We Built A $3M/Year Wholesale CBD Operation

$300K
revenue/mo
3
Founders
8
Employees
Beyond Botanicals
from Oxford, CT, USA
started January 2017
$300,000
revenue/mo
3
Founders
8
Employees
717K
alexa rank
330
followers
51
followers
market size
$9.3B
avg revenue (monthly)
$163K
starting costs
$42.2K
gross margin
75%
time to build
10 months
average product price
$10
growth channels
Word of mouth
business model
E-Commerce
best tools
Google Drive, QuickBooks, Instagram
time investment
Full time
pros & cons
33 Pros & Cons
tips
10 Tips
Discover what tools Mark reccommends to grow your business!
Discover what books Mark reccommends to grow your business!
Start A Cbd Business

Hello! Who are you and what business did you start?

Hi there! My name is Mark Maher and I am a co-founder of Beyond Botanicals, a CBD Manufacturing company in the USA focused on Private Label CBD, Wholesale CBD, and our own best-selling line of premium quality CBD products. We help people start their own CBD businesses.

We are proud to be the first licensed hemp consumables manufacturer in the state of Connecticut. Our CBD eCommerce store sells our retail CBD products online. Our CBD manufacturing program produces Private Label and White Label CBD for over 300 different brands.

On the retail side, our best-selling product is our CBD infused cooling gel, developed in-house by our cosmetic chemist and co-founder Jake Firmender. Our CBD oils and gummies round out our top three products.

We launched in 2017, doing about $80K in six months of business. In the following two years, we rocketed over $250K in monthly sales and quickly crossed $3M in annual revenue.

we-built-a-3m-year-wholesale-cbd-operation
Our facility in Oxford, Connecticut

What's your backstory and how did you come up with the idea?

Looking back on my journey, I’m not sure I would’ve believed you if you told me that I would one day help start a business, but now that I’m here I wouldn’t have it any other way. Here’s how it all started!

In high school, I began working as an EMT. After graduating at the top of my class, I was offered a position as an instructor, which ignited my passion for health and education. Part of my responsibilities included selling EMT and CPR programs to various organizations and municipalities, so this also began to develop my sales skills. In the early 2010s, nagging injuries and decreasing organizational budgets led me to consider a career change. At the same time, the Medical Technology program I was attending college for shut down right before I started my senior year.

Deciding college wasn’t for me, and debating what to do with an abundance of free time, I took a position as a Sales and Training Manager for Guitar Center as part of the Grand Opening team for a new store. I spent three years continuing to develop my sales experience before my long-time friend Jake Firmender reached out to me with a job opportunity. He and I took chemistry classes together in college, and he was now working with a non-CBD private label supplement and skincare manufacturer. At the time, they needed a new account manager. The allure of having weekends off for the first time in my life led me to quickly, and gladly, accept the offer.

I worked for this company for nearly four years when a regular client asked if we could make CBD oil products for him. Jake and I pitched the new products to our ownership group, who immediately refused on the basis that CBD was never going to be relevant and too difficult to be worth making.

Like some with Crohn’s disease, CBD’s potential anti-inflammatory benefits caught my attention and I immediately dove into learning as much as I could about the health benefits of CBD. Compared to the myriad of gimmicky superfood and anti-aging products we were manufacturing at the time, it appeared that CBD was a product that would truly make a difference in people’s lives.

I ordered some CBD online and experienced the benefits myself. I was sold on CBD’s worth immediately. A few business dinners later, Jake and I decided to start our own CBD business and Beyond Botanicals was born.

Nearly a decade of experience in the medical field allowed me to absorb scientific research rapidly, with a passion to educate others about the benefits of CBD. Jake’s education and experience as a chemist were - and to this day remain - the foundation for our CBD product research and development. Having this knowledge in-house saved plenty on start-up costs and we focused on providing Private Label CBD services to other CBD startups.

We started with a $7,000 loan, which we repaid within 6 months. Otherwise, we’ve bootstrapped everything else ever since.

Take us through the process of designing, prototyping, and manufacturing your first product.

In the early days of deciding what products we wanted to sell, we did a lot of simple competitor analysis - buying a range of products from CBD brands of various pedigrees. We sampled each for presentation, effectiveness, taste/scent, and cost. What stood out to us the most was nearly every product we tried tasted simply awful. We decided that having good taste was going to be our first competitive advantage, especially in products like CBD Tinctures which are taken orally and sometimes more than once a day.

