Read on to get the full rundown on how to navigate building a CBD income stream in today’s climate.
Note: This article is solely for informational purposes and does not constitute legal advice.
What is CBD?
You may hear CBD being described as “cannabis oil but without THC,” and that’s close but not entirely accurate. CBD, or Cannabidiol if you’re using the scientific term, is an active component of Cannabis — a small, effective part of the larger whole.
Cannabis is made up of different cannabinoids. Cannabidiol is one of them. According to users, this is the ingredient that helps alleviate an array of symptoms, including pain, anxiety, and even epileptic seizures.
What helped CBD boom into its own segment of the larger cannabis market though is the fact that it doesn’t contain THC (tetrahydrocannabinol). THC is the ingredient in cannabis that causes the widely-known psychological effects: the euphoria, short-term memory loss, increase in appetite, paranoia, and more.
THC is the ingredient that many governments around the world have fought to keep illegal, whereas CBD is the ingredient that simply acts as a natural medicine without any psychological effects.
Because of this, CBD is ahead of the game in the cannabis industry in the sense that it’s more widely accepted and legalized — in most cases.
The CBD market is booming
The number one rule of going into business is “Go where the market is.” One clear way to tell that is by gauging where consumers are already spending their money.
You might look at the explosive evolution that the CBD industry has undergone in the past couple of years and find yourself intimidated by market saturation and competition. Fret not — there are still plenty of pieces of the pie for everyone who wants to try and partake.
Just how big is the opportunity, exactly?
The CBD market is worth billions
The CBD industry is projected to be worth $20 billion by 2024. To put this into perspective, ice cream was only worth $2.27 billion in 2018. CBD is well on its way to being a household item for frequent buyers who will come back again and again as long as you can fulfill the product.
But it’s not that simple. What about the legalities of selling CBD products?
New legal terms for CBD oil
CBD has definitely undergone its share of legalization battles and still has some opposition, but there has been major progress along the way. The 2018 Farm Bill legalized hemp production across the US, which is great for sellers because CBD is produced from industrial hemp.
The bill essentially states that as long as your CBD product has less than 0.3% THC in it, you’re free to sell it, with caution.
Legality of selling CBD
For obvious reasons, the legalization of CBD has been widely disputed across the board. As long as it’s a controversial topic, you’ll want to prescribe to your favorite news channels and set up alerts for updates to CBD laws. With that being said, a plethora of laws have been put in place that you need to be aware of, both federally and at the state-level.
In the United States, there aren’t any concerns at the moment other than making sure your products contain less than 0.3% THC. CBD is otherwise legal nationally. It is recommended that you stay aware of the state of legalization as laws can always be overturned.
It’s worth noting that the FDA has stepped in on occasion to call out unapproved products that market false health claims.
Statewide laws will of course vary by state. Some states allow marijuana-produced CBD, while others only allow industrial hemp-produced CBD. Your best bet is to simply sell the industrial hemp-sourced CBD, as it won’t have high THC levels and is accepted across the nation. Otherwise, you’ll want to get in touch with local representatives or research laws in your state to see what you’re allowed to sell.
From that information, build a list of products that you know are legal for you to sell and stick with your regular inventory to avoid any legal mishaps.
How to start selling CBD oil online
Once you’ve dialed in your legal allowances, it’s time to start setting up shop. There is a simple game plan you can follow to get set up and start selling online. From there, you can start refining your product, marketing, and ecommerce fulfillment strategies to grow your business.
1. Obtain licenses
In order to sell CBD, you’ll need to get a couple of licenses. One is a business license. Usually, small businesses go for an LLC. Research your preference at your local government website. Registration usually costs about $100 in most cases.
You’ll also want to get a resale license if you plan to purchase your product from wholesalers. Much like business licenses, resale licenses and permits are handled at the state-level, which can be handled differently state-to-state. Discover what your state requirements are to determine if you need a resale license and how to acquire one.
