CBD sales have risen rapidly, with the market expected to reach $20 billion by 2024. Ecommerce is a big reason CBD growth is booming.
In fact, many companies sell their CBD products exclusively online, and the lower cost of entry for ecommerce has made CBD more attractive for businesses looking to grow and scale quickly. Are you interested in opening a CBD ecommerce shop?
Ultimately, to sell CBD online, you need standard business licenses. However, to legally sell CBD through an ecommerce site, you may also need to incorporate age verification tools into the process, as well as adhere to state and local laws and regulations.
The online CBD market can be lucrative. But the key to operating a CBD shop successfully is preparation.
To help, we’ve compiled a list of requirements and regulations online CBD sellers face, from the types of products you can sell, to whether you need age verification software for selling CBD online.
Regulations for Selling CBD Online
The laws that govern the sale of CBD evolve constantly, due to its increasing popularity. Therefore, it is crucial for your online business to stay updated on the latest laws and their potential impacts.
Federal CBD Regulations
In the past, hemp (the source of CBD) and other cannabis plants like marijuana were treated the same under federal law. CBD was therefore still considered illegal.
However, the 2018 Farm Bill changed that. The bill made it legal to sell hemp-derived products like CBD in the U.S. One thing to note: The bill did jumpstart the market, but there are still many limitations on how hemp is produced. These limitations include:
- Any cannabis plant (which includes hemp) must have a percentage of THC under 0.3%. If not, it is regarded as marijuana under federal law
- The Secretary of the USDA must approve if a state can license and regulate cannabis
- If producers act unlawfully, they may face violations
Is It Legal to Sell CBD Online?
In the US, CBD containing less than 0.3% THC is legal nationally.
Any items made from hemp must adhere to the regulations outlined in the 2018 Farm Bill. If a product is found to be non-compliant, it can be categorized as a Schedule 1 substance under federal law.
Another thing to keep in mind: The FDA regulates how companies can market their CBD products. For example, it is illegal to market a CBD product as a dietary supplement or add CBD to food products. Similarly, there are also FDA regulations in place for marketing with health claims. It’s illegal to falsely make claims about CBD impact on health.
In other words, although it’s legal to sell CBD online, companies must be careful to 1) measure the quality of their products, 2) ensure their products meet FDA standards, and 3) market their products carefully. Another additional requirement: You may be required to verify age to stop minors from purchasing age-restricted products.
>> Related: See legal guidelines for starting an online liquor store.
Is a License Required for Selling CBD Online?
Yes. A license isn’t required to sell CBD online. However, businesses must still obtain a business license, and a resale license may be necessary if reselling wholesale CBD products.
Both brick-and-mortar and online CBD shops must have these two types of licenses to operate.
Yet, prospective CBD sellers must do their homework. Local and state laws vary, but if you follow the guidelines in the 2018 Farm Bill, you can legally sell those CBD products.
Statewide CBD Regulations
While CBD is permitted nationally (with some restrictions), you should be aware that state regulations may differ. Some states do the following:
- Prohibit the distribution and use of CBD
- Restrict the kinds of CBD products that are permitted
- Require special for licensing CBD sellers
- Allow CBD derived from marijuana or just CBD derived from industrial hemp
Therefore, it’s vital that you communicate with local representatives and stay current with statewide laws. For instance, CBD is completely legal in states like New York, New Jersey, and Nevada, but it is considered conditionally legal in others, like Rhode Island and Minnesota.
What Types of CBD Products Can Be Sold Online?
Sourcing the right type of CBD products is essential to staying complaint. Ultimately, CBD products must be analyzed to determine their quality and THC levels. Here are some guidelines for the types of CBD products you can sell online:
Products containing high-quality CBD will include:
- Comes from industrial hemp and is compliant with federal regulations
- Less than 0.3% THC level
- Made from the plant’s leaves and stalks
- Devoid of any extraneous chemicals or contaminants (influenced by the CBD extraction process)
Avoid sourcing CBD from companies that:
- Derived from marijuana itself (which is illegal in some US states)
- Made from hemp seeds, which have a very low CBD content
- Contain greater than 0.3% THC
- On their website, they make claims about health
- Offer pricing that’s notably cheap
- Don’t follow federal regulations
NOTE: Learn how to read a certificate of analysis (COA) for hemp-derived goods before looking at CBD sources. You can tell if a CBD product has less than 0.3% THC by looking at the COA.
Ecommerce Restrictions for CBD
There are limitations on the platforms you can use to sell CBD online, in addition to state and federal regulations. Look into the stances taken by the following platforms about CBD products:
- eBay: Prohibits CBD products entirely on eBay’s US marketplace
- Amazon: Prohibits the sale of items containing CBD
- Magento: Allows CBD products
Shipping Requirements
You should consider product-based shipping regulations when conducting online sales. You should be careful to stay within safe shipping zones because state laws on CBD products differ. Major carriers like UPS, USPS, FedEx, and DHL will ship your items for you.
Online Age Verification for CBD Products
Currently, there isn’t an age requirement to buy CBD products at the federal level. However, this varies by state. Some states require you to be over 18 or 21 to buy CBD
If you ship CBD products nationally, it’s generally a good idea to adhere to the states with stricter CBD laws (e.g. selling to customers who are over 21 years old).
Therefore, it might protect your business from legal risk to adhere to the laws of a buyer’s state (if those laws are stricter). Yet, this is a complex idea, and it often depends on the types of products you are selling, how you’re selling them, and your business model.
To remain complaint, many CBD sellers use online age verification tools.
Any website can implement age verification or any other specification with the use of third-party integration tools.
How Online Age Verification Works
A streamlined online age verification process ensures your business stays compliant, but also that the customer experience is user-friendly. A process that’s too complex can cause online ID verifications to fail and will leak customers out of the ecommerce process.
Depending on the service that you use, the online age verification process might look like this for a CBD shop:
- Without any documentation, visitors may see a pop-up requesting them to verify their age when they access your website. “Age gates” may not always be successful in keeping minors away.
- If required, image verification can be used to verify CBD products online. However, some businesses maintain sizable databases and use credit bureaus, making it possible to speed up eCommerce checkouts and boost conversion rates.
- To make sure the appropriate individual is making purchases for current customers, age verification may also require the use of a CBD ID verification number.
The latest AI verification methods make this process easier and faster for customers.
Wrapping Up
The legal landscape around selling CBD online can be tricky to navigate, so it’s important to make sure you understand the laws and regulations before stepping into the arena. However, if done correctly, there are many opportunities available for those who wish to begin an online business with CBD.
Despite the challenge of dealing with regulations and legal issues, the potential rewards are well worth considering. There is a steady rise in consumers looking for high-quality CBD products, and those who provide access could greatly benefit from that increased demand.
All in all, understanding all the pertinent laws when it comes to selling CBD online will help ensure a successful business model. Through careful research and an eye-out for changing regulations, entrepreneurs have the chance to develop a thriving marketplace dominated by quality CBD products.
Ready to get started with FTx Identity to help your CBD business flourish? Get in touch with us today to schedule a consultation and experience a demo!