The CBD industry is on the rise, but the growth has been limited due to federal/state laws and restrictions. These laws and restrictions also limit the financial feasibility of opening up a CBD business. Furthermore, banks and other financial institutions may not grant you loans directly for setting up the CBD business. Getting start-up money for cannabis business can be challenging. However, these are not the only financial issues facing the growing CBD industry.
Financial Challenges Associated With The CBD Industry
1. Conflicting Laws Regarding The Cannabis Industry
A CBD business can be a riskier business model than other types of startups. In many countries, the government does not allow the purchase and sale of CBD products in the open market. Additionally, there are often conflicting laws between the federal government, state governments, and county governments.
2. Mass Negative Perception For CBD Products
It is no secret that the massive growth in the CBD industry has led to some negative perceptions. There are many misconceptions about the benefits and side effects of CBD, which has led to misinformation.
3. Expensive Licensing
Without a license, you cannot operate any business, much less a CBD business. On top of that, the cost of licensing for a CBD business is relatively high. There is no guarantee that you will get a CBD business license after you apply. Many cities limit the number of licenses they will permit.
4. Shipping Legalities
Some nations allow CBD businesses to flourish, while some nations have strict regulations. Likewise, some states or cities have very limited local laws restricting CBD businesses, but a neighboring city or state might have completely different regulations. This is the core reason why shipping CBD has become the main concern for many companies. Proper planning is essential to ensure there are no delays in product shipments.
5. Payment Related Issues
Payment processing is a challenge for the CBD industry. There is a lot of compliance-related activities that businesses must adhere to, which includes strict financial tracking. To stay compliant, companies often use Cryptocurrencies or specialized payment processing solutions for dispensaries.
Financial challenges affect the CBD industry worldwide. Though there is substantial growth in demand, many CBD companies are struggling to get the necessary funding and financial support for production. Additionally, there are challenges in scaling up the product. This is causing many companies to struggle to keep pace with demand, which impacts their bottom line and market share.