As CBD sales in the UK go from strength to strength, it may seem like there has never been a better time to jump on board and start a CBD company. Unfortunately, it’s not quite as simple as that. Hopefully, we can try and explain the latest rulings regarding starting a CBD company in 2023. The benefits and pitfalls when it comes to creating a new CBD brand.
The Food Standards Agency and the Novel Food Catalogue
Started in April 2000, the Food Standards Agency (FSA) is the governing body regarding UK Food Safety. They describe their role as “We regulate the food system in England, Wales and Northern Ireland. We directly deliver controls in meat, primary dairy and wine production. We work with local authorities who inspect local businesses selling food – setting the inspection framework, providing advice and guidance.”
With their main headquarters in London, they also have offices in York, Birmingham, Wales, and Northern Ireland, they work closely with local Trading Standards to ensure all food sold is safe and legal.
Novel Food is defined as “food that had not been consumed to a significant degree by humans in the EU before 15 May 1997”, when the first Regulation on novel food came into force. Anything that the FSA class as a “Novel Food”, has to be submitted for verification via the Novel Foods Catalogue. This will include:
. A Full Toxicology Assessment
. Stability Assessment
. Total ADME (Absorption, Distribution, Metabolism, and Excretion, are the internal processes that describe how a drug moves throughout and is processed by the body)
. Genotoxicology (the branch of toxicology that deals with the genetic effects of toxic substances on the human body)
All of the above tests can easily cost between £30k and £100k and this is per product (CBD Oil, CBD Paste, CBD Capsules etc). This would normally mean that starting a new CBD brand would be almost impossible unless you were a large company.
On top of this, no new CBD brands are allowed to be created unless their products were submitted to the FSA Novel Food catalogue before 31 March 2021. Not only that, but products must have evidence that they were on sale before 13 February 2020. Anything that didn’t meet these criteria, must be removed from sale from 1 April 2021. This should have been enforced by Local Trading Standards but very little (if any) products were ever removed.
At the time of writing this, there are currently 12,115 products on the Novel Food Application list. These are products that have been submitted either by the manufacturer or under a sub-license along with a manufacturer. Some are “Validated”, some are “Awaiting Evidence”, and some have been “Removed”. This process is expected to take at least another 12 months and validation and approval will almost certainly change daily.
The Bad News
Because of the FSA Novel Food regulations regarding new CBD Products/Brands, this is currently not allowed. This being said, this doesn’t mean that you cannot start a new CBD company, you can only sell branded products that are on the Novel Food Application List. You can legally create a new CBD business and sell top brands like ours and other well-known brands like Reakiro, Love Hemp, Canabidol etc. You just can’t relabel them as your own brand. This is called white labelling.
White labelling is where you purchase a product (for example, a 1000mg CBD Oil), and sell it as your own new brand. Crazy because this would be the exact same product that your manufacturer is selling, just with your name (not theirs) on the bottle.
The main advantage of white labelling is that as you promote your brand, it becomes your brand name that grows. Selling other brands only means that you are promoting someone else’s brand.
Another advantage of white labelling is that you can buy products in bulk. Instead of purchasing single bottles of CBD oil, you can purchase 1 litre at a time. Often at a great saving. Then you can bottle and label it yourself. This will also give you a greater profit.
Buying branded products (from our experience) often gives you a 30-50% mark-up. This sounds great but is not enough to grow a business. If a manufacturer has a sale, they often sell at 30-50% off. This means you need to sell your products at cost and zero profit. Not a great way to make money.
Another disadvantage is that your customer will buy a branded product from you, and when they need another, often look online and find the product cheaper direct from the manufacturer. All you have done is get your manufacturer new customers.
Manufacturers will often offer lower savings on wholesale orders, the lower the order value. If you spend £500 with them, you may get 20% off the retail price. If you spend £1000, you may well get 50% off the retail price. The main problem with this is that to try and make any decent money, you need to lay out larger amounts of money to buy stock without knowing whether or not you will actually sell it.
Selling branded products is a great way to start a CBD company and make some money short term but your main aim is to create and grow your very own brand.
At CBD UK, we originally started selling branded products and now sell 90% our own brand. We do offer some quality branded products, purely because they are such good quality and we have grown a relationship with the manufacturer enough to get good markups on their products. This just takes time. Starting and growing a CBD brand will not happen overnight and does take time. The rewards can be great though and CBD itself can be an amazing business to be in. We have hundreds of genuine feedback messages from customers who’s life CBD has changed.
