It may be an open secret in the cannabis industry, but nonetheless it’s well worth pointing out: many cannabis brands don’t actually manufacture their own products. Instead, they turn to private manufacturers, so-called “white label” partners, who use their own facilities and equipment to carry out the vision of the brand owner.

While consumers are well-aware that Costco’s Kirkland-brand products are made by various manufacturers, as well as the “store-label” brands carried in their favorite grocers, cannabis brands are so new that many purchasers have visions of a small band of workers who grow, process and package their favorite products by hand. But as marketers attempt to scale up and launch brand extensions — say a grower wants to get into gummies — white labeling is enjoying unprecedented attention.

So as an alternative to creating a complete vertically-integrated operation with licensed facilities, greenhouses and manufacturing plants, qualified specialists and a headquarters staff, there’s no denying the white label appeal — especially because the marketer doesn’t need its own state license or to deal with bureaucratic delays when the white label manufacturer takes full charge of handling the cannabis under its own license. But there are still a number of caveats that businesses need to be aware of.

Most white label producers expect that before they are contacted, the business has done its homework — it has created its branding guidelines, considered product specifications, designed its packaging, and thoroughly familiarized itself with rules and regulations. In return, the marketer needs to ask all the right questions about what similar experience the manufacturer has, their certifications, their ability to scale production, their timelines, and most important their security and confidentiality. Prospective companies need to be absolutely certain they can trust the manufacturer to keep their secret formulas secret.

CBD brands, in particular, need to think about the product lines where they may foresee future expansion. A marketer of a CBD lotion today who builds a popular brand name may want to add creams, ointments, bath products, edibles, and all other types of infused products. Will the white label producer be able to handle such new lines? Does the producer assist with research and development? Can proprietary formulations be developed exclusive to your brand? Also keep in mind that it’s common to develop relationships with more than one company. There are situations when it’s more advantageous for one white labeler to provide the raw product to another manufacturer who takes it to the finished stage.