After the US Farm Bill was Passed in 2018 & industrial hemp became legal, the CBD industry saw exponential growth, The global CBD market size was valued at $12.8 billion in 2021 and is estimated to register a 21.7% CAGR during the forecast period of 2022-2028.
Even though industrial hemp became legal in many US states, The major tech companies like Google, Facebook, Instagram, etc have not made things easier for many of the CBD brands when it comes to advertising, To understand more about the CBD industry and how to navigate the Marketing Challenges we invited Sonia Ortiz, She is the Director of Marketing of one of the fastest growing CBD brand – Cloud Water Brands, You can check out the full episode below
Q1 Give us a bit of context on CBD Legality
Sonia – It starts from the top. Federally, CBD is not legal to include in food or beverages. Basically ingestible which is where we fall under. However, the state has the authority to establish their own legislation, meaning that they could allow ingestible, they could allow topicals, they can just allow topicals. So what it created was a Wild West of a CBD market because it truly does vary state by state. I can tell you there are 25 states that are CBD legal. However, within those 25 states, not all will allow ingestible.
They only have a fraction of what they perceive to be not perceived, but what they established to be legal within their state. For example, In New York, they announced last year that they’re officially legalizing cannabis as well. This means that at some point THC products will be legally sold in New York. And we know that California was the first state to really take a bet on cannabis and THC and CBD is legal. And now that they, however, up until this year, they were not allowing CBD ingestible in large retail formats. And so they passed the bill that further defined their regulations so that retail stores could feel comfortable and compliant because they will get hit with fines if they’re not compliant. But when it isn’t clear to them what the rules are and aren’t they’d rather not take a gamble
So then they say, you know what, we just won’t offer them at all. We don’t want to take the risk. And that’s what has really happened. But now California understood that, but they also see consumer needs where people are demanding these products to be sold in their stores. So I think it really is forcing some states to take a look at the category and the consumer demand for these products. And many of them previously said no, and then now they’re transitioning into kind of restricted and then to fully legal. So it’s definitely a Pragmatic step
Q2 – What are the Marketing challenges that which CBD industry is facing?
Sonia: For CBD Marketing it’s almost the same challenge. We as small businesses or as businesses in general, we rely on advertising, on social media, we heavily rely on advertising on Google and both of those channels, and also Amazon, even all three of those channels, do not allow CBD ingestible advertising or promoting. So, for example, on Instagram, I’m unable to sell our CBD products. And at times I’m also flagged with our Immunity line, which is technically compliant. It does not contain CBD. It is a product line that offers 100% of your daily intake of vitamin D, three, and sync. But even then, because these channels are managed by their algorithm, their bots, or whatever you want to call them, you may get flagged if you have compliant products.
And that has very well happened to us. So it’s a daily struggle almost where it’s like you’re pushing them out and it’s like you’re winning the lottery if one of your ads does pass. And when I say winning the lottery, we’re still technically compliant, it’s just that they continue to get flagged because of that correlation to CBD. And so not only are we facing COVID, we’re facing CBD regulation challenges, and on top of that, just consumer confusion and the fact that CBD products are primarily sold in little boutique shops, smoke shops, or independent CBD shops, there’s also a lack of trust in the products that they should be buying. And so that’s one thing that we really set as a mission for ourselves
Q3 – How to Navigate CBD Marketing Challenges, Which Marketing channels to focus on?
Sonia: Absolutely so I think that the word of mouth really is important like I said. Facebook. Google. Amazon does not allow advertising CBD products, It’s really hard as a startup, you don’t have infinite resources like some of the very large brands do so you have to be incredibly scrappy almost and think outside the box. Influencer marketing is great for CBD brands because there aren’t restrictions with advertising, unfortunately, it is costly and influencer marketing isn’t as easy as it was in 2013 when they were barely discovering what it was now it’s a very expensive marketing strategy, however. It’s highly effective for CBD and almost a place where you should start one of the first places where you should start is leveraging the power of influencers naturally not just paying influencers but making sure that they relate to your brand. Love your brand. Love your product and are going to really be persuasive with their word of mouth because we can easily pay for influencers to take pictures of products and they’ll do it but
And that’s really where your brand identity, your transparency. Your consumer trust is going to do half of that work for you. For the many reasons that I mentioned of being flagged and unable to advertise, we have to do everything we can to improve our ranking organically. And so SEO is a top priority. And one of the first things that we look at, and we still look through our digital advertising and creating subdomains alternative Instagram pages to run our compliant ads for immunity. So there isn’t a uniform, it’s more so you have to keep experimenting and testing because, again, this is so new to everybody. So we’re all learning.
I hope this article was helpful!