The Good News
So now for the good news. There has never been a better time to try and start a CBD brand because once the FSA Novel Foods catalogue is finalized, approved brands will be allowed to white label their approved products to new companies. There will be stipulations where you will have to show on your label, the FSA NF Approval number and probably your manufacturer/supplier. From our experience, this isn’t a problem. Many well-known brands label their products as “Made for “company name” by “Manufacturer”. No one really cares. The only downside is that competitors would be able to see who/where you buy your wholesale products from. Trust us, there is plenty to go around in this industry.
Where do I start
The first thing you need to do is start a company. This will normally be a “Sole Trader” business. No need to become “Limited” or register for VAT for the first few years.
Think of a catchy name and look online to see if anyone else has that name. You can’t just call yourself “Microsoft” or “Apple” because someone already has that name and they will come for you if you try and steal their hard-earned customers.
A quick check on any of the popular website/web name providers will show you if someone has the web name you want. Also be wary that just because “Love-Hemp” dot Org is available, you can take that. You will regret it. Think of something original.
Dot Co Dot UK sites are normally good enough for targeting UK customers. Dot Com is only better if you intend to target worldwide later. Many top UK CBD sites are Dot Co Dot UK.
The easiest way to start a website is with premade theme sites like Shopify etc. No point in paying thousands of pounds for someone to make/host you a fantastic website when you haven’t got a single customer or product yet.
No need to buy thousands of labels for each product when you start. The easiest way is to start by using companies like printed.com and Avery Print. Here you can upload your own design label and select a size to suit your bottle or box, and just order as few as 20 labels at a time. Obviously, the more labels you order, the cheaper they work out each but this is a great way to start your product range. Same with boxes. We started using just a standard plain box and just adding our own labels to the box.
When it comes to labelling CBD products, it is essential to provide accurate and transparent information to consumers. While specific requirements may vary based on regulations and jurisdictions, here are some common elements to include on a CBD label:
Product Name: Clearly indicate the name of the CBD product.
This could be a brand name, product name, or specific variant.
CBD Content: Display the amount of CBD contained in the
product, typically in milligrams (mg). This helps consumers understand the
potency or strength of the product.
THC Content: If the product contains THC, provide the amount
or indicate it as "THC-free" if it is below the legal limit.
Compliance with THC regulations is crucial for legal and safety reasons.
Ingredients: List all the ingredients used in the product.
This includes not only CBD but also any carrier oils, flavourings, or other
additives. Ensure accuracy and clarity in ingredient labelling.
Supplement Facts or Nutrition Information: If your CBD
product is in the form of a dietary supplement, provide a supplement facts
panel, similar to what is required for other dietary supplements. This includes
serving size, servings per container, and information about other nutrients or
ingredients if applicable.
Recommended Use and Dosage: Offer clear instructions on how
to use the product and the recommended dosage. This may include the number of
drops, capsules, or servings to take per day. Make sure to provide any
additional instructions or precautions.
Storage and Expiry Date: Provide storage recommendations to
ensure product integrity and freshness. Include the expiration date or a
"best before" date to inform consumers about the product's shelf
Batch or Lot Number: Assign a unique batch or lot number to
each product to facilitate traceability, quality control, and recall procedures
Manufacturer or Distributor Information: Include the name, address, and contact information (website, email, or phone number) of the company responsible for manufacturing or distributing the CBD product. This allows consumers to contact the company for inquiries or concerns.
Optional: QR Code or URL for Lab Reports: Consider including a QR code or website link that directs consumers to access third-party lab test reports. These reports provide independent verification of product quality, potency, and safety.
Remember to comply with relevant labelling regulations specific to your region or market. It's important to consult with regulatory authorities or seek legal advice to ensure your CBD label meets all the necessary requirements.
Eventually, as sales start to come in, you will be able to afford to purchase 1000s of labels and boxes at a time. These can work out at pennies each.
This is a tricky one. Because CBD comes from the Cannabis plant, it can be classed as “high risk” to many banks and payment providers. Until recently, PayPal banned all CBD product payments and if you were caught taking PayPal for CBD sales, they would close your account and withhold any funds for 180 days. This was mainly because PayPal is an American company and CBD legality comes down to the state in which you reside, as different states have different CBD regulations. While hemp-based CBD is legal at a federal level, some states consider using or possessing any cannabis product illegal.
