The business bug has stricken you, and you’re considering opening a CBD store. Reported annual CBD sales across the U.S. are expected to hit the $2 billion mark in 2022, up from $1.6 billion in 2021. Who wouldn’t want to tap into such a rapidly growing market?
Let’s suppose, for a moment, that you’ve selected a niche- CBD oil. But wait, you must be wondering if CBD is legal in the first place. Perhaps you’re wondering aloud, “do I need a license to sell CBD oil?” The definite answer is yes.
You need the green light from federal and local authorities to run any legal business. A CBD business would be no different. So, what legal formalities or hoops do you need to jump through before establishing a CBD business or selling CBD oil? Let me help you brush up on some of your knowledge to navigate the legal process.
Licensing Requirements Vary
If you plan to open an establishment that strictly deals in marijuana products, your business would be subject to different regulations from a food establishment. Generally, licensing rules vary by state.
Therefore, the marijuana licensing board or department of agriculture in your state would oversee your business. In Nevada, licensing and regulation of marijuana businesses are under the state’s Department of Taxation.
Besides, most states don’t have laid-down specifics relating to the licensure of CBD businesses. In some states, you would need to apply for a license to operate a medical marijuana business to specialize in related products.
The sale of ingestible products such as CBD oils requires you to have a license in almost all U.S. states. Before venturing into the business, it’s advisable to be familiar with your enterprise’s various state or local license classifications.
State guidelines for states that require you to have a license to sell CBD oil may call upon you to adhere to various rules. These rules could spell out what you need to do in terms of:
- Product labeling
- The proportion of permissible delta-9 THC in the oil (most states cap it at .3%)
- Marketing
You would also need to submit samples for regular inspections to your local licensing board. Doing so allows the authorities to ensure that your business complies with the checks and balances. In Utah, for instance, you would need to annually register and pay fees for your CBD oil products with the state’s Department of Agriculture and Food.
While Utah might be an outlier due to its stringent laws, most licensing requirements tend to be less strict, as are the levies. Besides, restrictive policies limit the licenses issued to some extent. Generally, expect to deal with other nuances such as tax registration, sales tax permit, and corporate filings- just as you would in any other industry.
Still, other restrictions could relate to your background. For instance, if you have a previous conviction, your odds of getting a license would decrease dramatically.
Business Category
Are you planning to sell CBD oil as a retailer or manufacturer? Or are you looking to invest in an existing business? It turns out that the business category impacts licensing requirements and regulations.
For instance, if you’re into retail, licensing requirements in particular states may preclude you from selling more than a set limit of the product to individuals. Investors would also have to stick to detailed and specific provisions in place.
Interestingly, even employees have to abide by licensing requirements. For instance, Nevada law requires licensure of employees or volunteers before they can work in your cannabis-related business. That means your employees have to meet additional requirements besides the standard state provisions.
Failure to Comply: The Ramifications
Federal law prohibits the sale, possession, or use of cannabis. As a result, compliance with relevant state and local laws is crucial and should be a no-brainer. Suppose you fail to comply by selling CBD oil or other cannabis-derived products without a license. In that case, you could be in the government’s crosshairs.
In short, you may incur hefty fines or even end up behind bars for up to six months. Jail time could also increase for the unlicensed sale of many cannabis products. It, therefore, behooves you to get your business in order before selling CBD oil.
Ideally, you need to pay attention to all the regulations in your state. By understanding the licensing rules for establishing your business or selling CBD oil, you can avoid potential roadblocks. Besides, rules or regulations could change after you get into business. Due diligence pays, and only the prepared can hope to get into and succeed in their chosen trade.