Q&A with Steve Wallach, Youngevity Chief Executive Officer
This Q&A is from the December 2018 Cover Story
Youngevity is one of a few established direct selling companies who has launched a line of CBD products. We caught up with CEO Steve Wallach, who not only shares a few thoughts on their experience so far in the CBD space, but offers some friendly advice on what other companies can expect.
What was the deciding factor to launch into the CBD space?
Steve: Four years ago, we seriously started looking into CBD and got legal opinions in all directions. At the end of the day, the business decision was up to us, not the attorneys. It’s your responsibility as the executive to make business decisions based on the best information you have at the time.
Why is the confusion about hemp and CBD an advantage for our channel?
Steve: The confusion surrounding the whole hemp/CBD discussion—is it legal, will it make you high—is what I love about this product category. It gives our channel a leg up on other industries because of the educational platform built into our one-on-one nature. I believe CBD will be the greatest educational opportunity of our lifetime, in terms of a health and wellness product.
What would you say to companies looking to get into this category?
Steve: I would ask them how set in your product category mix are you? Do you have room to expand your product range? My estimation is that 85 percent of the health and wellness companies will have an entry into this product category within the next two years.
How did you discuss CBD with your distributors?
Steve: There were some who were skeptical, but the vast majority were very excited. The ones that weren’t came around pretty quickly once they became educated about the many benefits that come with CBD.
What do you tell them they can say about CBD?
Steve: Because of compliance and filing health claims with FDA, we’ve taken a proactive approach to teaching our distributors what they can and can’t say about supplements. If you can say it about calcium or vitamin C, you can say it about hemp-based products. It’s abiding by the same rules you have always abided by.
How have the products been received?
Steve: We’ve received so much interest in the products, and in the discussion on social media. We told our distributors to ask a question to their social media followers, How many people have tried CBD oil or hemp-based products? Just from that question, many distributors have received a wide array of responses. Some of our distributors were hesitant about engaging in this way, but I said “Aren’t we always looking for people to contact us? That’s what network marketing is all about.” Who wouldn’t love to have leads contacting you? Once you can start a conversation, the education starts.
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Any challenges with merchant processing?
Steve: We had heard that merchant processing could be an issue so we’ve taken a very conservative approach. Our HempFx by Youngevity is a standalone website and shopping cart. We are also using a separate, domestic merchant processor to keep everything separate. We are seeing major banks being non-committal, using a “Yes…soon…not quite there yet, but we’re with you” kind of approach at the moment. They want to be in this business as much as anyone as they are in business to be in business.
But there is a lot of misunderstanding and confusion at the banking level as many are lumping CBD and hemp oil in with marijuana products. If you’re a smaller or new company, you might have more of a challenge than the more established companies as most banks won’t allow you to process more than you have on deposit at your bank.
Any advice for other companies looking to get into this category?
Steve: Get your attorney in place first who knows about cannabis law, not because you’re going to get sued, but to make sure you are doing everything in the correct order. Make sure your labels and terminology are correct. Do all the same due diligence you would be doing in the other parts of your business. Because you will be watched from a regulatory standpoint if you go out and make a lot of noise.