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How to Grow a Successful CBD Business in 2021

The CBD market has always been a tough place to succeed. And companies experienced yet more hurdles in 2020, as a pandemic and an assortment of lawsuits gripped the industry.

In the face of such strong headwinds, it seems like it’ll also be hard for CBD businesses to grow in 2021. But it won’t be impossible. Despite obvious difficulties, the industry still provides opportunities for well-run companies to establish themselves and prosper.

There are several strategies companies can employ to develop a successful brand in this ever-changing market. But before discussing them, it’s important to understand the challenges that CBD entrepreneurs face.

The Obstacles Faced by Entrepreneurs in CBD Industry

For most CBD entrepreneurs, the biggest challenge is getting products into the market. The industry is highly saturated, making it vital that newcomers create a niche for themselves and sustain it. But achieving that goal still requires an effective sales outlet.

Even established companies struggle to get noticed in an e-commerce environment rife with competition. SEO traction is typically the ideal tool for brand exposure, particularly at a time when many physical stores aren’t open. However, there’s a ton of competition in that space as well. Many CBD brands are targeting the same popular keywords, which decreases the chances of ranking high on search engines.

Similarly, marketing is often impeded by advertising bans on a wide range of cannabis-related products. An archaic view of the cannabis market prevails in several key sectors, and this prejudice is severely hindering companies’ ability to advertise and rank on search engines.

Another obstacle for CBD entrepreneurs is finding a banking establishment that will work with their business. Hemp-derived products have been widespread since 2018, and the legal cannabis industry is a multi-billion dollar market, estimated to be worth $30 billion by 2024.

But large swathes of the banking industry still refuse to provide financial services to cannabis-related companies, even extending their unwillingness as far as ancillary businesses like landlords and cleaning services. This inability to do simple things like handle customer payments is a highly frustrating obstacle to everyday operations, and it’s one that many CBD companies struggle with the most.

The Challenges of 2020

On top of the aforementioned obstacles, 2020 posed its own unique challenges, as a pandemic and lawsuits regarding false marketing claims rocked the CBD industry. And while the former couldn’t be avoided, the latter certainly could.

The majority of lawsuits concerned CBD manufacturers that provided false or misleading information about their products. In addition to these lawsuits, the FDA hit a number of CBD companies with warning letters for making claims that their products can treat medical conditions.

It’s currently illegal for CBD manufacturers to place supplement facts on their packaging or make medical claims on behalf of their products. And while there may be much regulatory uncertainty surrounding the CBD industry, this is no defense for breaking the laws that do exist.

The FDA is happy to consult with businesses to provide clarification. At Kat’s Naturals, we’ve called the organization to find out what our business can and cannot do to avoid being penalized. In our case, our state requires that, as an unregulated supplement, our products can’t have supplement facts on their packaging. The FDA also checks our packaging to ensure we’re not making any illegal claims.

As a fundamental rule, nobody should enter this industry without first researching and understanding the relevant regulations around CBD. Anyone putting out a product with packaging that contains illegal claims runs the risk of an expensive lawsuit or an FDA letter, which can be incredibly damaging for a startup company.

In this respect, both big and small companies are getting themselves in hot water. In the case of many bigger businesses, they know the regulations but place supplement facts on their packaging anyway because they have the financial backing to take a risk.

But while larger companies have more scope to challenge the FDA on their regulations, smaller CBD brands should not use this approach. If they want to develop their business in this industry, it’s best to play by the rules.

How to Develop a Successful CBD Business in the 2021 Industry

Despite the many difficulties that the CBD industry faced last year, and the obstacles that lie ahead, it’s still possible for CBD businesses to grow and thrive in 2021. But what strategies can companies use to develop a successful brand in this challenging market? Here are three tips.

  1. Study the market

CBD entrepreneurs should research the market before they enter it. Look for gaps, find problems, and try to fill and resolve them. Not every business needs to be product-oriented. Some successful CBD entrepreneurs have found other niches to excel in.

For example, one company created a chain of custody software called Saphe that enables businesses to easily track seed-to-sale. Other companies have entered the market by developing things like better machinery or packaging.

  1. Bootstrap the business for as long as possible 

While the CBD industry is experiencing growth, its future remains uncertain; there are no assurances of success. As a result, CBD entrepreneurs may not want to get investors. There’s no way to guarantee that entrepreneurs can make back the money they received in this market.

Instead, CBD entrepreneurs should invest whatever money they can afford, find a niche, and let their business take off. Then, they’ll be able to grow their brand organically and sustainably and take the step to look for investors.

And when things are going well, entrepreneurs should save as much money as possible. One can never know when a crisis will occur, so it’s best to spend wisely and save when possible.

  1. Don’t make claims on packaging

CBD entrepreneurs shouldn’t make claims if they don’t have $50 million or stockholders to help pay for lawsuits. Keep supplement facts off the packaging and call the FDA to get a list of what is and isn’t okay to do.

They won’t punish entrepreneurs for calling even if they’re doing things incorrectly. However, the FDA will shut down an entrepreneur’s CBD business if it sees the brand hasn’t acted on its advice. Overall, it’s best to stick to the rules and play it safe, especially when a company’s future is at stake.

Who will succeed in the CBD industry?

Despite a tough year—and another potentially difficult one ahead—the outlook for the CBD industry should not look bleak. For many companies, the challenges posed by this ever-changing market will present themselves alongside new opportunities.

By doing the right things, businesses can avoid becoming embroiled in the lawsuits and FDA warnings that marked 2020 and be ready to move when new opportunities arise. The keys to success are just education and versatility. Only the entrepreneurs who are well-educated in the industry’s workings and positioned in a particular niche will be poised to succeed as the CBD market grows.


  • Kat Merryfield is the founder and CEO of Kat's Naturals, a Tennessee-based CBD company that uses American grown organic hemp to develop a range of products, including CBD topicals, oils, edibles, and skincare. With over a decade of experience in the health and wellness industry, Kat is committed to creating and spreading awareness around the benefits of CBD and other natural remedies. 

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