How To Start A CBD Business In Texas – Start Here

Last Updated on November 22, 2024 by Corepay

Looking to secure a Texas CBD license and launch your store? Texas has quickly become a prime destination for CBD entrepreneurs, thanks to the legalization of hemp-derived products and the state’s business-friendly environment. 

While Texas is welcoming to CBD ventures, the path to success is anything but simple. Strict licensing requirements, increasingly challenging labeling standards, and ever-evolving regulations mean preparation is key.

In this guide, we’ll walk you through the essential steps to launch your CBD business in Texas, from securing licenses to obtaining LegitScript certification and setting up reliable CBD payment processing systems with our team at Corepay.

Step 1: Understand Texas CBD Laws and Regulations

In 2019, Texas legalized hemp-based CBD products containing less than 0.3% THC, aligning with the federal 2018 Hemp Farming Bill. While CBD is legal, Texas enforces strict regulations to ensure product safety and quality. Key requirements include:

• Product Testing:
  • All CBD products must undergo third-party testing to confirm potency and ensure no harmful contaminants.
• Labeling COA Standards:
  • Labels must include ingredient lists, usage instructions, potential risks, and QR codes linking to lab results.
• Advertising Restrictions:
  • Federal and state laws limit advertising channels for CBD products.

Step 2: Secure the Necessary Licenses and Permits

To legally sell CBD in Texas, you need to obtain licenses based on your business model.

Licenses Required:

• Consumable CBD Product License:
  • For manufacturers, processors, and distributors.
  • Application fee: $258 (valid for one year).
  • Includes additional fees for fingerprinting and location-specific registrations.
• DSHS Retail CBD Registration:
  • Required for retailers of consumable hemp products.
  • Fee: $155 per retail location (valid for one year).

How to Apply:

1. Submit your application online through the Texas Department of State Health Services (DSHS).
2. Provide all necessary documentation, including fingerprints and business information.
3. Pay the fees and await approval.

Step 3: Choose Your CBD Product Line

Selecting the right products is crucial to your business’s success. Popular CBD products in Texas include:

• CBD Oil and Tinctures: Versatile and widely used.
• CBD Gummies and Edibles: Ideal for newcomers to CBD.
• CBD Skincare Products: Lotions and creams with growing demand.
• CBD Beverages: A rapidly expanding market segment.
• CBD Vapes and Supplements: Catering to niche markets.

Step 4: Obtain LegitScript Certification

Securing LegitScript certification is vital for ensuring compliance and gaining access to essential platforms. This certification is now a requirement under Visa’s Integrity Risk Program (VIRP) as of April 2024.

Why LegitScript Certification Matters:

• Payment Processor Access: Many acquiring banks and processors require it.
• Advertising Opportunities: Necessary for Google, Facebook, and other platforms.
• Building Consumer Trust: Demonstrates compliance with ethical and legal standards.

Corepay can help streamline the LegitScript certification process, ensuring you meet all requirements efficiently.

Step 5: Plan for Initial Costs

Starting a CBD business in Texas involves various costs, depending on your scale and business model. Common expenses include:

• Licensing and permit fees: $258 for manufacturing and $155 per retail location.
• Product testing and labeling compliance.
• Rental costs for physical locations.
• Marketing and branding expenses.
• Credit card processing and payment systems.

Step 6: Build a Strong Brand and Marketing Strategy

A professional and compliant marketing strategy is essential for success. Steps include:

• Developing an e-commerce website: Ensure easy navigation and secure payment options.
• Social Media Marketing: Use platforms like Instagram to build community engagement.
• Participating in Local Events: Farmers’ markets and trade shows offer visibility.

Step 7: Source Quality CBD Products

Working with a reputable supplier ensures compliance and builds trust with customers. We see many fly-by-night CBD merchants come through with inferior products, which never benefits the merchant. Merchants should do the following:

• Third-party lab testing results for potency and purity.
• Certifications for Good Manufacturing Practices (GMP).
• A diverse product range to meet market demand.

Step 8: Secure Reliable Payment Processing

One of the most challenging aspects of running a CBD business is finding a payment processor willing to work with high-risk industries. Many traditional processors avoid CBD businesses due to regulatory concerns.

How Corepay Can Help Your CBD Business Succeed

At Corepay, we specialize in providing tailored solutions for CBD businesses. Whether you’re just starting or scaling your operations, we offer:

• LegitScript Certification Support:
  • Our team ensures a seamless certification process, granting you access to essential advertising platforms and reducing compliance risks.
• Specialized Payment Processing:
  • We provide reliable, secure, customizable payment solutions for high-risk industries.
• Fraud and Chargeback Protection:
  • Chargeback protection via our sister product, CB-Alert.
• Processing for brick-and-mortar and online stores:
  • From startups to established businesses, our solutions grow with you.

Final Thoughts

Starting a CBD business in Texas is a promising opportunity but requires meticulous planning and compliance. By securing the proper licenses, adhering to labeling and testing regulations, and partnering with a reliable payment processor like Corepay, you can ensure your business is set up for long-term success.