Just because hemp-derived CBD was, in effect, legalized when it was removed from the list of controlled substances by the 2018 Farm Bill does not mean that it is an FDA approved drug, food additive or supplement.
Effectively, the Farm Bill succeeded in taking CBD out from under the thumb of one government entity and thrust it firmly under the thumb of a different branch, ultimately leaving oversight to the FDA. However, the FDA has no guidelines in effect for the use, marketing, and sale of CBD specifically. This leaves the FDA to treat the ingredient under already established guidelines created for other ingredients.
With CBD living within a myriad of local, state and Federal grey areas how is one to create and market CBD products responsibly?
Under FDA guidelines, when a product is “intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease and/or are intended to affect the structure or any function of the body.” it is then defined as a drug. In addition, if a substance has been used as an ingredient in an FDA approved drug it is then, by default, considered a drug and must be FDA approved before it can be used in products.
While CBD is considered legal there are still rules about what you can do with it and how it can be marketed. Rules that exist for many other products and CBD is no different. These violations of current regulations have prompted the FDA to serve some well known CBD companies with a warning, or cease and desist, letter.
Clearly, the biggest problem for the FDA currently is companies who are making medical claims as to the ailments CBD is believed to help. The FDA has begun to stand up and take notice of the growing CBD market and is not taking a very tolerant position, as witnessed by the recent warning letters going out to companies such as Curaleaf in regards to their claims about healing uses. Not to mention the influx of less than ethical companies who are lying about what is in their product or whose products do not actually contain the levels of CBD that they are claiming.
Some of the claims that the FDA is particularly troubled by included stating that CBD “has been shown to” be effective in treating a known ailment, comparing the CBD product to a pharmaceutical-grade treatment as a “natural alternative”, and making claims that are “scientifically unsubstantiated”.
How can you effectively market your CBD product in an ever-changing market?
Because the CBD market is growing exponentially with new companies popping up constantly, but with a lack of regulation, it is harder than ever to market effectively and set yourself apart from the crowd.
So, if you can’t talk about what your product can do for a customer or what the product is good for, then how are you supposed to market your product? Furthermore, how are people supposed to know which product they should choose if they are considering the use of CBD? How are people to know their product is real and contains what is stated on the label?
Consider what you want your brand message to be. Create a clear and concise message and go from there to create a marketing strategy aimed at educating your customers on your brand.
Websites are more important than ever before as it is often the first place consumers turn for information. Your website should be professional and have clear and concise information. Your website is the face of your brand and where consumers will turn for their research. Clear, concise information along with a clean, professional-looking website helps to build consumer trust.
Talk about why your company is different, as well as what is special about your product over others like it on the market. You may want to talk about sourcing and commitment to best practices in order to help to set your product apart from the other “fly by night” companies out there just trying to take advantage of the market growth.
Build your customer list and create an ongoing email campaign and monthly newsletter. This may sound daunting but there is almost no greater return on investment than with an email campaign. Recent stats show that the ROI of email is around 73%. Not only have these customers chosen to receive information from you, giving you a much greater reach rate than you would find even through social media, but, through email, you have the opportunity to speak much more openly about your product without the FDA breathing down your neck.
Know your marketing avenues and the rules they maintain around promoting CBD. Many simply won’t allow it. Pinterest clearly states that “Products made from CBD, hemp or their derivatives“ are prohibited on their rules for advertising guidelines page. Facebook, Instagram, and even Amazon will hold you to their regulations about the promotion of CBD products.
Strive to earn free publicity from sources such as magazines, television, even smaller trade publications. And in this day and age, even good reviews from customers or when customers mention you on Twitter are considered earned media. Because this attention comes from a 3rd party that you have not paid to get into, as opposed to advertising, it helps to reach the audience and develop trust with the public. Don’t be afraid to ask your customers to talk about your product when they love it! People love to share!
The FDA clearly regards CBD as a drug.
Public safety and marketing clarity is clearly the main reason we actually need the states to step up and create regulations and guidelines for merchants to follow and it is beginning to happen. For example, State Hemp Program SB1020 recently went into effect in Florida legalizing the sale of hemp extracts in that state and creating guidelines for “manufacturing, processing, packing, holding, preparing, or selling Food consisting of or containing Hemp Extract at wholesale or retail” as well as creating provisions for cosmetics and transportation of CBD containing products. Furthermore, the public should be hearing from the FDA in the early fall regarding the status of their efforts to expedite their process to “evaluate the regulatory policies related to” CBD products showing that they understand there is a high public demand for CBD products.
However, when the FDA recently spoke at the National Industrial Hemp Council 2019 Hemp Business Summit verbiage used clearly showed that the FDA continues to regard CBD as a drug that needs to go through the drug approval process to be marketed with claims of therapeutic benefit. They also vowed to continue to “monitor the market and take action” if they find a company to violate the FDA regulations.
In conclusion, businesses will want to make sure all disclaimers are being prominently displayed stating that the products have not been evaluated by the FDA and are not intended to diagnose, treat, cure or prevent any disease.
Why are we telling you this?
This is by no means an exhaustive list of marketing strategies, and we are by no means marketing specialists. But, we are in the business of providing our clients with payment processing solutions and we want to do everything we can to help keep our clients from getting warning letters from the FDA or even worse getting shut down by their bank and unable to accept payments.
Processors and acquiring banks who provide the CBD industry with payment solutions biggest interest is in managing their own risk. If they feel that the Federal government, who backs their services, will decide that the bank’s risk ratio is not in line with their preferred levels than they will shut down programs and close merchant accounts and many already have. As quickly as one solution becomes available, another is being shut down.
We strongly recommend taking a proactive approach to marketing your product legally and effectively by making sure you know your state and local regulations for CBD products, if your state has them, regarding the labeling, distribution, and sale of CBD products, as well as any marketing and advertising guidelines.
You may want to call on an advertising specialist for help and, of course, do not forget to consult your lawyer.
In the meantime, to find out what payment options are available today for accepting CBD payments give us a call and let one of our ETA CERtified Payments Professionals advise you and “experience the Bankcard Brokers Difference!”