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How to distribute CBD wholesale

Everything you need to know about selling CBD wholesale. Get in touch with us to start offering CBD to your customers.

How to distribute CBD wholesale
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To become a CBD distributor you need to know a series of logistical and legal aspects to take into account, such as: an economic plan, the quality and reliability of CBD products, the marketing possibilities depending on the country, and which distribution platforms you are thinking about using. Here are some of our tips and steps to follow should you want to begin distributing CBD in Spain.

WHAT IS CBD WHOLESALE DISTRIBUTION AND HOW DOES IT WORK?

CBD wholesale distribution consists in acting as an intermediary between a supplier of CBD products and the end customer (retail distribution) or a supplier of CBD products and another CBD distributor (wholesale distribution).

The supplier sets a recommended retail price (hereafter RRP) and a distribution price. The distribution price may be fixed or may vary depending on the agreement and the volume of orders or revenue the distributor generates. Thus, distributors with higher turnover or higher volumes may get a lower distribution price and consequently a higher profit margin.

CBD MARKET PRICES

The distributor’s profit margin 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 it can be high due to the costly extraction process of the raw material and the suppliers’ own standards on quality, sustainability or other business practices.

HOW TO BECOME A DISTRIBUTOR FROM SCRATCH?

To start becoming a distributor you will need to have a business plan, commercial vision or a network of potential customers. This business plan will help you to get a glimpse of the market situation, the different prices, agents, suppliers, distributors and offers within the sector.

The market analysis exercise will also help you to determine what market opportunities and niches exist in your country or region, so that you can 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 business in a small area and their special interest in expansion leads them to look for distributors to grow their business with. There are also other ways to identify business opportunities within the Cannabis and CBD sector:

  •       Cannabis or Medical Cannabis conventions and trade shows.
  •       Researching small and medium sized companies in your country or region.
  •       Tracking innovation in other countries or regions through the press and other media.

“The growth of the CBD market in Europe remarks 12% annually.”

-Prohibition Partners

Want to learn more?

WHAT DO I NEED TO SORT OUT BEFORE I START DISTRIBUTING CBD?

A location to sell the products: Ideally, you should have a location (either digital or physical) to market the products and the relevant sales permits to be able to sell CBD products.

To be aware of the legal situation to market the products: Depending on the legal status of CBD in your region or country, you will have to limit your production either to food or cosmetic permits. Below, we’ll 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 making profits from the sale of products. 

IS AN INITIAL INVESTMENT NECESSARY? AND DO I NEED TO KEEP A STOCK OF PRODUCTS?

Depending on the supplier, they may provide other distribution models that do not require an initial investment or stock holding. These models usually have a lower profit margin for the distributor.

Supplier’s agents: If you already have a number of retail channels or distributors, you can promote the brand, so you’ll be working on commission. That means that you’ll be in charge of being a salesperson for the supplier company.

Supplier’s salesperson: You can work for the company selling its catalogue in different sales outlet as one of its employees, for this you will need to have a model or expansion plan to negotiate the terms of the contract with the supplier.

Dropshipping: If you have an ecommerce or digital platform where you can sell the products, you can also sell them through dropshipping. In this type of business you don’t need to keep stock, once the product is sold, the goods are purchased from the supplier and sent directly to the end customer.

Other aspects you should be aware of before starting:

  •       Exclusivity: Depending on your economic projection, you can negotiate the exclusivity of the distribution of the supplier’s product within the channel or sector. Therefore, the negotiation needs to be interesting for both parties, normally a contract is needed where a list of agreements are established on the distribution and visibility actions of the brand itself in the channel or sector.
  •       Freedom to market: Each supplier has its own commercial rules on how you can market or sell its products, i.e. a defined line of sales pitch and ways of using its products. These aspects should be known and negotiated with the supplier before marketing.
  •  Sales materials: You can ask the supplier for materials to facilitate the sale such as: information content, displays, posters, CBD training, photographs, infographics, supplier logos, etc.

 

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How to contact and negotiate with CBD suppliers?

After the analysis, and once you have the economic plan for your business in mind, you should start contacting suppliers. 

1- The distributor gets in touch with the supplier either through their website, social networks, through visits to trade fairs and conventions or other means of communication.

2- The distributor contacts the supplier to browse their product catalogue, their RRP and ask for distribution prices.

3- They will also consult the relevant data (analysis, raw material certificates, etc.) and if they wish, they can request a sample of the product before placing their order.

4- Once the distributor has reached a decision, he will resume communication with the supplier indicating the volume of products required for his business and the payment dates of the order.

