Want To Sell CBD Throught MLM?

The Plants

Cannabis

Cannabis Sativa ^[1] is a subtype of the Cannabis plant and a relative of the Marijuana plant, but their differences are far greater than their similarities.

Marijuana

No explanation should be needed here, but for those of you who are too young to remember Cheech and Chong’s movie “Up in Smoke”, marijuana is a psychoactive drug from a particular strain of the Cannabis plant used for medical and more than not, recreational purposes. The main psychoactive part of cannabis is tetrahydrocannabinol (THC)^[1], one of 483 known compounds in the plant, including at least 65 other cannabinoids^[2].

Hemp

Hemp, (from Old English hænep^[3] )is a variety of the Cannabis sativa plant species that is grown specifically for the industrial uses of its derived products. It is one of the fastest growing agricultural plants and was one of the first plants to be spun into usable fiber over 10,000 years ago. Hemp can be refined into a variety of commercial items, including paper, textiles, clothing, biodegradable plastics, paint, insulation, biofuel, food, and animal feed.

CBD

CBD or Cannabidiol. is a phytocannabinoid^[4] discovered in 1940. It is one of some 113 identified cannabinoids in the Cannabis plants, accounting for up to 40% of the plant’s extract.  CBD can be taken in multiple ways, including by inhalation of cannabis (smoke or vapor), or as an aerosol spray into the mouth, or as an oil under the tongue or topically in the needed area. If the CBD-derived  product containing less than .03% THC (or does not have the same psycho-activity as THC), and is extracted from industrial Hemp, then under the Federal Farm Bill of 2018, it is considered a non-controlled substance. Keep in mind, the growers and manufacturers of industrial Hemp, must also follow strict growing and processing guidelines and procedures as outlined in the 2014 Federal Farm Bill. Then and only then does the Cannabidiol not fall under Schedule I of the 2018 Federal Governments Farm Bill^[5].

For the purposes of these product, and any time I deal with a potential client wanting to sell CBD-derived products through Multi-Level Marketing, I will always refer to this grouping of CBD products, as “Traceable CBD”.

So, in a nut shell, although they fall into the same family of cannabis sativa, Marijuana and industrial Hemp (with >.03% THC) are completely different plants. One is legal and the other, in accordance to a re-clarification of the 2018 Farm Bureau Act is not!

A Brief History of Cannabis

Cannabis has been used around the world for centuries. In most countries, it is not illegal to grow and harvest Cannabis. Here are some more recent events you should know about. If you don’t want to spend the time learning about the history of Cannabis, skip to The Legality of Cannabis in the U.S.

• 1890: The Cannabis industry was booming. Farmers were encouraged to raise cannabis to support the Civil War effort. Many of its derivatives, (clothing, rope, canvas, sails and lamp oil), help support and even gave the U.S. Colonies the needed leg-up during the war.
• 1906: In the U.S. the Pure Food and Drug Act is passed, regulating the labeling of products containing Alcohol, Opiates, Cocaine, and Cannabis, among others. At the time, a lot of individuals felt like the up-and-coming pharmaceutical companies lobbied hard to include cannabis in the US Controlled Substance List to eliminate the then freely harvested plant from competition.
• 1916: The United States Department of Agriculture (USDA) chief scientists Jason L. Merrill and Lyster H. Dewey created paper made from hemp pulp, which they concluded was “favorable in comparison with those used with pulp wood”. In USDA Bulletin No. 404. They reported that one acre of hemp, in annual rotation over a 20-year period, would produce as much pulp for paper as 4.1 acres of trees being cut down over the same 20-year period. This process would use only 1/7 to 1/4 as much polluting sulfur-based acid chemicals to break down the glue-like lignin that binds the fibers of the pulp, or even none at all using soda ash. If the new (1916) hemp pulp paper process were legal today, it would soon replace about 70% of all wood pulp paper, including computer printout paper, corrugated boxes and paper bags.  
• 1920: The 18th Amendment to the U.S. Constitution banned the manufacture, sale, and transportation of alcohol and positioned marijuana as an attractive alternative leading to an increase in use of the substance. 
• 1970: The US National Organization for the Reform of Marijuana Laws (NORML) forms. That same year the Comprehensive Drug Abuse Prevention and Control Act repealed mandatory penalties for drug offenses and marijuana was categorized separately from other narcotics. 
  1971: First evidence suggesting marijuana may help glaucoma patients.
  1972: The Nixon-appointed Shafer Commission urged use of cannabis be re-legalized, but their recommendation was ignored. U.S. Medical Marijuana research picks up pace.
• 1986: President Reagan signed the Anti-Drug Abuse Act, reinstating mandatory minimums and raising federal penalties for possession and distribution and officially begins the U.S. international “war on drugs.” 
• 1988: DEA administrative law Judge Francis Young finds, after thorough hearings, that marijuana has a clearly established medical use and should be reclassified as a prescriptive drug. His recommendation is ignored. 
• 1992: In reaction to a surge of requests from AIDS patients for medical marijuana, the U.S. government closes the Compassionate Use program. That same year the pharmaceutical medication dronabinol is approved for AIDS-wasting syndrome. 
• 1999: Hawaii and North Dakota unsuccessfully attempt to legalize hemp farming.
• 2014: The States of Alaska and Oregon legalize marijuana / cannabis for recreational use; the States of California, Nevada, Arizona, Hawaii and Massachusetts all begin to draft legalization legislation. 
• 2015: With the passage of Senate Bill 5052 Washington State medical marijuana comes fully under the control of the newly re-named Washington Liquor and Cannabis Board (LCB). 
• December of 2018, in Section 12619 of the Farm Bill ^[7] passed legislation, removing Hemp-Derived products (products with >.03% tetrahydrocannabinol), from its Schedule I status under the Controlled Substance Act. So, on the Federal level, it is no longer illegal to deal in CBD related products.
• Today: Multiple organizations (WebMD, Epilepsy Society), doctors (Dr. Mehmet Oz, and Sanjay Gupta) and parents (me included) are now praising the benefits of CBD. I personally have benefited from the amazing effects of CBD, but that’s a story for another day.

