Growth opportunities abound in the global hemp industry, with Grand View Research predicting a compound annual growth rate of 16{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} over the next several years—representing a potential market of more than $10 billion by 2028. To tap into these possibilities, hemp business operators must strike a balance of following proven best practices while setting their brands and products apart from the rest.
To this end, Hemp Grower reached out to several hemp cultivation operation owners across North America to collect their top tips and insights for running a successful hemp business. With advice on everything from building your brand and finding your niche to creating efficiencies and generating profits, these suggestions can help you hone your strategy for success in 2022 and beyond.
On navigating regulations:
1. “If you’re producing finished products for the wholesale or retail markets, join an organization that understands the food, beverage, and dietary supplement industries. My favorite such organization is the American Herbal Products Association [AHPA] because they help their members navigate the complex regulations at the federal level with the FDA and the USDA. An ounce of prevention is worth a pound of cure, so having a resource like AHPA can help avoid costly mistakes that can come with very high legal bills.”
On building a brand:
2. “Building a brand is neither cheap nor fast and requires a lot more than just developing a logo and slapping it onto packages. A brand is a promise, so spend time considering what your brand will mean and why it will bring value to the customer. Consult with a graphic designer who has experience in brand development. Also, consider consulting with an intellectual property (IP) attorney about the process and cost of applying for and using trademarks properly to add value to your brand and your company.”
On customer service:
3. “Customer service is a huge opportunity to differentiate your company from others in the industry. [Ensuring] you’re set up to respond to [customers’] emails, texts, and phone calls [promptly] will create a real sense of trust between you and your clients. So often I hear about well-known companies in the industry that seem to be impressive from a distance, but for those who try to do business with them, they are impossible to reach and frustrating when trying to get clear answers. Make sure you emphasize to your staff how critical it is to make customer communication a priority.”
On building a brand:
4. “In the growing universe of hemp and its appeal in the cannabis industry, it’s easy for your brand to get lost in the world of all the things that can be created from hemp. … For this reason, I think each successful hemp business should have a niche product or service that their company is known for. Your niche is what your customers can rely on you to offer and becomes your ‘expert space’ as a business. The stronger your niche, the easier it is to build a brand.”
On creating efficiencies:
5. “At the end of each year, we take a look back at the income statement to see where we have been inefficient as a company, and [we] make the necessary adjustments [based on that information]. Creating focus within your operations allows your business to serve based on its zone of genius (or niche offering). When your business is flowing in its zone of genius, you are able to determine what tools and people are needed for the business to not just prosper, but profit. I encourage every hemp business to study [its] financials and learn from the story they share.”
On creating efficiencies:
6. “Economies of scale do not always apply, especially in the boutique, smokable hemp flower market. If you are growing biomass for extraction, fiber, or feed, then the ‘bigger is better’ model may apply, but for smaller farms focusing on smokable flower, the best advice is to dial in your harvesting, drying, and curing processes first. Be effective before you create efficiencies.”
On navigating regulations:
7. “There is a patchwork of local, state, and federal regulations with varying degrees of enforcement. The best practice is to know [not only] the regulations in your state, but also those in which you intend to sell and follow them. There is currently a huge financial incentive in exploiting loopholes in total THC concentrations and synthetic cannabinoids while skirting testing and regulatory requirements. But running a business through the lens of what you ‘could’ do versus what you ‘should’ do will eventually catch up with you. Consumers will catch on that they are being exploited for short-term profits and, ultimately, only companies that are compliant and protect the health and safety of their customers, and the industry, will survive.”
On increasing sales:
8. “Listen to your vendors and your customers, and engage with them. The best way to increase sales over time is by word-of-mouth. Slick advertising campaigns and SEO-optimized websites may attract initial business, but what sustains companies is organic growth driven by a commitment to quality and recommendations from previous customers.”
On building a brand:
9. “Be transparent. Be original. Be vulnerable. Let folks see who you are and what you do. The market is flooded with lifestyle brands that have no actual connection to the product they are providing. Folks like to feel connected to the products they buy and the companies that produce them. Engage your audience throughout the year and let them feel as if they were actually on the farm. A bit of education and whimsy (when appropriate) is also a plus.”
