How Much Does it Cost to Start a CBD Company?

It’s always crucial to take the time to understand all the costs that are associated with starting your own CBD company. When you can identify all of your running and starting costs, you can make better-informed decisions regarding all aspects of your business. While a lot of costs are subjective, here are some guidelines to give you a better idea of how much it costs to start a CBD company.

Company Costs for CBD Startups

  • Training and Consulting: Since there’s a lot of education that’s required with this industry, it’s a good idea to set aside money for training and consulting purposes. Whether you need the education yourself or you plan on having employees that will require training, CBD courses can cost around $500 or less.
  • Business Formation: In order to form your business, you may need a legal professional. Some businesses are able to start their LLCs on their own, saving this cost. This can run you from $0-$500 depending on what avenue you decide on.
  • Facility: If you plan on manufacturing your own CBD products for sale, you’ll need to rent an industrial facility. This cost is subjective and is based on your rent and security deposit. If you plan on solely white labeling from a CBD wholesaler or established CBD brand, you won’t need to rent a facility.
  • Business Licence: Your business licensing costs are dependent on what city you live in. Generally, this can cost anywhere from $0 to $500, depending on where you plan on starting your CBD company.
  • Seller’s Permit: This cost is also dependent on the city. Some cities don’t charge anything for a seller’s permit while others do.
  • Bank Account: You will need to find a CBD merchant-friendly bank account from one of your local banks. These accounts typically require a base amount, starting at $250+.
  • Merchant Processing: CBD merchant processors usually require a security fee of around $500.
  • Insurance: Insurance isn’t as common for online companies and smaller businesses. Company insurance is more important for larger companies and brick-and-mortar establishments. If you’re planning on starting an eCommerce site, to begin with, you may forego insurance costs.
  • Logo Branding: Some businesses are able to create their own logo, helping save this cost. Branding is so important, especially in the current CBD market. Hiring a professional artist to design your logo can cost around $250 to $500.
  • Trademark: Trademarking isn’t required but is recommended, especially for companies with unique CBD products or have a unique niche. The trademark process can cost $250 if you complete it yourself in-house or can cost $2000+ if you decide to hire a professional.

Product Costs for CBD Startups

  • White Label: As a CBD startup, you may or may not have white labeling costs. If you plan on white labeling products from a CBD manufacturer or established CBD brand, these costs will be provided from those companies. White labeling costs typically cover the product itself as well as the packaging. You’ll either provide the labels or the artwork for the labels based on what company you’re working with.
  • Custom Formulations: If you plan on creating your own product formulations, here are the costs that are associated:
  • CBD: This number is subjective and is based on what CBD wholesaler you purchase from. As a startup, you probably are purchasing smaller amounts of CBD, to begin with. The more product you purchase, the better the rate. For instance, a smaller order to start can cost around $15/gram for 100 grams. This number is high but is a good starting point if you’re making a small order to start.
  • Other Ingredients: This is the cost of the other ingredients that go into your CBD product formulations. This number is also subjective but a good ballpark number is $500.
  • Packaging: Packaging costs can vary based on numerous factors. CBD product packaging can cost around $500-$2500 for the first run.
  • Lab Testing: You can save on lab testing by including the COA test results from the CBD wholesaler that you purchased your bulk CBD from. If you’re white labeling, that company should provide COAs as well. Some companies like to take it a step further by independently testing their finished products. This independent, third-party testing can cost around $300 to $800 per test.
  • Equipment: Chances are that you’ll need special equipment for your unique formulations. This number is also very subjective and can range anywhere from $200 to $100,000+.

Marketing Costs for CBD Startups

Marketing costs are completely subjective– you can spend as little or as much as you want on marketing. The CBD market is overly saturated, making marketing strategy significant, to say the least. Here are some of the potential categories for marketing expenses:

  • Social Media: Influencer outreach, affiliate marketing, sponsorship marketing, Facebook and Instagram ads, etc.
  • PPC: Pay-per-click marketing through certain websites
  • Banner Ads: CBD product ads through certain websites
  • Podcasts: Podcast advertising can be relevant and timely for listeners
  • Radio: Radio ads can be beneficial for brick-and-mortar locations and eCommerce sites
  • Print: Finding the right publication can provide the right target audience exposure
  • Funnel: Funnel marketing is crucial for any online business. These are costs associated with driving business to your website including SEO.
  • Content Creator: Whether you decide to do this yourself or hire a professional, you’ll need someone to write all the content for your website, product labels, etc.

Website Costs for CBD Startups

  • Design: You can create your own website based on existing themes from WordPress and Shopify starting at $40. You can also hire a professional to build your website which can cost $500+.

Total Startup Expenses for CBD Companies

While there are a lot of variables to consider, a good, general total for starting your own CBD business is around $10,000. There are some tasks that you can take on yourself to save money in regards to licensing, trademarks, etc. If you don’t have existing, strong product formulations, you may want to consider white labeling in order to save money on renting an industrial facility, purchasing specialty equipment, and all the other ingredients and components you would need for product creation.

Learn More About the Costs Associated with Starting a CBD Company

Hemp Depot is proud to share all the leading tips and information on starting a CBD company. Finding the right CBD wholesaler and/or CBD company to white label from is so crucial in the success of any CBD startup. Make sure to always check COAs and compare pricing. For more information on the costs associated with starting a CBD company, please contact us!

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