CBD oil is a really hot commodity right now and many people are making a lot of money from it. Kannaway has already established itself as a major player in the CBD market and in this article, I will let you know if it is possible to make money with this particular CBD oil MLM company.
Right off the bat, let me clarify that this Kannaway Review is not about Kannaway’s products (although I do mention them) but the Kannaway business opportunity and whether it’s possible to make money with Kannaway. So, with that being said, and without any further ado, let’s see.
What is Kannaway MLM?
Kannaway is a network sales and marketing company specializing in the sale and marketing of hemp-based botanical products. Network sales and marketing is, of course, a fancier name for multi-level marketing (MLM).
The current legal entity known as Kannaway LLC was founded in 2014. In 2015 it was acquired by Medical Marijuana Inc., a publically quoted company whose CEO is one Dr. Stuart Titus, a long time exponent of the benefits of medical marijuana and hemp-based products generally.
The current CEO of Kannaway is Blake Schroeder.
Kannaway products can be purchased directly from the company’s website, but the vast majority of its sales are made through its members.
|Owner||Medical Marijuana Inc.|
|Price||Annual membership – $54.98|
Purchase of product Value Packs heavily encouraged ($249.00 – $2,499.00 each)
|What you get||Replicated Kannaway website|
Secure back office (to administer the website)
Training and support tools
|CRIO rating (0-10)||3.3|
Who is Kannaway For?
Kannaway MLM is for anyone who is interested in marketing and selling hemp sourced CBD oil and related hemp products.
No special qualifications or experience are required to become a Kannaway member although some experience in marketing is definitely going to help.
To have any chance of success you are going to need an iron resolve, very thick skin, and a lot of friends and family who you will try to persuade to purchase the Kannaway products and then themselves join Kannaway as part of your downline.
What is CBD Oil?
CBD (CannaBiDiol) oil is one of many cannabinoids (compounds) found in the cannabis plant. Following extraction, it is typically blended, in varying proportions, with other cannabinoids and with a ‘carrier’ oil like coconut oil before bottling.
In recent years, CBD oil has won great acclaim for its alleged health benefits and its ability to cure everything from acne to high blood pressure and Parkinson’s Disease, even heart problems. It is very widely used for pain relief.
Unfortunately, there has been very little scientific study to back up these claims, and, to date, the FDA has only approved CBD oil for medical use in cases of Lennox-Gastaut syndrome and Dravet syndrome (two forms of epilepsy).
Are Kannaway’s Products Legal?
What a minefield!
All of Kannaway’s products, including their CBD oils are processed from hemp (a species of Cannabis). Following the passing of the 2018 Farm Act in the US, it is now legal, subject to compliance with various rules and regulations set out in the Farm Act, to grow hemp and sell/purchase hemp-derived products. Hemp is defined in the Farm Act as cannabis plants containing less than 0.3% THC (TetraHydroCannabinol), which is the compound that gives the ‘high’ in traditional cannabis. So, yes, under Federal law Kannaway’s products are legal in the US, provided Kannaway complies with the strict regulations laid down in the 2018 Farm Act. Good luck checking that out.
Under individual state’s laws in the US, the legal situation is confused by the varying ways that the states treat cannabis generally, with some states now making the sale of cannabis and cannabis products completely legal, while others have legalized its sale for medical purposes only and then others still have a complete ban. Some states have also distinguished hemp and made that legal, along the lines of the 2018 Farm Act, while others have not.
All in all, it appears that right now, and throughout most of the US, producers of hemp-derived CBD oil are being left in peace both at the federal and state level, the most common enforcement action coming when suppliers start to make extravagant claims about the health/medical benefits of their products. But the whole situation remains in a state of flux and anyone thinking of joining Kannaway needs to be aware of this and, at the very least, carefully check the state laws where they plan to market Kannaway’s products.
Outside of the US, there is, similarly, widespread differences in the way individual countries approach the sale of CBD oil. Although I haven’t checked in any great detail, I understand Europe generally has a more relaxed attitude, in the United Kingdom, for example, CBD oil is legal provided it contains less than 0.3% THC.
How does Kannaway Work?
The Traditional MLM Model
Kannaway follows the traditional MLM model of recruiting individuals to become members of the organization and sell their products, in return for a commission, and those members are then encouraged to recruit more members to the company who also sell the company’s products, recruit more members, etc, etc.