Thankfully, we had a network of already vetted and trusted suppliers accumulated during our previous years in the supplement industry. We must have gone through half a dozen carrier oils (the base from which other products are created) and over forty flavors before settling on our core CBD formula: a blend of hemp seed and coconut oils. Our original flavors included mint, peach, and a natural unflavored oil. We churned out dozens upon dozens of prototypes and gathered as much feedback as we could from family and friends about how they tasted. To this day, our original mint CBD Tincture prototype remains our customers’ favorite.

we-built-a-3m-year-wholesale-cbd-operation

Packaging worked largely the same way. Lots of revisions, and more polls than I can remember. The most important thing to note is that the winning packaging and logo weren’t the ones our founders were most fond of, but our potential customers voted overwhelmingly in favor of them. In business, it’s not always your own personal taste that wins - trust the feedback you get!

At first, we rented space in a local facility with extra capacity to manufacture our products in the evenings. Since we already knew what it takes to set up an FDA and cGMP-compliant facility, we were comfortable with beginning to outfit a building as soon as we could fund it.

About six months in, things started to really take off and we began construction on our own 15,000 square foot facility in Oxford, Connecticut. Because the industry was so young at that point, there wasn’t much in the way of a blueprint or established regulations to follow. To make sure we brought value, our regulatory approach was largely “What are the biggest CBD brands doing, and how can we take it a step further?” In the years since, the federal Farm Bill, which regulated hemp (from which CBD is extracted) as well as many state regulations have kept us on our toes, constantly learning about and implementing new changes in manufacturing, packaging, and product testing.

we-built-a-3m-year-wholesale-cbd-operation
Jake prototyping our CBD oils

Describe the process of launching the business.

With our product in hand and our manufacturing in-house, our website and shipping capabilities were the next components to come online. My Guitar Center and previous start-up experience were invaluable on the shipping side. I was already familiar with packing and shipping products (safely, I might add. If you can ship $10,000 guitars, drum sets, and amps safely, you can handle anything!) so we ordered an assortment of envelopes, tape, boxes, and labels from Uline, and we were off to the races. Years later, we would start a switch to custom printed packaging at lower prices to boot, but the next-day service of Uline can’t be beaten.

We built our eCommerce website from the ground up in WordPress/WooCommerce to save on startup expenses, planning to bring on a full-time web developer to make improvements and develop a higher-end look as we scaled. Part of that web build was payment processing. Back in 2017, this was single-handedly the biggest challenge of starting a CBD business. Nearly no one would accept you if you were selling “marijuana”, even though hemp is a legal “cousin” to marijuana and has been used for hundreds of years in industrial applications. CBD was in a very “grey” area when it came to payment processing.

The understanding that CBD is not marijuana came with the Farm Bill. Before that, we bounced from credit card processor to processor, often at rates as high as 10% with our funds being held up to 180 days before dispersal. Tough times, they were! Nowadays, with more understanding of the industry and the stigma mostly dispelled, mainstream processors like Square will offer you CBD payment processing at rates less than half of the old standard.

With good SEO and content in place, we were #1 for Private Label CBD keywords within a couple of months. Before we knew it, we had a few multi-thousand dollar purchase orders arriving per week for a variety of private label products.

Today, that niche is far more competitive and requires a lot more effort than it did three years ago. Frequent, relevant content was, is, and will always be king when it comes to search engine ranking.

Somewhere along the line, society collectively romanticized this hustle culture of working ridiculous hours, not sleeping, sacrificing everything else, and on and on. Do not, under any circumstances, ruin your health, relationships, or general well-being for your business.

Our B2C sales started far more slowly because no one allowed you to advertise CBD back then, and it remains somewhat limited even in 2021. Instead, we went for the tried and true boots-on-the-ground approach. Concerts, festivals, fairs, and handmade products gatherings were our bread and butter for the first year and a half, generating their fair share of recurring retail customers. Those customers go on to share positive experiences with their friends, and the cycle continues from there.

we-built-a-3m-year-wholesale-cbd-operation

Our first physical event - Connecticut’s Forever Grateful festival in the Summer of 2017

Since launch, what has worked to attract and retain customers?