Payment providers have become a lot easier to get over the last 12 months but still many UK banks will not allow you to start a CBD business bank account. If this is the case, you can still get an online bank and payment provider like Viva Wallet or Tide etc. Both can be found on Google.
If you are selling branded products, the product liability is all on the manufacturer/brand. You would still need Public Liability and you would also need to declare you are a CBD company. Many of the top insurers will not insure CBD companies. We know some companies apply online via the “Compare the Market” brokers and put the company down as a “Health Food” company. We can tell you from experience, the small print will state that they do not allow CBD sales and if anything did go wrong, this could land you in serious trouble. Just not worth it.
There are companies in the UK who will gladly insure CBD companies but it can be over £1200/year. Not only that but you would need to meet certain criteria like ensuring all your products are THC-free and are Lab-Tested for safety and purity etc.
If you need any more advice on Insurance (or any other questions regarding starting a CBD company), please feel free to click our “Contact” page and get in touch. Our team are always here to offer free impartial trusted advice.
3rd Party Lab-Testing
To ensure your products are safe, we always recommend 3rd party lab-testing. If you are selling branded CBD products, the supplier should have all these lab reports available on their website (or at least available on request).
When it comes to lab testing CBD (cannabidiol) products, there are several key tests that are commonly conducted to assess their quality, purity, potency, and safety. These tests help determine the cannabinoid profile, identify any potential contaminants, and ensure compliance with regulatory standards. Here are some of the typical lab tests performed on CBD:
Cannabinoid Profile: This test analyses the concentration of
various cannabinoids present in the CBD product, including CBD, THC
(tetrahydrocannabinol), and other minor cannabinoids like CBG (cannabigerol)
and CBN (cannabinol). It helps confirm the potency and composition of the
THC Content: This test specifically measures the THC content
in the CBD product. It is essential to ensure that the THC levels are within
legal limits which is less than 1mg/container in the UK. Compliance with these
regulations is crucial to prevent any psychoactive effects and legal issues.
Pesticide and Herbicide Analysis: This test screens for the
presence of pesticides, herbicides, and other agricultural chemicals that may
have been used during the cultivation of hemp plants. It ensures that the
product is free from harmful contaminants.
Heavy Metal Analysis: This test detects the presence of
heavy metals such as lead, mercury, arsenic, and cadmium, which can be absorbed
by hemp plants from the soil. These metals can pose health risks when consumed,
so their levels must be within safe limits.
Microbiological Testing: This test checks for the presence
of bacteria, moulds, yeast, and other microorganisms that can cause
contamination and potentially harm consumers. It helps ensure the product's
safety and prevents the risk of microbial-related infections.
Residual Solvent Analysis: This test is primarily conducted
for CBD products derived from extraction processes that involve solvents like
ethanol or butane. It ensures that any residual solvents remaining in the final
product are within acceptable limits and do not pose a health hazard.
Terpene Analysis: Terpenes are aromatic compounds found in hemp plants that contribute to their unique flavours and potential therapeutic effects. This test identifies and quantifies the terpene profile of the CBD product.
These tests are typically performed by accredited third-party laboratories specializing in cannabis testing. The results of these tests provide valuable information about the quality and safety of CBD products, enabling consumers to make informed choices.
Food Supplement V Medicine
One important thing you must know regarding the sale and promotion of CBD products is that CBD can only ever be sold/promoted as a “Food Supplement”.
The Medicines and Healthcare Products Regulatory Agency (MHRA) is the regulatory body responsible for overseeing the regulation and safety of medicines, medical devices, and blood components in the United Kingdom. The MHRA ensures that these products meet the required standards of safety, quality, and efficacy.
In the context of CBD (cannabidiol), the MHRA has provided guidance and regulations for CBD products that are marketed as medicinal products. According to the MHRA, if a CBD product is presented as having medicinal properties or is intended for medicinal use, it is considered a medicinal product and must go through the appropriate regulatory processes.
For CBD products that are not marketed as medicines, such as food supplements or cosmetics, the MHRA defers to other regulatory bodies for oversight. For instance, the Food Standards Agency (FSA) regulates CBD products intended for consumption as food or food supplements in the UK.
It's important for CBD manufacturers and sellers to comply with relevant regulations and ensure that their products meet the necessary standards of safety, quality, and legality. Consulting with regulatory authorities like the MHRA and following their guidelines is crucial for navigating the regulatory landscape surrounding CBD products in the UK.