Because a member is typically entitled to receive a share of the sales commissions earned by all the members they recruit (known as their downline) the sales made by those downline members invariably become the principal commission source for the member at the top, and usually far exceeding that person’s own direct sales.
Irrespective of the quality or popularity of the products/services being sold there is an abundance of overwhelming evidence that the vast majority of participants in MLM schemes don’t make any money. A recent study carried out by the AARP Foundation found that of all the study participants who had at some time been part of an MLM scheme, a whopping 74% had made no money and that 47%, i.e. nearly half of the participants, had actually lost money.
Even worse, a Consumer Awareness Institute investigation concluded:
“Of the 350 MLMs I have analyzed for which a complete compensation plan was available, 100% of them are recruitment driven and top-weighted. In other words, the vast majority of commissions paid by MLM companies go to a tiny percentage of TOPPs (top-of-the-pyramid promoters) at the expense of a revolving door of recruits, 99% of whom lose money.”
With any MLM scheme, the odds are definitely not in your favor.
Is Kannaway a Pyramid Scheme?
Despite the FTC’s mystifying prevarication when it comes to prosecuting alleged pyramid schemes, the fact remains that pyramid schemes are illegal in the US and many other countries throughout the world. Because of the similarities between a pyramid scheme and the MLM model, it is totally legitimate and even necessary, to question when considering whether to join any MLM company whether it is indeed an illegal pyramid scheme in disguise.
There are a number of factors that come into play in answering the question but, without a doubt, the two most critical are:
- whether the members have the reasonable prospect of making money through the direct sale of goods or services to persons outside of the company
- can the members realistically only make money by recruiting more members
With Kannaway, it is clear that the members can and do make sales outside of the Kannaway organization. Furthermore, and although members do receive a share of the commissions earned by everyone in their downline, they do not receive any payment for actually recruiting new members to their downline. In these circumstances, and in my opinion, Kannaway is not a pyramid scheme.
Kannaway Products and Pricing
Kannaway has several product lines including CBD oils, nutrition, skincare, essential oils, pet products, and a miscellaneous line called Hempy’s which includes such things as hats, candles, and lip balm. The common factor in all Kannaway’s products is that they all contain either CBD oil some other extract or derivative from hemp. Even the hats are made from hemp yarn or canvass, the candles have hemp wicks and the essential oils contain one or more terpenes which are aromatic oils found in hemp.
Kannaway’s CBD oil is their most popular line and includes not only CBD oil itself but other products infused with varying percentages of CBD oil including coffee, tea, and mints. This line also includes vaping products.
Most of Kannaways products, and especially their CBD oils, appear to be well received by their customers and I have come across very few complaints regarding either quality or effectiveness. Kannaway goes to great lengths to stress the purity of their oils, the effectiveness of their extraction and production methods, and the overall quality of all their products and it seems these claims may be well-founded. Their CBD oils are regularly lab tested and the test results can be checked by entering the lot number (found on the product’s label) on the Kannaway website.
I have come across a number of complaints about products arriving in leaking containers, which is a little troubling.
Where the complaints do come is in relation to Kannaway’s prices and which are amongst the highest anywhere. Their Pure Gold CBD Oil, 1500mg retails at $187.99 which puts the cost of each (recommended) 50mg dose at over $6.00. Their top-of-the-range Gold Enriched Hemp Oil retails at a whopping $479.98 for 3600mg but with the recommended dose here being 120mg it results in a cost per dose of just under $16.00! Yikes!
Compare these prices with those of, for example, CBD Buddy, an online retailer of CBD oil products based in Britain and enjoying an excellent reputation for producing high-quality oils. Their 10% blend retails at just $56.00 (at current rates of exchange) and contains 1000mg of CBD oil which means one 50mg dose costs just $2.80. Compare that to the more than $6.00 cost of Kannaway’s Pure Gold CBD Oil. It’s less than half the price!
Another price-related area of complaint I have come across is Kanannaway’s shipping prices which are allegedly very high and which suggests Kannaway is treating shipping as an additional revenue source. To make matters worse, I have also encountered complaints about unreasonable delays in shipping and there are also complaints of overcharging.
What this means for anyone contemplating joining Kannaway is that they will be trying to sell products in what is now a highly competitive market (and becoming even more so with every passing day) and at prices (and shipping charges) way above those of most of their competitors. It’s just not going to work.
