The CBD industry is booming as more people discover the benefit of cannabidiol and other safe hemp-derived botanicals. However, many brands are new, and most don’t know how to properly comply.
Fortunately, this post is here to help. We look at how CBD businesses are getting into trouble and what they can do to dodge them.
Making Unsubstantiated Health Claims
While CBD might seem like a miracle cure for a lot of conditions like anxiety and chronic pain, it’s still illegal to make unsubstantiated health claims on the label. Therefore, be careful of what you say and always follow best practice for the industry. Don’t fall into the trap of saying something on your products, just because you believe it’s true. It has to have been through formal testing to pass muster.
Contaminants In Products
Contaminants are also an issue in a lot of CBD products. Many contain heavy metals, pesticides, and other nasties that fall outside of acceptable limits for the FDA.
You should be looking for suppliers to minimize these contaminants from the get-go and performing internal testing. It’ll boost trust in your brand and make people want to buy from you more.
However, it also reduces the risk of group lawsuits against you (many of which are well funded). It’s a simple “win” and shouldn’t be ignored.
Unclear Labeling
Another thing you’ll want to do is check your labeling. Again, this is something that sounds so simple but it can get a lot of companies into trouble.
For example, if you’re selling CBD as a topical ingredient, make sure you say so. Otherwise, consumers may wrongly believe that you’re selling something for oral consumption.
Similarly, you’ll want to ensure that you’re following the ingredients list rules and other labeling requirements. If you try to sell products without these, government agencies may come down on you like a tonne of bricks.
Inadequate Supplier Vetting
Inadequate supplier vetting can also be a problem at a lot of CBD businesses. You might think you’re doing everything by the book, but if your suppliers aren’t, that can undermine your product enormously.
Therefore, check all your suppliers before working with them. Make sure they’re not supplying you with contaminated products or the wrong ingredients. Ensure that they don’t cut corners and go the extra mile on issues like recalls and traceabilit noy.
Financial Non-Compliance
Finally, don’t fall into financial non-compliance issues. Ensure you follow the rules outlined in your agreements with those providing you with money and banking services.
Remember, a lot of merchant account providers designate CBD as “high-risk.” This category isn’t just because of the nature of the product, but also the fact that a lot of customers simply request chargebacks. If you use the wrong service, you can face issues with transaction terminations and be subject to anti-money laundering laws.
To avoid this, only work with processors who are friendly to CBD companies. Make sure you partner with payment providers who understand the realities of the industry and risks you face.
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