5- The supplier ships the product to the distributor. The distributor receives the order and can start marketing the products with the RRP and conditions agreed with the supplier

The basics you need to know before selling CBD

  •       What is CBD? CBD, also known as Cannabidiol, is a legal derivative of Hemp that has become quite a trend over the last few years.
  •       How is CBD obtained? Cannabidiol is most commonly obtained through extraction methods from the flower of the Hemp plant, also known as 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 uncommon.

·        Why is it a market trend? This trend is due to the increasing awareness of users about their wellbeing, the attractive benefits Cannabis provides and the rise of hemp-derived products such as CBD oil. This is why it is becoming a business opportunity for European entrepreneurs.

According to CB Insights, CBD startups in Europe registered a large volume of investment, with a total of 34 innovative companies receiving close to $120 million.

Another report, collected by the Medical Cannabis Centre, estimates that between 8-11% of adults in the UK alone, i.e. between 4-6 million people, have already tried CBD.

The following graph shows how user interest is growing notably and the companies that are best positioned will be those that have a strong Corporate Social Responsibility.

What is the most common way it is marketed? Users typically consume it in the form of CBD Oils in which the raw material is blended with hemp seed oil, or other oils, to act as a vehicle for the raw material.

 

  •       What are its benefits? The most attractive benefits of CBD are the analgesic, anti-inflammatory, antioxidant and anxiolytic properties. These properties make it an ally for stress and day-to-day discomfort but also for occasional ailments and sports recovery. It is also particularly beneficial for skin afflictions such as dermatitis, acne, psoriasis, etc.

 

 

  •       CBD is neither addictive nor harmful to health. CBD is a component that is neither addictive nor harmful to health, as confirmed by the WHO.

Furthermore, this same organisation has reported on the great medicinal and therapeutic potential of CBD for the treatment of a wide range of pathologies: dermatitis, eczema, acne, anxiety, depression, arthritis and other rheumatic and inflammatory diseases (arthrosis, fibromyalgia, etc.), nausea, Crohn’s disease, epilepsy, etc…

For more information on CBD read our article: What is CBD? History, benefits and properties.

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 high quality.

Official suppliers have third-party analysis (performed by external laboratories) of the products to analyse the amount 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 systematisation that confirms the quality of the products through external agents.

Legal aspects to take into account when selling CBD

The legal status of industrial hemp and more specifically CBD depends on the legislation of each country. For instance, in Spain it is legal to grow and harvest industrial hemp, as long as the strains contain less than 0,2% THC.

However, CBD extraction is not yet legal in Spain, so raw materials are obtained from other countries such as the United Kingdom, Switzerland or the United States, where the extraction of cannabinoids is already regulated.

Legal status of CBD in Europe.

The WHO recommended in January 2019 the removal of Cannabis from schedule IV of banned substances of the 1961 Drug Convention. Unfortunately, restrictions on the Cannabis plant are still in place.

This action will boost the regulation of Cannabis for medicinal and ingested use in Spain, but for the time being 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 to promote the regularisation of Medical Cannabis, specifically CBD, the EFSA (European Food Safety Authority) does not allow its commercialisation as a food or food supplement, as it is considered a novel food.

For the time being, in Spain and most of Europe, the marketing of CBD products is limited to external use and therefore the products can only be recommended for this type of use and marketed as cosmetics.

On the other hand, consumption and possession is illegal in public spaces. Private cultivation, possession and consumption are allowed 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’s CBD products? Access our contact form or consult our complete catalogue.

Tel and Whatsapp: +34 633 715 272 (Ignacio) +34 715 332 (Lucas)

Email: sales@beemine.farm

Why should I trust The Beemine Lab products?

All our CBD products are manufactured in Spain in GMP certified laboratories for cosmetic products. We test our raw materials and final products with an external laboratory (CTAEX) to offer our users and distributors, full transparency and assurance of product quality.

Why should I trust The Beemine Lab?

With the aim of increasing and protecting the most important animal species for biodiversity: bees, “The Beemine Lab” was born in 2018 uniting the benefits of honey and cannabis for self-care. We allocate 10% of profits to the protection and conservation of bees through the sponsorship of hives in sustainable beekeeping projects. All our products are free of animal cruelty, toxins and pesticides.

Translated by Lucas Medrano

Lucas Corrales (Author)

Marketing and Sales expert in the sports sector with more than 8 years of experience in retail, sales and Marketing both nationally and internationally. Experience as an ambassador and planner of sporting events.

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