Another product-related issue is that the health benefits of CBD oil have not been proven scientifically and that all the evidence in this area is purely anecdotal. Maybe someday it will get FDA approval but this seems a long way off at this time.
The Kannaway Compensation Plan
As is the case with all MLM companies, Kannaway’s compensation plan is extremely complex.
There are, essentially, four ways for a member to make money with Kannaway:
- Purchase products from Kannaway and re-sell them in person, for instance to family, friends, and acquaintances, in which case the member will earn the difference between the wholesale and retail prices of each product. If we take as an example the Pure Gold CBD Oil mentioned earlier, the retail price is $187.99 and the wholesale price is $155.99, which means the member will make $32.00 on each personal sale of this product.
- Earn commissions on online sales through the member’s replicated website. In this case, the member will again earn the difference between the wholesale and retail prices for the product plus 30% of the ‘Commissionable Volume’ which is the sum Kannaway sets aside from each sale for paying commissions. For the Pure Gold CBD Oil, the Commissionable Volume is $55.00 and the member earns 30% of that, namely $16.50. Total commission earned = $48.50, which is not bad.
- Earn bonuses and additional commissions on product sales through several customer purchase incentive programs including ‘3 For Free’, ‘SmartShip’, and ‘Fast Start’.
- Earn commissions (and other sums) on the sale of products by other members in the member’s downline, i.e. other members recruited by the member and in turn by those other members. This is where everything starts to get really complicated and difficult to understand because so many variables come into play.
Why Does Everything Have to be so Complicated?
At first sight, Kannaway’s Compensation Plan appears to be quite well written but on closer inspection, vital definitions are missing and terminology is used that makes no sense. As with all MLM compensation plans, there are a huge number of factors, rules, and conditions that come into play in determining the commissions and other rewards earned by any individual member for a given accounting period. This means it is practically impossible for the member to know for sure if what he is being paid is correct, much less to successfully contest the amount if they think it is incorrect.
The cornerstone of the system (as with all MLM schemes) is the member’s rank within Kannaway and there are no less than 18 Ranks within the Kannaway structure. Each Rank has an impressive and catchy title, starting with the entry-level ‘Brand Ambassador’ and culminating in the top-level ‘Double Crown Ambassador Elite’. A member’s rank is totally dependant on their performance (principally their sales and the sales of those in their downline) and the rank changes automatically as that performance improves or declines. In determining rank the following values come into play:
- The members monthly PV (personal sales volume) which is the total of all sales made directly by the member (including sales to himself) and which is expressed in points with each point having an approximate value of $1.00. The PV for a Brand Ambassador is 28 while that for a Double Crown Ambassador Elite is 110, meaning they have to personally sell (or purchase) at least $28.00 and $110.00 of products respectively each month. Failure to meet the PV means they lose eligibility to receive any sales commissions for the accounting period. Also, for all members above Brand Ambassador, their rank will drop to the rank equivalent to their actual PV. In practice, of course, no member is going to allow this to happen and they will simply personally purchase sufficient products to bring their PV up to the necessary level.
- For every rank above Brand Ambassador, the monthly Qualified Group Volume (GV) is the total sales, again expressed in points, of all Brand Ambassadors in the members downline. For a Director (the next rank up after Brand Ambassador) the minimum GV needed to achieve and maintain that rank is 600 while for a Crown Ambassador (two down from the top rank) it’s 1,000,000. For any given rank, failure to maintain the minimum volume results in the member’s rank dropping to the rank appropriate for their actual GV although the top 9 ranks are allowed grace periods ranging from 30 to 180 days to get their volume back up.
- In order to maintain any rank above Brand Ambassador, the member also has to personally recruit and maintain at least three Brand Ambassadors in three separate legs. This means, of course, that if a member cannot keep at least three of their own recruits going (replacing dropouts along the way) they can never rise above the entry-level rank of Brand Ambassador. Recruits brought in by others in the downline don’t count.
As a member’s rank goes up so does their ability to earn, principally by getting a share of the commissions earned by members in their downline.
