What is CBD wholesale distribution and how does it work?
CBD wholesale distribution involves acting as an intermediary between a CBD product supplier and the end customer (retail distribution) or a CBD product supplier and another CBD distributor (wholesale distribution). The supplier sets a retail price (hereinafter RRP) and another price for distribution. The distribution price may be fixed or may vary depending on the agreement and the volume of orders or income generated by the distributor. In this way, distributors with a higher turnover or higher volume of orders may receive a lower distribution price and, consequently, a higher profit margin.CBD Market Prices
The profit margin that the distributor would obtain is obtained by calculating the difference between the RRP and the distribution price. One thing to know about the price of CBD products is that they can be high due to the costly process of extracting the raw material and the suppliers' own standards regarding quality, sustainability, or other business practices.How to become a distributor step by step?
To start becoming a distributor you will need to have a business plan , a commercial vision or a network of potential clients. This business plan will help you to get a glimpse of the market situation, to know the different prices, agents, suppliers, distributors and offers within the sector. The market analysis exercise will also be positive in determining what market opportunities and niches exist in your country or region, in this way you will be able to identify business opportunities in which to develop your business.Where to find business opportunities to sell CBD products?
Small and medium-sized CBD companies start their activity in a small area and their special interest in expanding leads them to look for distributors with whom to grow their company. There are also other ways to identify business opportunities within the Cannabis sector and more specifically CBD:- Cannabis or medicinal cannabis conventions and fairs.
- Research small and medium-sized businesses in your country or region.
- Monitoring innovation in other countries or regions through the press and other media.
What do I need before I start distributing CBD?
- A location to sell your products: It will be optimal if you have a location (either digital or physical) to market your products and the relevant sales permits to be able to sell CBD products.
- Know the legal situation for marketing the products: Depending on the legal situation of CBD in your region or country, you will have to limit yourself to food or cosmetic permits. Below we explain the legal situation of CBD in Europe and Spain.
- Initial investment: You will need to have an initial capital investment to place your order to obtain stock and start earning profits from the sale of products.
Is an initial investment required? Do I need to keep a stock of products? Depending on the supplier, they may offer other distribution models that do not require an initial investment or stock maintenance. These models usually have a lower profit margin for the distributor:
- Supplier Agents: If you already have a number of retail channels or distributors, you can promote your own brand. In this way, you work on commission and your job is to be a salesperson for the supplier company.
- Supplier Sales Representative: You can work for the company selling its catalogue at different points of sale as one of its employees. To do this, you must have a model or expansion plan to negotiate the terms of the contract with the supplier.
- Dropshipping: If you have an e-commerce or digital platform where you sell products, you can also market them through dropshipping. In this type of business, it is not necessary to have stock; once the product is sold, the merchandise is purchased from the supplier and sent directly to the end customer.
Other things you should know before you start
- Exclusivity: Depending on your economic projection, you can negotiate the exclusivity of the distribution of the supplier's product within the channel or sector. To do this, the negotiation must be interesting for both parties, normally a contract is needed where
- Freedom to market: Each supplier has its own commercial rules on how you can market or sell its products, that is: a defined line of sales pitch and methods of use of its products. You should be aware of these aspects and negotiate them with the supplier company before marketing it.
- Materials for sale: You can request materials from the supplier to facilitate sales, such as: informative content, displays, posters, CBD training, photographs, infographics, supplier logos, etc.
How to contact and negotiate with CBD suppliers?
After the analysis exercise and having the economic plan for your business in mind, you should begin contacting suppliers.- The distributor obtains contact information from the supplier either through their website, social networks, through visits to fairs or conventions or other means of communication.
- The distributor contacts the supplier to consult their product catalogue, their RRP and request distribution prices.
- You will also be able to consult the relevant data (analysis, raw material certificates, etc.) and, if you wish, you can request a sample of the product before placing your order.
- Once the distributor has reached a decision, he will resume communication with the supplier, indicating the volume of products he needs for his business and the payment dates for the order.
- The supplier sends the product to the distributor. The distributor receives the order and can begin marketing the products with the RRP and conditions agreed with the supplier.
Basic aspects you should know before selling CBD
- What is CBD? CBD, also known as Cannabidiol , is a legal derivative of Hemp that has become a complete trend in recent years.
- How is CBD obtained? The most common way to obtain Cannabidiol is through extraction methods from the flower of the Hemp plant, also known as the Cannabis buds.
- CBD is also present in trace amounts in the seeds and stem of the plant, but the extraction process is much more difficult and rare.
