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The last decade was strong for the cannabis industry — especially the burgeoning cannabidiol (CBD) market. But in order to compete with the many other brands also striving to become the biggest and the best, new brands need to take some important measures to ensure they stand above the rest.
A little background
Prior to 2018, all cannabis extracts were considered illegal on a federal level — unless specific exceptions were given to medical patients.
A new bill was put forward on the basis that there was a distinction between non-psychoactive compounds like CBD, and psychoactive compounds like THC (tetrahydrocannabinol). This allowed any cannabis product made from hemp (which doesn’t produce THC in any meaningful supply) to be sold over the counter to the American public.
This change opened up an entirely new market catering to CBD-infused products like oils, capsules, cosmetics, edibles, and much more — all made from hemp.
As a result, the growth of the industry has been incredibly rapid. New CBD startups are becoming multi-million dollar companies in as little as two years of operation. Although the future is bright for CBD, the market is crowded. Here are some of the ways CBD companies can position themselves to achieve total domination of the industry.
1. Move into newly-legal states
The majority of CBD companies operating in the United States are based in the areas where cannabis laws are the most friendly: California, Oregon, Washington, and Colorado. As a result, there are fewer CBD companies in the Midwest or even on the East coast.
This has left a large area of the market unattended.
In particular, there are three remaining states that have not legalized cannabis at all: Idaho, Nebraska, and North Dakota. Based on legislative moves happening in each of these states, it seems likely they will change their position in the coming years and become new markets that brands should keep a close watch on. CBD brands are expected to be able to extend into these markets by the start of 2021.
2. Play by the rules
It’s increasingly important to play according to the rules if you want to survive the actions of the FDA in the next decade. Those who don’t follow the rules will likely be pushed out of the industry altogether.
In order to play by the rules, CBD companies need to make sure there are no health claims on the product labels or website, perform the necessary testing for every batch of hemp extract, and follow the GMP standards already put in place as if it was doctrine.
The CBD industry is growing way faster than regulations can keep up with, which is starting to affect the quality of products currently on the market. The CBD industry is notoriously abundant in low-quality products that can’t back up the claims made on the bottle if the contents are tested in a lab. Often, the contents of the oil are only a fraction of what’s claimed on the packaging — making it nearly impossible to calculate CBD dosages accurately.
As more examples of this pop up around the country, people are starting to become hesitant about the products they’re ordering.
Likewise, the FDA is increasingly concerned at the number of sham products circulating around online. It’s only a matter of time before the FDA sweeps in with dramatically increased regulations for CBD manufacturers to keep these sham products from ending up in-store shelves.
Currently, the industry self-regulates — pointing out bad players, and giving praise to companies that maintain strong integrity. There are a few third-party organizations that provide unbiased advice to customers on how to identify the best CBD products, but in the future, this job will come down to agencies like the FDA and FTC instead.
3. Focus on product diversity
The last decade saw a ton of brands popping up overnight to cash in and ride the wave of the emerging cannabis boom. Very few of these brands have even attempted to distinguish themselves as leaders in the industry by innovating new product types, or going above and beyond the industry standards.
In order to remain relevant and compete with the hundreds of other CBD brands all selling similar products, some companies have begun pushing out new, innovative product types to catch the attention of customers. In addition to the standard CBD oils, e-liquids, and gummies, we’ve seen some creative CBD products – and it’s only February. Taking home the cake for most creative are these cute CBD Christmas cookies from Nordic Oil that appeared in December of 2019. This does not remove the place of CBD suppositories and salves as they are still very much in trend.
Related: The 12 Weirdest CBD Products
The need for this variety and growth is further necessitated by the controversy over vaping which has led many states to ban vaping due to health risks.
While, most of the vaping related deaths and lung diseases can be correlated with the black market, the public has become more skeptical about the use of vaping products than ever before.
Additionally, the FDA is expected to impose new vaping regulations on the industry. These realities will impair the CBD e-liquid and vaping business. In order to remain adaptable to these changes, CBD brands should spend less effort in developing new e-liquids, and focusing on newer, more innovative product types instead.
The CBD industry only emerged within the last 10 years, and a lot has changed. The market has been an oasis for new health startups — earning millions of dollars in revenue within just a couple of years in business.
However, the lack of regulation and poor public understanding of the topic has enabled a lot of foul play in the industry. Companies were often getting away with using false claims and piggy-backing off the innovation and hard work of others.
The cannabis market is set to change over the next decade as more people become aware of the sham companies currently operating in the space, and it’s likely government regulators like the FDA will begin to take a stronger tone with CBD companies.
This decade will push brands to reassess its lineup to better match the wants and needs of its customers. As the industry matures, the smaller companies that bring less innovation to the table will begin to fade into the background as larger brands with strong integrity continue to rise to the top.
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