There are several available downline commission ‘pots’ for the members to participate in. The principal one, and the one available to all Ranks is the Residual Team Override Commission. This term is not clearly defined but in this case, every Rank, starting with Brand Ambassador, is eligible to participate and earn commissions on sales by other members in the ranking members downline. Based on rank, there are varying limits on how many levels below the ranking member are to be taken into account for this purpose. For example, for a Brand Ambassador only the sales of the first two levels below the Brand Ambassador, i.e. the Brand Ambassador’s own recruits and the recruits of those recruits count. The number of levels which are taken into account goes up with higher rank, the maximum being 10 and which applies only to the very top rank of Double Crown Ambassador Elite.
The other commission pots that members are entitled to participate in as they rise through the different Ranks include Rank Infinity Commissions, Coded Infinity Commissions, Lifestyle Commissions, and Rank Advancement Commissions but this is where the missing definitions become a real issue and it is practically impossible to understand exactly what those commissions are and how they are calculated. A common fault with most MLM compensation plans.
You can view the full Compensation Plan HERE.
It was not possible to obtain Kannaway’s Income Disclosure and which would have indicated the kind of incomes being made by Kannaway’s members. This indicates a lack of transparency and more than likely means that, as with almost all MLM programs, the vast majority of the members make little to nothing and that all the wealth is concentrated in 2% – 3% of the members right at the top of the hierarchy and who have huge downlines. The owners obviously would not want you to see that.
Kannaway Pros and Cons
- Good-quality products with few customer complaints
- Relatively inexpensive to get started
- Products are very expensive compared to those of other suppliers
- The CBD oil market is now very competitive
- Uncertain legal status for the product line
- No scientific evidence of CBD oil’s health benefits (and no FDA approval)
- FDA restrictions on advertising mean marketing the product line will be challenging
- Confusing and incomplete compensation plan
- No income disclosure
- Complaints of poor customer service
- Realistically, the only way to make money is by recruiting other members (starting with family and friends)
Is Kannaway a Scam?
I said previously that I do not consider Kannaway to be a pyramid scheme and, for the same reasons, I am satisfied that Kannaway is not a scam. Clearly it has real products for its members to sell and, while the only way a member can, realistically, make any money is by recruiting like crazy, he does not receive any payment directly from recruiting, only from the sales by those recruits.
As MLM schemes go Kannaway is certainly not one of the worst I have come across. It has real products and an extensive line of seemingly good quality products that are regularly lab tested. It also appears to have a loyal customer fan base for its products, albeit many of those customers are likely Kannaway members who are also selling the products.
On the other hand, Kannaway’s prices, particularly for its CBD oils, are really high, and in an increasingly competitive market that is not good news, particularly for anyone planning to make their money principally from the sale of products rather than recruiting new members.
The Kannaway Compensation Plan is extremely complex and has some glaring gaps and ommissions which means it is impossible to gain a full understanding of it before joining. One thing is clear though and which is that the only way to make money with Kannaway is by continually recruiting more members. In this regard, Kannaway is a classic example of the standard MLM model and that model is fundamentally flawed because it naturally funnels all the money to an incredibly small number of high earners at the top while those further down the chain make nothing or lose money.
So, What’s a Good Alternative to Kannaway?
If you really want to try your hand at selling CBD oil but are uncomfortable with the MLM aspect, a great option would be to do so as an affiliate. As an affiliate:
- you can choose whose products you want to sell (many of the online CBD oil retailers offer affiliate programs)
- you can earn excellent commissions on every sale
- you don’t have the expense of carrying stock
- your startup costs are minimal
- you truly are your own boss and
- you don’t have to continually hassle family and friends to buy your products and/or join your program
The total opposite of the MLM model!
Interested? Then take a look at the program I recommend to get you started in affiliate marketing. It will:
- teach you everything you need to know about affiliate marketing and more
- help you build your sales website
- host your website
- provide excellent tools to help drive traffic to your website
- provide 24/7 super fast support
If you would like more information, you can read my review of the program here.
Have you ever worked with Kannaway? If you have then please share that experience (good or bad) with our readers by leaving a comment in the box below.
Likewise, if you have any questions about anything I have written about in this article, please also leave them in the comments box and I will get back to you as quickly as possible.
Thank you for reading and I wish you every success in your financial endeavors.
- Good quality products
- Inexpensive to join
- Products are expensive
- Highly competitive market
- Uncertain legal status of the product line
- Confusing and incomplete compensation plan
- Very low probability of making any money