How To Legally Sell CBD Online
Wondering “how can I legally sell CBD online?”
You are in the right place! To ease your journey, we’ll break it down for you in a few easy steps.
Note: we are not attorney’s and the following shouldn’t be considered legal advice. This is what we’ve learned on our journey of selling CBD online.
Selling CBD products is a great way to enter a booming industry and earn money. But there are also certain legal requirements you should consider before you begin.
If you want to sell CBD online, you need to be familiar with the laws surrounding the CBD market. This includes the licenses and permits you’ll likely need to do business legally.
How to Sell CBD Oil Online In 9 Easy Steps
1. CBD Legal Obligations
The 2018’s Farm Bill federally legalized industrial hemp extracts. Simply put, any CBD product that is hemp-derived can be legally sold throughout the U.S.
However, there are other legal obligations to consider. To avoid getting in trouble, before opening your online CBD store, make sure you read all your state’s laws about selling cannabinoid products.
And there’s one more thing to consider. Until we have a definitive regulatory landscape, the FDA doesn’t allow merchants to make medical claims about CBD’s health benefits. That’s something you should keep in mind when wondering “how I can legally sell CBD online”, but also when preparing your marketing strategy. This can include product reviews from customers.
2. Business Formation
By establishing a legal business entity, you can protect yourself if your business gets sued. Aside from protecting your personal assets from liability, a business entity can also have tax-saving advantages. We recommend consulting a tax professional.
The business formation procedure is straightforward; You fill out a form with the secretary of state and pay a fee. In a few day’s time, you’ll receive a certificate confirming that your new business officially exists.
3. Know Your Products
Did you know that CBD can be both marijuana and hemp-derived? As long as your products are industrial hemp-derived, you will not need a special license to sell them throughout the U.S.
But what makes hemp different from cannabis?
There are quite a few differences between the two. But what might interest you when wondering how I can legally sell CBD online, is the THC concentration.
Industrial hemp comes with high concentrations of CBD but carries almost no THC. Marijuana on the other hand can have up to 30% THC percent, and as a result, produce psychoactive effects.
You need to know your product’s origin. From farm to the extractor to the warehouse shelf. Also, make sure your products test under the 0.3% THC threshold.
Manufacturing and selling marijuana-derived CBD oil is considered a federal offence in many states. To be safe, we advise staying away from these products.
4. Get a CBD Wholesaler’s License
While you don’t need a special license to sell industrial hemp-derived CBD oil, you will still need a reseller license.
A wholesale license allows you to buy the CBD products in bulk, at discounted prices, and resell them in your online store for a profit.
You can find more information about this on our other post: Do I need a license to sell CBD?
5. Apply For a Tax ID Number
Another thing to consider when learning how to sell CBD oil online is taxes.
Before selling CBD, you will need to register with your local taxing authority for a variety of taxes. These can include income and sales taxes, but also employment-related taxes.
In order to apply for a tax ID number, you will first need to get a federal Employer Identification Number (EID) and open a business account.
6. Keep Your Business Clear and Transparent
If you want to be successful in the CBD industry and to stay out of legal trouble, one of our biggest pieces of advice is to be transparent. Keep your business’s details and third-party lab testing available for anyone interested.
It's one thing to sell cannabinoid products in a brick and mortar shop, but it’s totally different when you’re doing business online. Your customers cannot see your face or check your store.
Being clear and transparent can also save you time and money. Avoid making false promises that your products cannot deliver on, and you will not disappoint your customers. They will find your brand trustworthy, reliable, and will know what to expect.
7. CBD Payment & Shipping Restrictions
"Is it legal to sell CBD in all 50 states?" and "Is it legal to mail order CBD oil?" are two questions we hear often.
Shipping CBD products by mail or private couriers is legal across the United States. However certain states have laws restricting ingestibles.
To be sure about your product's origin and quality, choose a reliable CBD supplier. Partnering with a high-quality producer is one of the most important things to consider when wondering how to sell CBD oil online. It can help ensure that your business is positioned well in this competitive field.
Also, you need to know that not all third-party payment processors allow you to sell CBD through them. So you’ll need to make sure that you choose a payment processing which covers both your' and your customer's needs.
8. Ensure Your Business
This one is simple.
To operate lawfully and safely, your CBD business needs to be insured. Companies that don’t have insurance can face serious financial and legal repercussions.
9. CBD Age Restrictions
As CBD age restrictions vary from state to state, some companies choose to limit their products’ sale to customers that are above the age of 18.
Although CBD regulations are still in a grey area, if you want a clear cut answer about age restrictions, just consult your local state’s laws and regulations.
Still, wondering how I can legally sell CBD online?