2. Find a certified supplier
You’ll want to find a reputable supplier that will sell you high-quality products (such as tinctures, oils, hemp products, and more) and is also certified to sell by the state or federally. They’ll also need to get regular tests performed by third-parties to make sure the quality is assured and you’re selling quality products. Many CBD companies have their own hemp farms.
3. Build your website
Now that you have the paperwork and selection process out of the way, it’s time to build your website. First, you need a domain name (or a “www.yoursitename.com” web address).
One of the most popular platforms to buy domains from is GoDaddy.com. But you can just as easily get your domain name from most web building platforms. There’s no shortage of platforms out there that make it incredibly easy for you to build an ecommerce site.
For example, BigCommerce offers full-featured solutions for merchants of all sizes, with no additional fees for selecting your own payment gateway.
Be careful to cover the terms of service and community policy to make sure you’re advertising and selling your products within the boundaries set by the platform.
You’ll need to find reliable credit card payment processing, which can be tricky for CBD products as the payment gateway landscape has been changing a lot in this industry.
CBD is not currently approved by all payment processors (e.g., PayPal), so you’ll need to make sure you’re working with a company that can do this. Note: Credit card fees with CBD gateways may vary by merchant based on a risk assessment done by the processor.
4. Market your CBD products
Now that your website is live, it’s time to bring in the buyers. You might think the “build it and they will come” mantra rings true here. Sorry to say, that’s not the case.
In a land where it’s difficult to market CBD using a lot of popular methods (as Facebook Ads, YouTube Ads, and other common ecommerce marketing channels ban these products from their advertising platforms), there are still two viable options that have the potential to bring in a lot of profit if you play your hand right.
The first is SEO, or the art and science of getting Google to rank your site above others in search results to show potential buyers your website first. In order to succeed with SEO, you’ll want to get an SEO professional to audit your site. They can make sure that Google views things like your site speed, meta data, image optimization and other components favorably. These things help Google trust that your website is worthy to show visitors.
You’ll also want to start a blog, master the skill of keyword research, and put out fresh content that captures the intent of what people are searching for. Make sure you’re targeting terms that bring in potential buyers and not just visitors looking for information on the topic.
Once you start getting organic website visitors through your SEO efforts, you’ll want to start an email list and use your website to grow it. In exchange for an email address, you can offer discounts or even free informational PDFs and trainings on CBD.
When visitors provide their email address for your freebies, they’re giving you permission to nurture the relationship and inform them of more promotions moving forward (e.g., having a sitewide sell for 4/20 or a Black Friday/Cyber Monday deal).
You can also look elsewhere and try partnering with marketplaces like CBD Oils, Ganjapreneur, and Pot.com, or CBD-specific ad platforms like Traffic Roots.
5. Fulfill and ship customer orders
You’ll need a system for warehousing your CBD products and managing inventory over time. When you’re first getting started, this may be done in your home. After experiencing growth, you’ll want to expand into a fulfillment center by either signing a warehouse lease or outsourcing fulfillment.
Just make sure your fulfillment technology syncs up well with your ecommerce platform, payment processor, and other software. For example, ShipBob is tech-enabled fulfillment company with warehouses across the US to help you spend less time worrying about packing and shipping orders and more time on growing your brand.
“Our fulfillment is on autopilot. ShipBob saves us so much effort, and the opportunity cost savings has been substantial. ShipBob’s platform is easy to use and navigate, the interface is intuitive, and the analytics are very clearly laid out. Today, our health and wellness brand sells three CBD products in the United States.”
Yannick Crespo, Co-Founder & President of Pot d’Huile
Take CBD company Nature’s Ultra. Last year, they started to experience a surge in orders. They were managing CBD shipping and logistics themselves but didn’t understand just how massive and difficult retail fulfillment was. They were getting so deep into the logistics and supply chain side that they didn’t have time to focus on their core products.
