Despite the investment and hype, starting a CBD brand is not without its challenges. One hurdle is accessing social media advertising, be it because of controversy around certain cannabis-derived ingredients and the resulting restriction around advertising, or the missing funding for largely growing advertising costs. “The fact that CBD brands are in this grey area, it’s really hard to get traffic to your website, which kills the model for DTC. Secondly, if you don’t have a lot of retailers who are willing to put CBD on their shelves, you have a distribution problem,” Dillon adds. Furthermore, CBD is illegal in the states of Indiana, Kansas, Kentucky, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, and Texas, and that is only within the US.
From a formulation perspective, regulations are also much tighter. “I don’t think a lot of consumers are aware of how much testing one has to do, and the scale factor. If I was to do a CBD version of a body butter, I would do that in a GMP-certified factory and send it to get testing, that could be anywhere between $500-700 per batch. The cost of doing business is higher and the legal framework is more challenging for emerging brands on the regulatory, marketing, and distribution side,” Dillon emphasizes.
There are knowledge gaps from both a retailer and consumer perspective on CBD, leading to some brands altering their original mission statements to expand beyond cannabinoid messaging in order to expand reach, but at the same time increasing competition. “CBD brands tell a different story of plant-based wellness, and then emphasise the other ingredients or launch non-CBD SKUs, which is probably to do better marketing. But then you’re not competing with other CBD brands, you’re competing with other products in your category,” Dillon explains.
Breaking down the stigma and old stereotypes around CBD has been a huge aid in the category’s growth. “A lot of people in the space are trying to change those old stereotypes and traditional trains of thought. There’s just so many helpful benefits, that it’s really important for us to continue to educate and provide that information to people,” Jamie Lea, founder of Toastyy, explains.
The former Uber executive turned entrepreneur founded the brand in response to the effective application of CBD for her athletic recovery and Hashimoto’s treatment. “When people first heard that I was going into CBD and cannabis, they still looked at it as someone selling drugs. It’s so hard to navigate getting a website and payment processing up, because some companies don’…….