In November 2020, we talked with Todd to get some insight into Joy Organics, their success, and his personal take on entrepreneurs entering the CBD space. If you’d like to learn more about Todd’s insight into this industry, we invite you to check out Joy Organics’ blog. There, you’ll find a number of articles concerning how to start a CBD business.
Todd Smith Interview
What were some of the initial steps you had to take to start your CBD business?
There were a lot of things that we did. Just to kind of walk you through those steps, the first thing we did was really spend some time and talk about who our target market would be.
We determined that we wanted to focus on the female market, between 35 and 65. Our goal was to develop premium CBD products and, specifically as it relates to those females, we were looking for those who shop at Whole Foods, Sprouts — people who cared about the environment.
Our objective was to target the upper end of the market from an economic side knowing that we’re going to be selling them a premium product.
We then talked about how we would begin to market our business. We looked at everything from SEO to the different forms of marketing that were available to us at that time. And still largely today, the same methods are available now. Different strategies with Facebook, different strategies with Google. Obviously, affiliate marketing.
Private labeling is a big part of our business. We have more than 1,500 private label partners. These are people who we’ve helped launch their brands. I do weekly training teaching them how to build their businesses. I’ve got over 75 videos on YouTube that teach them different ways of marketing their businesses, different things they need to take into consideration. So, private label is a big part of our strategy.
If you’re interested in giving Joy Organics a try, we invite you to check out their store!
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Our wholesale side was a big part of our strategy initially. That’s a little bit of what we did thereafter getting clear on our target market — we got clear on how we were going to market our business.
Then we looked at names – what we wanted to name our company and considered a lot. We wanted something that’d be easy to spell, something that would be easy to remember, we wanted a dot com name that wouldn’t consist of more than two words. As a result of looking at a lot of different options, we came up with Joy Organics. We did not want a name that included “hemp” or “CBD” or anything like that as we felt those names would be limiting. And it’s certainly proven to be the case now as other cannabinoids, such as CBG and CBN, are becoming more popular.
And then we began to work on our branding, our label design, everything that we wanted our brand to look like. We put together a branding guide and it was simple at first because our goal was just to get to the market. It was all about speed to the market for us. Then we figured that once we got to the market, we would come behind and begin to refine which is largely what we did.
Focusing on the development of our brand, our colors, photography, all of that. We evaluated, talked about what we would do there. We then went through and did our logo design and looked at how we wanted our name to appear.
And then from there, once we got our branding foundation built, we moved into building our website which was initially with E-commerce — now it’s with Shopify.
A lot of this was happening simultaneously and we divided and conquered. Jared [Todd’s son and chief marketing officer of Joy Organics] took on some of these responsibilities, I took on others. We applied for our CBD merchant account which, back then, was very difficult. We made the decision in April 2018 to launch Joy Organics. Six weeks later, we were ready with the website and everything done. But we didn’t get our merchant processing until the first week of August.
So, we ended up being ready, but not being able to launch our online presence. We did open a store in Fort Collins in July. So, we did have some sorts of revenue when we initially launched.
That’s what we largely did in getting launched and we took off and had great success. We were doubling every month all the way to the end of the year. I mean, we started off in July doing about $50,000 in our store and by the end of the year, we were just short of a million dollars in monthly sales.
Did you come across any challenges during these initial steps?
Everything has been a challenge in this space. I mean, first of all, the life of an entrepreneur is not an easy life. I’ve been an entrepreneur my whole life — starting my first business at age 18 to being a top producing real estate agent to my last 30 years in the nutrition industry and teaching entrepreneurs how to build successful businesses.
So, the life of an entrepreneur is not easy. There are a lot of things a person has to do in order to be successful in any type of business.
Then as it relates specifically to CBD, you have a whole other set of challenges. The merchant processing, no doubt, was the most frustrating. But everything we do is more challenging because we sell CBD. Our workarounds for Google advertising are more challenging, our workarounds for Facebook advertising are more challenging. Everything that we’re doing across the board is more difficult because it’s CBD.
I mean, even label design, as an example. It’s not black and white. We follow the dietary supplement guidelines for our label design, but even a lot of that has been changing over the last 2 and a half years.
We also grew so fast. So, that was really challenging too. When you’re doubling every month — going from $50,000 to $100,000 to $200,000 — there’s a whole other set of challenges that come with growing a business that quickly. But those are good challenges.
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What should people avoid when starting a CBD business?
They should definitely avoid being cocky and thinking they know it all because they’ll quickly be humbled when they realize this is not like starting any other business. Things could be very different in two or three months [from this interview].
There’s a bill that’s been dropped that should be voted on during the “Lame Duck” session that would regulate CBD as a dietary supplement. It would then need to be voted on by the Senate and signed into law. We don’t know for sure if that’s going to happen this year, but if this comes out next year  and CBD is now being regulated, that changes a lot.
A lot of the barriers that we had will be different. I mean, even banking was very stressful because 99% of the banks will not process CBD. No major bank, no Chase, no U.S. Bank, no City Bank — none of them will allow you to do banking with them if you’re in the CBD space. Forget about merchant processing.