Because modern advertising methods like Google, Bing, Instagram, and Facebook have banned direct advertising of CBD, and Amazon won’t allow sales of it at all, we’ve relied heavily on a more traditional approach. Prior to COVID, attending trade shows in person was a great way to meet and work with new Wholesale CBD and Private Label CBD clients. In terms of gathering new wholesalers, we’ve found that contacting them directly and offering to spend some time training their employees at no cost is a great way to earn their loyalty and get them to carry your product.

On the B2C side, we’ve been fortunate enough to make appearances on a few local radio stations and TV shows to spread the word about Beyond Botanicals. Those expos we did when we first started were great for beginning momentum, and the local appearances have maintained it.

Using Drip as our email marketing platform has been great for keeping customers engaged. Its workflows allow us to set up recurring intro campaigns that progressively educate the recipient more and more about CBD and its uses as they relate to our product line. It also segments the most loyal customers automatically, which allows us to hone in on who deserves the most attention and reciprocates with the most consistent support. Between Drip and Shipstation, we’ve got a good loop going to tell customers about new products and follow up on their purchases to make sure they come back for more.

To compete with everybody’s Prime expectations, we ship all retail orders for free. As of Summer 2021, Amazon still doesn’t allow CBD sales. That doesn’t stop the bad guys from taking advantage of the uneducated, selling things like “1 million milligram hemp extract gummies” and capitalizing on customer questions that mention CBD. We’ve taken countless sales that would have otherwise gone to Amazon sellers by explaining the basic math behind product weights, making sure customers understand just how impossible it is to have a 1 million milligram gummy bottle, for example.

In support of our wholesale clients, we’ve found that sharing a store locator on our site is a great way to ensure mutual success - client businesses are promoted and we, in turn, see more sales because of it.

Most importantly, we guide our clients through many of the most important processes of starting their own CBD business: product consultations, custom formulations, branding/graphics, packaging, and even web development, shipping, and fulfillment. Our White Label CBD program is even more direct: we put your label on our own products which allows you to get to market fast. We also have low minimum orders which allow people to get their feet wet in the industry without major commitments.

we-built-a-3m-year-wholesale-cbd-operation

How are you doing today and what does the future look like?

Most of our Private Label CBD clients are small businesses: individual entrepreneurs, health food stores, etailers, or CBD-specific brick and mortars. COVID hit that demographic hard in the last year, and many of those businesses have suspended operations indefinitely. As unfortunate as that is for them and us, it’s given us more time to give attention to each client, doing everything possible to ensure their success and provide a great product for their customers. The last few months have been refreshing as we see more and more clients re-opening their businesses as their areas get COVID under control. We remain profitable and are excited to add some additional cannabinoids to our lineup this year, including CBG and CBN. To start in 2021, we expanded the distribution of our retail products to Brazil through 4 Social Meds.

In 2020, we tried working with a few different marketing agencies for paid ads through Google and various display platforms but found the restrictions on CBD advertising too prohibitive. While others with niche focuses may have found these costs worth it, we continue to believe that content is the best approach. This has been effective in generating new sales and also keeps our marketing budget lean.

Over 80% of our customers in both B2B and B2C are repeat customers, which makes us proud to know we have a product worth staying with. By publishing regular CBD-related education content on our site, our average customer is spending 7 or 8 minutes on site, which ultimately leads to good conversion rates. As we look to the future, we’re confident that upcoming FDA regulations will pave the way for more industry growth and the eventual groundbreaking of our second production facility.

We believe that Amazon will finally allow CBD products once that FDA legislation hits. Since all quality, legitimate CBD products require lab testing and certificates of analysis, it will be easy to pick out the scam products because there’s no way their lab results will back up their label claims. From there on, Amazon’s proven retention methods will give us access to a whole new customer base that we’ve been kept away from thus far.

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Through starting the business, have you learned anything particularly helpful or advantageous?

The most important lessons I’ve learned in the CBD business are usually about what NOT to do. As Napolean said best, “When the enemy is making a false movement we must take good care not to interrupt him.” We’re always paying attention to FDA warning letters and competitors in the news to see what’s gotten them in trouble, and then shoring up our own operations if needed to ensure we never make the same mistake.

As it relates to CBD specifically, this is still a very young industry with a massive need for education. If you’re looking to start a CBD business, you’ll earn customers by sharing knowledge and helping them understand the product, its effects, and the laws surrounding it. Never discount the brand loyalty you can generate by being a good educator.