The good thing about CBD being classed as a “Food Supplement”, is that companies like ours are allowed to sell it without a prescription. If CBD was ever given medical accreditation, it would mean that it would only be available on prescription and that would be the end of companies like ours (and hopefully yours).
Growing your CBD business on Google
This is a subject we learnt the hard way so you don’t have to.
Until recently, Google would not allow the advertising or promotion of CBD on Google Ads. CBD sales were banned on most Social Media platforms. Some still close accounts for trying to sell CBD.
Now we are starting to see Google Ads allowing “some” CBD sales/promotion. This should be a good thing but unfortunately, it seems it is a very select few that are allowed to advertise at the minute.
Google does show search results for all CBD companies and this is where you need to concentrate your main growth. The #1 search result on Google is estimated to get approx. 35% of the traffic/visits. #2 is estimated to get 11%. That soon leaves the companies lower down on the rankings with little to fight over.
One way to get to the front of Googe and other search engines is to target what is known as SEO. This stands for Search Engine Optimisation. This is the key route to climbing and ranking on Google.
Google (etc) rank a site on many factors but here are a few:
Page Speed. This is where Google tests your website from 3G (slow connection). If your site takes a long time to load or a long time before a visitor can interact (click a shop now button), they will tend to leave out of frustration. You can help page speed by having things like images optimised.
Poor User Experience: If your website fails to provide a positive user experience, visitors may leave quickly, resulting in higher bounce rates and lower engagement metrics. Factors such as slow page loading times, intrusive ads, confusing navigation, poor mobile optimization, and irrelevant content can contribute to a negative user experience, negatively impacting your SEO efforts.
Thin or Duplicate Content: Search engines favour websites that offer high-quality, unique, and informative content. Thin or low-quality content that lacks depth or originality can harm your website's SEO performance. Similarly, duplicating content from other sources or having duplicate content within your own website can lead to search engines devaluing your pages or ranking them lower in search results.
Ignoring Technical SEO: Technical SEO refers to optimizing the technical aspects of your website to improve its crawlability, indexability, and overall performance. Ignoring technical SEO issues such as broken links, improper redirects, missing meta tags, poor site structure, and slow-loading pages can hinder search engines' ability to understand and rank your site effectively.
Ignoring Mobile Optimization: With the majority of internet users accessing websites through mobile devices, having a mobile-friendly website is crucial. Ignoring mobile optimization can lead to a poor user experience on mobile devices and negatively impact your rankings on search engine results pages (SERPs). Responsive design, fast loading times, and mobile-friendly navigation are essential considerations.
Lack of Backlinks: Backlinks from reputable and relevant websites are an important factor in search engine rankings. If your website lacks backlinks or has a low-quality link profile, it may struggle to achieve higher rankings. Building a strong and diverse backlink profile through legitimate outreach, content marketing, and relationship building is essential for effective SEO.
It's important to stay up to date with SEO best practices, adhere to ethical strategies, prioritize user experience, and provide valuable content to maximize the benefits and avoid the potential pitfalls associated with SEO. Regularly monitoring your website's performance, conducting audits, and making necessary improvements can help you maintain a healthy and effective SEO strategy.
Social Signals: Engage with your audience on social media platforms and encourage social sharing of your content. While social signals may not directly impact rankings, they can contribute to increased visibility, brand awareness, and the potential for attracting more backlinks.
Regular Monitoring and Adaptation: Continuously monitor your
website's performance, keyword rankings, and analytics data. Stay up to date
with SEO trends, algorithm changes, and industry best practices. Adapt your
strategy accordingly, making necessary improvements and optimizations based on
the insights you gather.
Local SEO (if applicable): If you have a physical location or serve a specific geographic area, optimize your website for local searches. Create a Google My Business profile, include your location information on your website, and encourage positive reviews from satisfied customers.
Have deal pages and special offers to make your website more attractive to visitors. Everyone likes a bargain. Just like our CBD in UK page.
Remember, SEO is a long-term process, and it takes time to see significant results. Consistency, patience, and a focus on providing value to your audience are key.
Again, if you have any questions regarding growing your business on Google etc, please get in touch. We have many SEO experts we can put you in touch with.
Hopefully, we’ve given you plenty to think about. As we said earlier, at CBD UK, we are always here to help new businesses. We were once in your position and know exactly how you are feeling. It’s not easy but it is 100% worth it.