- CBD Isolate, broad or full spectrum? Depending on the amount of other cannabinoids present in the raw material, the products are marketed as Isolate (CBD completely isolated without other cannabinoids), Broad spectrum (CBD extracted with a slight presence of other cannabinoids) and Full Spectrum (The raw material contains all the diversity of cannabinoids present in the strains from which it has been extracted.)
Which one to choose depends mainly on the legal and commercial aspects of cannabis products in your country or region. For example, if the sale of THC is prohibited in your country, it is best to choose a Broad Spectrum CBD oil or Isolate to avoid possible legal problems.
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Why is it a market trend? This trend is due to the increase in users' awareness about their well-being, the attractive benefits that Cannabis provides and the rise of hemp-derived products, such as CBD oil. That is why it is becoming a business opportunity for European entrepreneurs.
According to CB Insights, CBD startups in Europe have seen a huge amount of investment, with a total of 34 innovative companies receiving nearly $120 million. Another report compiled by the Cannabis Medical Center estimates that between 8-11% of adults in the UK alone, or between 4-6 million people, have tried CBD. The following graph shows how user interest is growing significantly and the companies that are best positioned will be those that have a significant Corporate Social Responsibility.
- What is the most common way of marketing it? Normally, users consume it throughCBD oils in which the raw material is mixed with hemp seed oil or other oils to act as vehicles for the raw material.
- What are its benefits? The most attractive benefits of CBD for users are the analgesic, anti-inflammatory, antioxidant and anxiolytic properties of CBD. These properties make it an ally for stress and discomfort in everyday life, but also for specific or chronic ailments and sports recovery. It is also especially beneficial for skin conditions such as dermatitis, acne, psoriasis, etc.
- CBD is not addictive or harmful to health. CBD is a non-addictive and non-harmful component for health, as confirmed by the WHO (2) . In addition, this same organization has reported on the great medicinal and therapeutic potential of CBD for the treatment of a wide list of pathologies: dermatitis, eczema, acne, anxiety, depression, arthritis and other rheumatic and inflammatory diseases (osteoarthritis, fibromyalgia, etc.), nausea, Crohn's disease, epilepsy, etc.
How to identify quality suppliers
Before buying CBD oil or other industrial hemp derivatives, you should make sure that the product, the raw material and the supplier are of quality. Official suppliers have third-party analyses (conducted by external laboratories) of the products to analyze the quantity of Cannabidiol or other cannabinoids contained in the product. This analysis should be available on the suppliers' website along with other quality seals such as GMP, ISO or any other code or systematization that confirms the quality of the products through agents external to the company.Legal aspects to consider when selling CBD
The legal status of industrial hemp and more specifically CBD depends on the legislation of each country. For example, in Spain the cultivation and harvesting of industrial hemp is legal, as long as the strains contain less than 0.2% THC. However, CBD extraction is not yet legal in Spain, so the raw materials are obtained.Legal status of CBD in Europe
In January 2019, the WHO recommended removing Cannabis from Schedule IV of prohibited substances of the 1961 Convention on Drugs (3) . Unfortunately, restrictions on the Cannabis plant remain in place to date. This action will boost the regulation of Cannabis for medicinal and ingestible use in Spain, but for now we will have to wait.Legal status of CBD in Spain
CBD is legal, but cannot be sold for human consumption . In the absence of clinical studies that promote the regulation of Medicinal Cannabis, specifically CBD, the EFSA ( European Food Safety Authority) does not allow its marketing as a food or food supplement as it is considered a new food. At the moment in Spain and much of Europe, the marketing of CBD products is limited to external use and therefore the products can only be recommended for this mode of use and marketed as cosmetics. (4) On the other hand, consumption and possession are illegal only on the streets and in public places. Private cultivation, possession and consumption are permitted to varying degrees depending on the Autonomous Community or Region.Become a CBD distributor with The Beemine Lab
Do you want to become a distributor of The Beemine Lab CBD products? Check out our distribution page or check out our full catalogue . Telephone and Whatsapp :- Lucas Corrales: +34 633 715 332
- Ignacio Garcia: +34 633 715 272
- Annex 1- Extract from the Report of the 41st Expert Committee on Drug Dependence: Cannabis and cannabis-related substances. (2019)
- CANNABIDIOL (CBD) Pre-Review Report. Expert Committee on Drug Dependence . Thirty-ninth Meeting. Geneva, 6-10 November. ( 2017)
- Towards a responsible, innovative and high-quality cannabidiol industry. Center for Medical Cannabis. ( 2019)
- Legal status of CBD in Spain. THC Abogados . (2019)