On customer service:
10. “Treat folks the way you want to be treated. Publishing policies for shipping, returns, refunds, etc., is great, but at the end of the day, customer service boils down to relationship building. If you can create a trustworthy relationship with a customer, then your policies become irrelevant to them—and so do the barriers to purchasing—because they are confident that you will take care of them no matter the issue. This is a lofty goal that is expensive to maintain, but definitely worth it.”
On generating profit:
11. “Overestimate expenses and underestimate revenues, and budget accordingly. Know your margins and increase them where you can, but also make sure that you are providing value to the consumer by delivering quality products at competitive pricing.”
On diversifying:
12. “We made our name [as a] farm-to-table hemp flower company and have since expanded our product line to include topicals, edibles, and concentrates. If folks like you in one arena, there is a high probability that they will be willing to try other products you decide to produce and carry. However, beware of trying to spread yourself too thin or trying to carry the next big thing. Slow and steady wins the race.”
13. “You can’t be all things to all people. Know your strengths and play to them. Get to know your audience and listen to them.”
On creating efficiencies:
14. “Try to integrate hemp into your already existing rotations. Utilize the strengths and synergies you’ve already established on your farm, like using the same equipment and nutrients, if possible. At the end of the day, hemp is still a plant, so many of the same farming principles apply.”
On building a brand:
15. “Be genuine and transparent. If you want people to trust your brand, they need to trust you.”
On generating profit:
16. “Know your end game: Where are you selling your crop or product, and what is the expected income? Then, work backwards from there.”
On selecting genetics:
17. “Local science-based data is a must. Replicated trials over multiple years provide growers with the confidence on what a cultivar will do.”
On diversifying:
18. “When [a company is] diversifying I am often asked: ‘Do you have a variety that has high CBD and high grain yield with fiber?’ You’re better off managing for one of the revenue streams, and then finding additional genetics that fit each purpose. For genetics, there is no one variety that fits all. Accept that.”
On building a brand:
19. “In the crowded hemp marketplace, building a brand that people can understand and trust is key to breaking through the noise and capturing repeat business. A brand begins with founders who have a story to tell, combined with clear distinctions that set the brand apart from its competitors. At Cornbread Hemp, our brand is built on 250 years of hemp traditions in Kentucky, even when it wasn’t legal. By embracing the story of the ‘Cornbread Mafia,’ Cornbread Hemp has opened the door to an honest conversation about ending cannabis prohibition at the federal level.”
On customer service:
20. “Great customer service is key in the hemp industry, especially in the CBD direct-to-consumer space. Many of the bigger brands have outsourced their shipping and customer service to third parties, making it easy for smaller brands to provide better service to their customers who are looking to change or cancel orders or get more information on products.”
On diversification:
21. “A combination of due diligence and creativity will set your business up for success in this nascent industry. Now is the time to get in on the ground floor and build a company that will last, but differentiate yourself with several end-use products that stand out from the crowd.”
On navigating regulations:
22. “Connect with your department of agriculture agents to create a relationship above and beyond inspections and compliance. By openly communicating your vision boards and aligning with key regulators, you [can] create a pathway to proactively find solutions within regulations.”
On building a brand:
23. “Put simply, a brand is the way a business is perceived or the story that it chooses to tell. This story should repeat itself across all the various means in which audiences come into contact with the brand, amounting to a cohesive and unified identity. These assets are many and diverse: from the name of the business, to its visual look-and-feel, and the written language it applies.
“Eight steps we approached in brand development for BrightMa Farms [are]:
- Research the competition.
- Establish your brand personality.
- Choose the right business name.
- Craft a catchy slogan.
- Design a professional logo.
- Define a visual language.
- Build a brand voice.
- Apply your branding consistently.”
On increasing sales:
24. “The most important part of any successful hemp business is sales. Growing is the easy part! Developing a network of people to help you move the crop is essential.”
On customer service:
25. “Be honest, [and] do what you say you’re going to do. Always put your customers’ needs above your own; success and money will follow.”