The thing I would definitely say to people that wanna start a business is to learn how to do it so you can do it right. So, I guess the opposite of that would be don’t think you know it all [before] you don’t understand the CBD space and the nuances of that.
For example, if people go to their bank and try to open an account, they may get it open, but it could get shut down two weeks later as soon as they process their first wire — as soon as the first audit is done on their account. If somebody goes out and tries to open a merchant processing with Stripe or Paypal and then they immediately get shut down, or even worse, they get put on the match list which means they can’t get a merchant account with anybody for five years.
So, one thing to avoid for sure is not doing your research and learning the nuances of starting a CBD business. Do your research. Read your articles. Make sure you understand what you’re doing in the CBD space before you get started so that you don’t get your bank account shut down, so you don’t get your merchant account shut down, so you don’t get put on the match list and blacklisted.
You have to make sure you’re doing things accordingly to how things need to be done in this space.
If you were to guesstimate, how much money would one need to start a CBD business? Where would this money go?
If somebody wants to start a business in this space and not be completely handicapped, I feel they need to have $25,000 or more. Here at Joy Organics, our minimum order for our private label partners is $2,500. So, technically, somebody can have their own line of branded products for $2,500.
Then they’re going to need a website. Certainly, they could do some low-budget websites, but low-budget websites don’t convert because they just don’t look like trusted websites. So, I think if somebody wants to do it right, they need to plan on spending upwards of $5,000 to really put together a website that makes them look like they’re a trusted brand.
Now they’re up to $7,500. And then there’s going to be odds and ends. Some people may want to spend money on getting the trademark processed started. If they do it with LegalZoom, that’s the least expensive way to do it. If they hire a trademark attorney, they could be into that for thousands of dollars — I don’t recommend anybody to do that initially.
The biggest money they’re going to need to spend is on marketing. That would include some basic SEO [search engine optimization] and depending upon what their niche is and how they’re going to attack that niche.
Let’s say $10,000 for product and website and everything over that would be marketing.
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How do you market Joy Organics? Do you find there’s a marketing strategy that works best?
Right now, we are doing everything. And when I say we’re doing everything, I mean we’re doing affiliate marketing which has been a great strategy for Joy Organics, we’ve invested heavily into SEO and we feel like that’s an important long-term strategy, we’re investing in Google pay-per-click (PPC) and all the workarounds with that which we think is a good long-term strategy.
Obviously, we’re testing and doing workarounds with Facebook. And I say workarounds because you just can’t do it like you’re selling widgets. With everything, you have to be creative in the way you do it, the way you say it.
We’ve pretty much-tested everything or we’re doing everything. And I would say that we’re getting a little bit of business from everything. Not one thing is like, “wow, that’s the way to go.” If that was the case, we’d be bigger than Charlotte’s Web because we’d be pouring money into that one area.
What do you consider when sourcing ingredients for your products?
Our number one goal is to bring products to market that are in demand. Products that the market is using. We look at Google Analytics to see what kind of products people are shopping for. We don’t want to introduce a CBD shampoo or CBD soap — you know, things that the market is not buying.
One of the keys to our success is we bring products to the market that the market is buying. Then we just made those products better than what our competitors have done. And when I say better, a lot of people don’t understand this, but there’s a big difference in biomass, in extraction processes, in remediation processes of removing THC, in the minor cannabinoid profile that appears in your products.
For us, we take great pride in our basic oil – we wanna make sure that it has at least a 5% minor cannabinoid profile so that there’s some CBG in there, some CBN, some CBDA.
Being a premium brand, we look at everything. We’re sourcing the highest-quality ingredients. If it can be sourced as organic, we source it as organic. Even before we could get the THC remediation process certified, our carrier oil in the products like our olive oil and MCT oil were USDA certified organic, our flavoring was USDA certified organic. So, even before we could say with the green USDA badge, we sourced everything as organic.
Basically, our philosophy as a company is we are sourcing only the highest-quality ingredients that can be sourced to make the highest-quality, most premium products in the marketplace.
Since the industry is unregulated, what actions does your company take in order to ensure customer satisfaction?
Everything we have produced is made in cGMP facilities, FDA-registered facilities, and depending on the product, it could be a Kosher facility, a sports-certified facility, an ISO-certified facility. Those standard operating practices are the same guidelines for dietary supplements.
Even beyond that, we’re doing things that aren’t even required. As an example, for our tincture filling, we’ve got additional layers of filters put in there that are not required according to GMP. But just to make sure that if there is any residue in the oil, it’s removed.
Our quality levels are higher than anything that’s required within these certifications. And it’s just because, for us, number one is liability. We want to make sure we never have a problem that anybody opens and says, “Look at these spots in here. What is this floating in here?” We don’t want any of that for liability. For safety, we don’t want any of those issues.