There are thousands of other dates and stories about Cannabis and Cannabidiols, but for the purposes of this article, I have focused mainly on the US marketplace. Whether you agree with the moral or legal journey of Cannabis, one fact can’t be ignored, it’s here to stay and will only becoming more accepted over time.

What the Future Holds

The Legality of Cannabis in the US

With the legality and new relaxed rules surrounding the medial and recreational use of Marijuana and Traceable Cannabidiol, by inclusion, CBD oil is now legal or at least accepted now in 47 of the 50 US States.

In 1987, I owned a small but thriving telecommunications company. I remember meeting with my bother-in-law, who at the time, was a closet tecno-junkie. Dave told me that if I wanted to become rich, I should start buying up company names on this thing called the Internet. More importantly, he described how information (especially documents, books and any open data) was going to be controlled by this new storage and distribution medium. He wasn’t 100% on-track, but he was correct about one thing, this thing called the Internet was going to be “game-changing”. Sadly, I didn’t listen and he too (for whatever reason) didn’t do any of the things we talked about. We both missed out on “the next big thing”. So, will removing Traceable Cannabidiol from the Farm Bills Class 1 Controlled Substance List be the next big thing?  I don’t know. I do know however, I won’t be standing by this time, watching from a distance. One thing is for sure, in the medical and health industries alone, there is a major shift coming. When it comes to the amounts that are being spent on cannabidiols terpenes and what will come to be known as “traceable” CBD products (dietary supplements, skin care, beverages, clothing and manufacturing) the amounts are going to be staggering. The early adopters, those who’ve taken the risk over the last three or four years, have seen phenomenal growth.

Are You too Late?

Not at all!  The CBD Industry alone is expected to reach 20 Billion dollars by 2020 and the number of products created with traceable CBD, is projected to be even higher.  One thing’s for sure, you’d better know what you’re doing or at least be wise enough to partner with those who have experience in navigating the operational and ever-changing legal waters of dealing in CBD!  Sorry, probably not the best use of that particular verb.

Selling through Direct Sales, Multi-Level Marketing or through parties is complicated enough, each with its own rules and regulations, many of which are not applicable to your local mom & pop or retail outlet.  Adding CBD to the mix, is guaranteed to complicate the process – dramatically!

Being Prepared to Sell CBD through MLM

Here are just a few of the issues you will need to be ready to address before you start your MLM CBD business.  At the very least, you had better be able to answer these few simple questions.  Doing so, will mean the difference between failure and success.

• Is my Merchant Provider (and the underwriting bank) friendly to companies that sell through the MLM channel and now, CBD products?
  This is without a doubt the most volatile part of your business. I’ve seen direct sales companies strangled and even die, because they didn’t pick the right processor and/or bank. Don’t ever take the word of the jobber or merchant re-seller when it comes to your business’ approval, and always read the fine print. Better yet, ask your software provider who they might recommend. They know which Merchant Providers are MLM friendly and more importantly, which underwriting bank will accept and work with companies selling CBD and CBD related products.