Our biggest challenges to success often come in the form of quick regulatory changes. For example, CBD is included in recent vape legislation, the banning of Delta 8 oils in many states, or even restrictive packaging laws passed without input from industry experts. Because the laws can change so quickly in this industry, it’s important to move fast. You’ll miss out on sales opportunities that may never come your way again by hesitating. For this reason, it’s also critical to be aware of these changes as they happen so that you can pivot portions of your business into the areas that are viable and most successful. Since we have our own retail product line, we learn what needs to happen first and fast and pass that knowledge onto our Private Label CBD customers. We guide them through the entire process - from formulation to shipping, including providing fulfillment services for those businesses that wish to be totally hands-off.

What platform/tools do you use for your business?

Our site still runs on a heavily customized WordPress framework, which has allowed us to expand easily over the years and gives us more flexibility than we found with Shopify. Outside of that, here are a few of my favorite apps in our arsenal.

  • Trello - There’s a basic kanban framework here that you can customize for nearly anything. You can use it to keep track of projects, invoices, manufacturing, lead gen, and more. The free version is insanely powerful and would be helpful to any startup.

  • DataNinja - Remaining compliant with FDA and GMP standards requires top-notch manufacturing records and batch tracking. DataNinja is a pricey service, but it integrates everything from receiving and inventory to manufacturing records and lot testing.

  • Quickbooks - Every business needs to be on top of its financial outlook. Quickbooks remains the best option available and has some affordable starter packages too.

  • G Suite - Sure, google has email, but the ability to share documents and edit in real-time with co-workers is a lifesaver.

  • Notion - This is a new one to me and I’ve spent the last few weeks getting comfortable with it. Notion offers everything Trello does with the addition of calendars, wikis, CRM, and even some of the G Suite features. I can see us abandoning a few other apps in the near future in favor of Notion.

  • Drip - Maybe the coolest marketing tool I’ve ever used. Drag and drop workflows for customized mailing list automation.

  • Shipstation - Integrates with just about every possible ecom platform and gives your customers real-time tracking of their orders. What’s not to like?

What have been the most influential books, podcasts, or other resources?

  • Extreme Ownership and The Dichotomy of Leadership - Jocko Willink: As a business owner, every outcome - good or bad - is ultimately on your shoulders. Jocko shares how to promote accountability and approach the most difficult situations in leadership with grace and effectiveness.

  • The Art of Happiness - Dalai Lama XIV: Business can be stressful, and startups even more so. This is a crash course for making the best of and finding happiness in every situation.

  • The Infinite Game - Simon Sinek: As someone with a largely binary perspective on life - my trauma patient lives or they die, my sports team wins or they lose - Sinek’s perspective helped me succeed in business, where there is no outcome or scoreboard.

Advice for other entrepreneurs who want to get started or are just starting?

Somewhere along the line, society collectively romanticized this hustle culture of working ridiculous hours, not sleeping, sacrificing everything else, and on and on. Anybody who’s started a business can tell you that it’s difficult and it requires sacrifices. Do not, under any circumstances, ruin your health, relationships, or general well-being for your business. It IS possible to find balance in all things. I’ve found over the years that the more you take care of yourself, the more you can give it your all while working on the business, and still be home early enough to enjoy time with your family.

Whether you find a therapist, coach, or mentor, I can’t speak strongly enough about the benefits of having someone you can confide in about your biggest challenges. At first, this may be another business owner who’s gone through what you have. As you progress, the investment you make in a coach or mentor will pay back a hundred times over. If you’re starting a business, you probably think you can do it (mostly) yourself. I believe in you too, but never turn down the opportunity to learn from others with different or more experience.

Are you looking to hire for certain positions right now?

As we continue to mature, our current focus is on finding full-time, talented sales people and marketers to bring on new private label brands and grow our B2B sales presence. With our foundation of legacy customers in place, it’s time for some outbound work to find new clients and see how we can augment their existing product lines or become their new primary partners. If you have experience selling in the CBD industry, we’d love to hear from you. You can reach us here: [email protected].

Where can we go to learn more?

If you have any questions or comments, post below. I’d be glad to chat with you!

-  
Mark Maher,   Founder of Beyond Botanicals
Pat Walls,  Founder of Starter Story

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