We’ve sold upwards of 2 million units and we’ve not had any issues with quality. Nothing I can think of since we’ve launched our company. So, we just take everything above and beyond what the basic requirements are just to make sure the quality is there and that we never have a liability or safety issue.
What do you think consumers gravitate towards when it comes to a CBD business?
I don’t think there’s anything right now that you can put on a label that has more credibility than the USDA-certified organic badge. There’s no doubt that when a consumer looks at a bottle of our product and they see that USDA-certified organic badge, that just speaks credibility.
You can put GMP on there, you can put Kosher-certified, you can put gluten-free — you can put all these different symbols on there, but nothing speaks as high of a level of credibility as the USDA-certified organic badge.
Consumers largely are uneducated. I think they’re largely looking at a website and saying “does this website and this company look trustworthy?” I mean, for us at Joy Organics, the reason we launched our store was because we felt that the store would give us credibility.
We’ve looked at everything we can do to build trust and to build credibility and to build confidence. And it’s everything from our photography to our design to our branding to the safety symbols to the badges — everything we have done has been to build trust and credibility.
As Joy Organics continues to develop, do you find yourself coming across any unexpected difficulties?
No. Every difficulty we’re experiencing, we expected. And we’re super proud of the way we’re handling everything.
There’s a lot of challenges in the market right now — even with bottles, lids, and stuff like that. But we saw that coming. We have huge inventories of empty bottles, extra lids, and extra droppers. So, while a lot of the industry is suffering from supply chain issues, we have none of those. But again, that was because we expected it.
Part of what our success has been is we are out in front of anticipating problems. And I think part of that may stem from my experience of being in the [nutritional supplement] industry for 30 years. Part of it may stem from really researching things out and understanding where our potential pitfalls are and preparing for those.
There haven’t been any surprises. I mean, COVID was obviously a big surprise. But even all the decisions we make post-COVID, super proud of the decisions we’ve made because it has proven to be exactly right. When COVID broke out, I expected we’d see a huge decline in retail sales all the way through [summer 2021]. I immediately had the team working at home and told them they’d be working at home till next summer. And this was in March.
A lot of people could put their head in the sand and think that this thing’s going to be over in two months. But you look at the facts and it was very clear what was going to happen. So, when it became clear what was going to happen, we made all the decisions and preparations and that’s why we don’t have any problems.
What do you think the future outlook for the cannabinoid industry is?
I think that CBD will be the number one dietary supplement in 10 years, as all this research comes out on everything from depression to PTSD to seizures. I mean, you can type in any health concern that you’ve ever heard about into Google along with CBD and there are testimonials from people who are seeing relief. Hundreds and hundreds of health concerns are being addressed by CBD.
I believe when all this research comes out, CBD will be the number one dietary supplement. I see it in ten years, every multivitamin having CBD in it. In addition to all those vitamins that are in those daily supplements.
You look at omega-3, a top-selling dietary supplement — you take omega-3 and you notice nothing. So, the only reason you take it is because the research shows that you should take it. You look at Vitamin C — I had Vitamin C today at lunch. There was no feeling or sensation I had when taking Vitamin C.
When you look at the entire dietary supplement market — from Vitamin D to Vitamin C to Vitamin B and right on down the list — very few supplements you notice anything when you take them. Whereas with CBD, you do. You notice an immediate benefit and then you’ve got all the hidden benefits that come with it.
I believe that CBG is going to be the next most popular cannabinoid. Just in how it works with the CB1 and CB2 receptors a little bit differently than CBD. I see some of the acids like CBDa gaining some traction. But all the research is so preliminary on a lot of this, it’s really having consumers try it and see what kind of experience they have with it.
The hemp plant is one of the most amazing plants to ever be developed and I think we’re just at the very tip of the iceberg in learning its true benefits.
If you could give one piece of advice to someone starting off in the CBD industry, what would it be?
The number one thing I would say is you can’t come into this and think it’s going to be easy. You gotta come into this with an absolute total commitment that you’re going to be all in. This is what I’ve been teaching entrepreneurs forever. You can’t stick your toe in the water and think you’re going to be successful. You either do it or you don’t do it. You’re either all in or you stay out.
You can’t treat it like a part-time hobby and think you’re going to be successful because it just doesn’t work that way. It’s not like you can put 10 hours a week into something versus 40 and say I’m going to get 25% of the results. It doesn’t work that way. 10 hours a week might be 5% of the results.
Do your research, make sure you’re well-capitalized for what you’re wanting to do, make the commitment you’re all in, understand that there are obstacles, and those obstacles are what prevent other brands from starting. So, if you’re willing to come into this space and recognize there’s going to be unusual obstacles, but understand that that is going to allow you to gain market share — to have an advantage — then you will have an advantage.
There’s just a lot of nuances that are unique and different to this industry. But again, the same challenges are what gives those people that are willing to overcome them the advantage.
Paul James is a seasoned cannabis and CBD writer and expert. He is a mental health blogger who advocates CBD as a natural alternative to prescription medications. You can read more about this and other natural alternatives on his blog: https://bedlamite.co/."