• Am I legally set up with all the appropriate and proper paperwork?
  At the very least, you will need to meet with a qualified MLM attorney. One that knows the rules of the industry and preferably, the rules surrounding high-risk sales, refunds and returns. With the advent of Cannabis to an already litigious industry, your attorney should also be actively engaged in new and ever-changing rules, regulations and yes, even the atmosphere surrounding Cannabis and the selling of CBD related products.

• Can I Prove “Traceability”?
  For CBD to be legal across the checkerboard called These United Sates, your product will need to contain less than .03% THC. And sorry, it’s not as simple as that. The most important facet of this equation is your products “Traceability”. When (and not if), but when the local or federal authority comes knocking on your door, (and if you ever have any kind of success, they will), then you had better be ready to prove that your product was derived from an innocuous strain of Cannabis called Industrial Hemp, and through every step of the process, you, not your vendors, but you, will need to show that your product (from seed to processing, packaging and delivery) supports the legal definition of “Traceability”

• Does my software support the sale of high-risk products like CDB?
  Multiple currencies, split payments, multiple payment processing paths, cross-border recruiting, and tracking are all critical to your operations and success. If the software you want to use does not support these most basic needs, you will most likely fail and will be looking for another provider once you really start to grow. Just know, if you think you can wait and address these issues or add these features later, without it affecting operations, you are wrong. You will encounter missed opportunities for expansion and success. I’ve even seen companies fail entirely as they try to make the transition from one platform to another, when these features are not supported.  Do it right and do it now!

• Am I ready and able to calculate, collect, report and correctly pay taxes on a product who’s legal and taxable rules fluctuate almost monthly?
  Please don’t ever think you can track, calculate, collect report and then pay sales and use taxes by yourself. Your software system must have an automated and integrated sales tax system built in. With over 10,000 taxing jurisdictions in the US alone ^[7] (and it’s changing every month), you’ll want and need the security of having a reliable third party that you can refer to, lean on and fall back to, when the time arises, and it will. For MLM, I recommend Squire.

• Does my software, infrastructure and various vendors support a national and international footprint?
  This is a must. The last thing you want to do is to pause or put a hold on your companies and distributors ability to expand. Network marketers are a driven bunch of wonderful people and if you make them “wait”, they will find another company to call home. Any good software should be able to support your foray into approved and needed international markets.

Again, these are but a few, but critical questions you must have positive answers to, before launching your CBD Direct Sales company.

So, Am I Too Late?

Although there are hundreds of businesses now selling Cannabidiol products, the industry is just now scratching the surface of what will become a deep and diversified ocean of products and services surrounding and supporting the CBD industry.

The Network Marketing and Direct Sales profession hit a new record high in 2015 with $183.7 Billion in global sales^[8].
By 2020, according to Direct Selling News, the CBD industry will surpass the 20 Million Dollar mark.

Indulge Me. What’s Your “Why”?

P.A. Stewart once said, “Being bold doesn’t mean you simply jump into the fire, but knowing first, where and when to jump!”

This is true of those who have been in and now want to sell Cannabidiol products. But be prepared. You will be judged, and you will be mocked, and you will have to be patient as you educate and train thousands of people as to why you are selling such an evil, controversial, good and life altering product. You will need to endure and most of all, believe in your why! If you are in it for the buck alone and don’t have a compelling or even a legitimate “why”, I suggest you wait. If you have a mission and are passionate about your “why” then by all mean, jump right in. After all, it’s only your time, money and reputation that are on the line, and why would you jeopardize those?!  Oh yea, because you’re bold.
So, to the Bold I say, “Go forward and good luck in your adventure.”

1. https://en.wikipedia.org/wiki/Tetrahydrocannabinol
2. https://en.wikipedia.org/wiki/Cannabinoid
3. Hemp: https://en.wikipedia.org/wiki/Hemp
4. https://en.wikipedia.org/wiki/Cannabinoid#Phytocannabinoids
5. Farm Bureau Statement on 2018 Farm Bill
6. 2018 Farm Bill explained: https://www.everycrsreport.com/reports/R45197.html
7. Tax Jurisdictions: https://www.vertexinc.com/
8. MLM Global Sales in 2015-16