Intelligence

How To Go About Starting A CBD Business In The UK: An In-Depth Guide

We think there’s no opportunity more exciting right now than starting a CBD business in the UK.

It provides access to a retail market which was worth an estimated $1bn (approx. £800M) in the UK in 2021, according to The Association for the Cannabinoid Industry (ACI).

Of course, there’s plenty to think about when starting a CBD business in the UK. You may be wondering, realistically, can I start a CBD business? Where do I begin? What’s the first step?

Don’t worry, we’ve put together an in-depth guide, based on our extensive experience.

If you’re interested, ask yourself a few important questions first and then read on to find out how to legally launch a CBD business and build a presence quickly.

1. Research the market

Do your research thoroughly and make sure you’re aware of potential threats, for example, the competition you will face – and risks, including a few common misconceptions about the UK law on CBD.

CBD is legal in the UK as long as it does not contain any more than 1mg of THC per pack – a trace amount.

THC is a controlled substance under the Misuse of Drugs Act 1971.

Industrial hemp can only be legally cultivated if its THC content is below 0.2%. There are also parts of the plants that are outright illegal to possess, sell or buy in the UK – such as flowers or buds.

Make sure you understand all the relevant legislation before starting a CBD business in the UK.

2. Evaluate the competition

In terms of competitors, it goes without saying that with the wide range of very lucrative CBD business opportunities out there, the battle for market share is well underway already.

There’s plenty you can do though to put your CBD business ahead of the competition – such as collecting relevant, robust data to look for white space or untapped potential.

Before starting a CBD business in the UK, evaluate the competition and check out our nine steps that will help you differentiate from other companies.

3. Identify your CBD opportunity

The most popular CBD products in the UK are oils, according to YouGov research, but while that means the demand will be high, the competition will be fierce too.

There are many potential opportunities to consider when starting a CBD business in the UK – how about cosmetics, edibles or drinks?

We’ve put together a list of 10 CBD business opportunities you could capitalise on.

4. Write a business plan

Once you’ve identified your opportunity, whether it’s CBD oil distribution or something else, write a business plan.

Any entrepreneur asking themselves ‘Can I start a CBD business?’ will need to get this right.

Outline your objectives, strategy and financial forecasts – with a view to securing funding.

If you’re not sure where to start, the government provides templates and example business plans you can download for free.

5. Create customer-centric CBD products

Start by identifying what your customers will want, then work backwards. Try to pinpoint their unmet needs through ideation sessions.

Ideally, include a few carefully chosen consumers – they’re the ones who use the products, so they’ll likely have some interesting views on what works well and doesn’t.

According to one consumer research report, 28% of people asked said that the quality of the CBD was the most important factor when deciding which CBD product to buy. Other reasons included: trust in the brand, trust in the retailer, level of CBD and the cost.

However, your own research may reveal other differentiating factors too.

6. Get feedback on your products

Long before launching, we recommend collecting consumer feedback – on your marketing, prototype concepts and so on. It’s a key part of starting a CBD business in the UK.

You could run focus groups or host online communities to check that your initial ideas are on the right track.

Feedback should be an ongoing process – continue asking for it throughout development and after launch too. Here’s how to do it and how to use it.

7. Secure any required licences or approvals

Familiarise yourself with the CBD product approval process in the UK – we’ve written a very detailed guide about the Food Standards Agency’s novel food application process.

However, bear in mind that depending on your CBD product type, there are other licensing requirements to prepare for.

We’ve also written a comprehensive overview about the different approvals you may need – for example, if you’re planning to sell CBD cosmetics or cultivate industrial hemp. 

8. Choose a name for your CBD business

Your CBD business name will be a key part of your branding, so it should be a good fit with the qualities you’re trying to communicate to your customers.

It should also be SEO and word-of-mouth friendly, so make it catchy and don’t make it hard to spell.

Don’t forget the other crucial steps – searching for trademarks, trying to get the domain name, etc.

9. Decide on your business structure and register

When you’re thinking about how to legally launch a CBD business in the UK, this is a key step.

You’ll need to register your business with the government – either as a:

  • Limited company
  • Partnership
  • Sole trader

There’ll be different rules to follow depending on your type of business, where you work and who you hire.

Starting a CBD oil business in the UK

10. Open a business bank account

This is essential for a limited company in order to track:

  • Cash balance
  • Money owed to your business
  • Money your business owes to creditors
  • Employee payroll

You’ll need to provide ID for all company directors, proof of address and your business registration information.

11.  Get insurance

Insurance will protect you against a wide range of unexpected business costs and risks.

For example, it can cover mistakes, damage to your premises, legal costs, supply chain breakdown and much more.

A key requirement, when you’re ready to think about how to legally launch a CBD business, is employers’ liability insurance for your staff.

12. Choose your suppliers

It’s rare for companies to manage the entire new product development process themselves – figure out which parts will be more cost-effective to outsource.

For example, can you bulk buy packaging? Or work with a digital marketing agency?

If you need raw materials, white-labelled products or consultancy services, we can help.

13.  Think about distribution

Of course, retail outlets – online and offline – are a key part of the supply chain. Will you sell your products via your own stores, or go through independent retailers?

If the latter, then think about what they’ll want from you. What types of products do they want to stock?

Retailers also want to see proven results, a good reputation and clear customer guidance – find out more in our helpful guide here.

14. Ensure compliance with other rules and regulations

To wrap up our steps covering how to legally launch a CBD business, take note of the UK’s rules on storing and using personal data.

Also, if you’re planning to run a CBD e-commerce store, be aware of the guidelines for selling products online.

There are also rules to follow if you want to export or import anything abroad.

15. Join trade organisations

For a helping hand, sign up to one or more trade associations – they can provide valuable support when you’re starting a CBD business in the UK.

They’ve been set up to form best practice frameworks and campaign for a well-regulated, safe industry in the UK.

Two of the most prominent UK organisations are the Cannabis Trades Association and the aforementioned ACI.

16. Establish and grow your brand

Stand out from the crowd with a strong brand, one that communicates the benefits of your products in a considered, informative and responsible way.

Always remember that you must not make any medical claims about your CBD products.

One way to spread the word on social media is through celebrity endorsements – read our guide on how using celebrity endorsements to sell your CBD products works.

17. Develop strong relationships with your customers

It’s still a nascent industry, so your customers will likely look to you for guidance and a better understanding of everything the CBD market has to offer.

Prioritise excellent customer service. Loyal customers will help you to increase your profits, but dissatisfied ones won’t hesitate to switch brands.

Here’s how to help your customers shop for CBD.

18. Ensure transparency and trustworthiness

Finally, throughout the process of starting a CBD business in the UK, every decision you take should have transparency and trustworthiness at its heart.

Reputation is vital in this growing industry, which risks being negatively impacted by low-quality products on the market – some are badly mislabelled.

Find out more about building the reputation of your CBD products here.

Summary: Starting a CBD business in the UK

We hope our comprehensive guide to the early years of starting a CBD business in the UK has helped you.

The order you tackle the above steps may vary – and you’ll find that several of these stages are ongoing responsibilities – but however you approach it, enjoy the journey.

So, can I start a CBD business? Yes, you really can!

For any further queries about starting a CBD business in the UK, CBD products or our services, please contact us.

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