They knew they’d be doubling and then quickly tripling their order volume, so they wanted to get help on the front-end to ensure a long-term relationship with a lot of room for scalability. They searched for companies that could give them something similar to Amazon’s delivery capabilities for their website orders, so they partnered with ShipBob.
“Now that we’re working with ShipBob, we can easily ship to all 50 US states with ease. We use ShipBob’s fulfillment centers in Dallas, Texas, Chicago, Illinois, and Bethlehem, Pennsylvania. They help us to maximize our shipping and ultimately our growth potential.”
Andrew Hardy, COO of Nature’s Ultra
Challenges of selling CBD online
Once you get your CBD store up and running, you will likely face a new set of challenges as you grow. Here are a few considerations to help you break through the crowded space and set your business up for success.
Standing out in the market
In a saturated market, you must consider your competitors. Think through the following:
- Which keywords are your competitors ranking for and how can you write better content to outrank them?
- What kinds of products are they providing and how can you stand apart?
- What can you do differently from your competition that your customers will love?
Think through the entire customer experience to uncover where you can differentiate, whether that’s selling unique products, providing custom packaging or a branded insert, or even offering free 2-day shipping.
As mentioned earlier, you’ll want to go through the proper state channels to figure out what your regulations are so you can abide by them. Your best bet is to take inventory of any regulations, rules, and restrictions, and create company policies around them to make sure you’re following them. With the industry continuing to evolve, be sure to stay updated on these regulations.
As selling CBD becomes more widely accepted, you may eventually be able to sell internationally, ship to other countries, and build out an international shipping strategy. In the mean time, don’t ship products to destinations where they’re not allowed.
Without the proper support and systems in place it can become really difficult to fulfill your orders especially as demand picks up. When you can no longer go at it by yourself, you’ll need to find a solution that will ensure you’re able to deliver the products your customers buy in a timely fashion.
“We place considerable expectations and pressure on shipping so we can get close to what Amazon does. With ShipBob, 100% of our orders are going out via 2-day shipping. We see that people are far more likely to order and keep ordering from us when 2-Day Express Shipping Program is an option.”
Andrew Hardy, COO of Nature’s Ultra
Ecommerce shipping can be very challenging and order fulfillment boils down to three common options. What works for one business may be cost-prohibitive or inefficient for another.
There are plenty of CBD brands that fulfill orders by themselves. They keep inventory at home and run to the post office, or use local warehouse space to pack and ship each order by investing in the infrastructure and running operations. This option is often best when getting started or if order volume isn’t too much to handle. As your store grows, you need to scale seamlessly and find a more streamlined solution.
Dropshipping is when a manufacturer handles both product procurement and shipping orders. All you do is market the product without touching inventory. This can work well for some products, but is often difficult for CBD oil because you have less control over quality, product selection, and speed of shipment.
3PL (third-party logistics) solutions
3PLs are a happy medium as you don’t have to purchase land or hire a team to pack boxes, but you still have control over selecting a manufacturer. The 3PL is the middleman that stores your inventory close to your end consumers, while helping you quickly and seamlessly get the products shipped out.
“We were shipping a dozen orders per day, and now we ship hundreds per day. ShipBob has allowed us to scale up and become successful — we have gone from $70,000 in sales in 2018 to over $7 million in sales in 2019. When it comes to delivery, accuracy and timing are the most important to us, and ShipBob helps us execute on that.”
Andrew Hardy, COO of Nature’s Ultra
Starting an online CBD business might have some legal and marketing challenges involved, but with the growth of the industry and continued legalization, now is the time to get in. Since it’s still a young industry, you can still get ahead of the curve.
Already running a CBD store or anticipating a huge launch? Get in touch to learn how ShipBob can handle your CBD fulfillment so you can focus on your brand — not packing boxes . Request fulfillment pricing today.
Kristina is the Director of Marketing Communications at ShipBob, where she writes various articles, case studies, and other resources to help ecommerce brands grow their business.