How to Get a CBD License in Alabama & Start Your Business

The federal legalization of CBD products in the 2018 Farm Bill saw a huge surge in cannabinoid interest among Alabama residents. Research indicates a more than 600% increase in statewide CBD web searches from 2014-2018 to 2019.^[1]National Library of Medicine. “Trends in Internet Searches for Cannabidiol (CBD) in the United States“. Accessed on October 18, 2023. However, like all regulated industries, launching a CBD business in Alabama differs from starting a traditional retail venture. Business owners must conform with state and federal CBD laws, as well as with state requirements.

Likewise, CBD businesses must register with sales tax authorities and choose a partner for payment processing. This guide explores how to start a CBD business in Alabama, how to get a CBD license in Alabama, the Alabama CBD rules and regulations, along with other related topics. Let’s get started!

How to Start a CBD Business in Alabama

While starting a CBD business in Alabama requires businesses to follow specific rules and regulations, the initial setup stages are the same as opening any other business. First, a business must decide on its legal structure. Many Alabama CBD businesses choose an LLC as a business structure to provide owners with some liability protection. You can register an Alabama business online via the Secretary of State—the registration fee will fluctuate based on your chosen ownership structure. During this registration, you’ll need to designate a registered agent to accept legal documents on your company’s behalf.

Next, you’ll need to apply for an Employer Identification Number (EIN) from the IRS. Not only does this make it possible to employ staff members, but it also makes it possible to apply for a business bank account. This helps separate your personal finances from your CBD business expenses and makes it easier to apply for loans, lines of credit, and other forms of commercial finance.

How to Get a CBD License in Alabama

Retail CBD businesses in Alabama do not require special permits, making it simple to sell legal CBD products to customers. Just make sure your retail CBD business only sells products legally classified as CBD in Alabama (more on this later).

On the other hand, if your CBD business focuses on growing or processing hemp to produce CBD products, your business requires a CBD license. There are two types of licenses for this purpose: Hemp Grower Licenses and Hemp Processor Licenses.

The prices are as follows:

To obtain a hemp grower or processor license in Alabama, you must take the application process seriously—there’s only a short window to apply for the following year’s permit period. The application period for 2023 licenses was open from 8:00 a.m. CT, October 11, 2022, to 5:00 p.m. CT, November 30, 2022. It is not possible to apply for a license outside of this window, and only a limited number of companies are successful. For example, only 64 hemp processors have active licenses in Alabama.^[2]Alabama Department of Agriculture & Industries. “Hemp Processor/Handler“. Accessed on October 18, 2023. Businesses can access the application on the Alabama Department of Agriculture & Industries website. However, it’s unavailable outside the application period.

CBD License Application Requirements for Alabama

While the specific requirements for CBD grower and processor applications might change with each year’s updated form, it’s essential to ensure the following information is on hand:

• Details about your business, including Articles of Incorporation and formation documents.
• Details on key members in the Articles of Incorporation.
• Criminal background reports on key members— this should include fingerprint checks.
• For members who aren’t Alabama residents, criminal background checks must be conducted by a state law enforcement agency, not a local sheriff.

Additionally, the applicant must either be an Alabama resident or reside within 50 miles of the proposed grow site.

Laws & Regulations for Selling CBD in Alabama

Alabama’s guidelines align closely with the federal laws set out in the 2018 Farm Bill. Specifically, all CBD products must contain 0.3% THC or less. Additionally, marketing CBD products with unverified therapeutic claims is prohibited. Also, Alabama requires CBD retailers to follow FDA regulations, meaning it’s illegal to sell CBD-infused food and drink products.^[3]Alabama Public Health. “Cannabidiol (CBD) in Food“. Accessed on October 18, 2023.

How to Renew Your CBD License in Alabama

If you’re a standard CBD retailer, there’s no requirement to apply for or “renew” any CBD licenses. However, hemp growers and processors must ensure their licenses remain active to avoid potential criminal or financial repercussions. While Alabama authorities don’t provide explicit details on renewing Hemp Grower and Hemp Processor Licenses, it seems that businesses adhering to the program’s guidelines can renew their licenses by paying the annual $1,000 per site fee.

Start Selling CBD in Alabama

Research suggests significant increases in demand for almost all types of CBD products—including CBD oils, isolates, creams, transdermal patches, and more—making it an opportune time to start a new CBD business in Alabama.^[4]Global Market Insights. “Cannabidiol (CBD) Market 2022-2028“. Accessed on October 18, 2023. However, if your business also plans to involve itself with the cultivation and processing of hemp for CBD products, be sure to apply for the relevant licenses listed in this guide before opening your business.

Whether you’re running an eCommerce platform or a traditional retail establishment, a well-designed website is essential to engage customers seeking CBD products in Alabama. Furthermore, leveraging social media ads, PPC campaigns, and other digital marketing strategies can significantly broaden your reach.

Additionally, business owners need a payment processor to accept credit and debit card payments from CBD customers in Alabama. Unfortunately, CBD companies in Alabama find it challenging to partner with traditional banks and payment service providers, many of whom avoid CBD companies due to CBD’s perceived high-risk nature.

For seamless credit card transaction capabilities, joining forces with a CBD merchant account provider is ideal. These providers specifically cater to CBD businesses, offering modern payment infrastructure, enhanced support, higher tolerance for chargebacks, and more. Notably, many CBD merchant services boast account managers with specialized knowledge in CBD, simplifying the process of obtaining tailored payment solutions. If your CBD retail business wants access to dedicated support, affordable processing fees, and dependable merchant accounts, a merchant account provider is the solution for you.