For those looking to break into the cannabis industry, white labeling is a way for entrepreneurs from other sectors to make a name for themselves in cannabis without spending too much cash upfront. White label manufacturing in the cannabis industry takes a generic version of a product, such as wax, edibles, or tinctures, and markets it to multiple sellers who rebrand it as their own. The same formula could be sold to 10 different retailers and rebranded as 10 individual products.
Now you may be asking, “Why would anyone want to do this?” Well, investing in a white label manufacturing service is the fastest way to get your products onto the market.
Yes, there is a chance that your formula will be the same as other retailers, but that is where you set yourself apart with branding. Not only that but depending on the capability of your white-label manufacturer, you can also receive a certain level of customization with your white label product. This could include the raw materials, marketing inserts, product packaging, and many other things to help you create the best version of your line of products.
PROS OF WHITE LABEL SERVICES
Typically, the process for breaking into the cannabis industry is both a lengthy and costly one thanks to licensing fees, the amount of working capital needed, capital expenditures, and much more. What’s the reason for this? Due to high levels of regulation surrounding the cannabis industry, there is a lot of red tape that you’ll have to go through before being able to start a business. This is where white labeling comes in. White labeling cannabis products allows you to reduce your initial startup costs while letting you put your ideas through rapid-fire testing before entirely investing yourself into the cannabis industry. By investing in white labeling, you can reduce your business risk by having proof of your successful concept before showing it to potential investors. From there, you can easily decide whether or not you want to bring manufacturing in-house, expand your product line, and get fully funded.
If you’ve already been looking into white-labeling for cannabis, you may have noticed that you’re not the only one. Many entrepreneurs are looking to sell their ideas to white labelers, making it a competitive market in itself where only the most unique, sophisticated, or big picture brands will be able to have a shot at working with a white-label service. You will be creating an intellectual property licensing agreement with your vendor, so make sure that you have a precise model of the type of product, brand, and marketing that you want to execute before taking it to a manufacturer. We encourage entrepreneurs with unique ideas to invest in design patents, as well as think about putting their intellectual property into an LLC. Get the producer or operator excited about your unique vision or product while showing them the value of working with you.
HOW DO WHITE LABEL SERVICES WORK?
Once you secure a manufacturer that will produce your product, you will receive royalties as the IP holder of the white label product. Depending on your agreement, this could be based on the total revenue of the product, per unit, or a monthly per minimum payment. By building your brand, you are also increasing the potential of your success and ensuring that distributors push your items out to their sales networks. Make sure that you have a target demographic and build a brand that allows your products to resonate with them. Achieving both a strong brand connection as well as a product connection to your target demographic is ideal and allows you to curate a loyal base within the community.
When you work with a white labeling manufacturer who is a multi-state operator, you can also quickly move your products into new markets without being forced to deal with as much red tape. Manufacturers have done the work for you in order to ensure that they are in accordance with regulations. Multi-state access allows you to drastically increase the distribution range of your product while proving to new markets that your formula has already been successful and should invest with you. Going this route allows faster product expansion at a fraction of the cost compared to traditional in-house manufacturing of cannabis products. Manufacturers also typically know the costs to white-label your products, allowing you to price accordingly while adjusting your margins. This is aspect is important to build a clearer picture of what you need to do to break even and make a profit.
All of these factors will allow a new frontier of business entrepreneurs into the cannabis sector and allow healthy competition and growth amongst businesses as well as distributors. Whether you’re thinking of focusing on CBD, THC, dog treats, vaporizers, batteries, topicals, or capsules, if you can put oil into it, your white label manufacturer will be able to produce it. White label manufacturing will likely lead the forefront as cannabis production and stocks continues to grow in both the United States as well as the rest of the world.