CBD has so many potential benefits, it’s no wonder we discover (or develop) something new with it every year. This time, terpenes are the new focal point.

Terpenes are aromatic compounds offering businesses a brand new set of opportunities for product development and marketing. Let’s explore everything you need to know about terpenes, from sources and benefits to regulatory considerations and marketing strategies.

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What Are Terpenes?

Terpenes are aromatic compounds that plants produce to protect themselves from predators and attract pollinators. These scent molecules create the distinctive smell of pine forests, lavender fields, and citrus groves.

Plants store terpenes in specialized glands called trichomes. When you smell the zesty aroma of an orange or the calming scent of chamomile tea, you experience terpenes firsthand. These compounds exist throughout nature, with over 20,000 different terpenes identified so far.

To be clear, terpenes aren’t unique to cannabis. They can be found in:

• Cannabis and hemp plants
• Citrus fruits
• Pine needles
• Essential oils
• Herbs and spices

However, cannabis and hemp plants contain particularly rich and diverse terpene profiles. Common cannabis terpenes include myrcene (earthy), limonene (citrusy), pinene (pine-like), and linalool (floral). Each creates distinct aromas and can offer different effects to the products you sell.

Terpenes work beyond just creating pleasant scents. Research suggests they may influence how other plant compounds interact with the body. This is a phenomenon called the “entourage effect.”

For cannabis businesses, terpene CBD might enhance or modify certain effects.

For non-cannabis businesses, terpenes offer natural alternatives to synthetic fragrances. Food and beverage companies use terpenes to create consistent flavors. Cosmetic brands incorporate them into skincare for their aromatic properties. Cleaning product manufacturers use terpenes like limonene to create effective, natural-smelling solutions.

The growing consumer demand for natural products makes terpenes increasingly valuable for product development. As synthetic ingredients fall out of favor, these plant-derived compounds provide authenticity that today’s consumers seek.

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Cannabis vs. Non-Cannabis Terpenes

Terpenes aren’t treated the same depending on their source. Some have more legal and regulatory checks to pass before can you start selling or marketing.

Cannabis-Derived Terpenes

Cannabis plants contain a rich profile of terpenes that work alongside cannabinoids to create the “entourage effect.” These terpenes give each cannabis strain its distinctive aroma and flavor profile, from the citrusy notes of Lemon Haze to the piney scent of Jack Herer.

Cannabis-derived terpenes come directly from the cannabis plant itself. Extractors use specialized equipment to isolate these aromatic compounds from the plant material. The resulting extracts contain the full spectrum of terpenes found in the source strain, preserving its authentic aromatic profile.

The legal status of cannabis-derived terpenes depends entirely on their source:

• Terpenes extracted from cannabis plants containing more than 0.3% THC fall under controlled substance regulations in many jurisdictions
• Terpenes from hemp (cannabis with 0.3% THC or less) face fewer legal restrictions at the federal level

One significant advantage of cannabis-derived terpenes is their authenticity. When used in products, they replicate the exact taste and smell of specific cannabis strains. This creates a more genuine experience for consumers who appreciate the natural characteristics of cannabis.

Common cannabis-derived terpenes include:

• Myrcene: The most abundant cannabis terpene with a musky, earthy aroma and potentially sedative effects
• Limonene: Features a citrusy scent similar to lemon or orange peel with possible anti-anxiety properties
• Pinene: Offers a pine-like aroma with potential anti-inflammatory and pain-relieving qualities
• Ocimene: Provides a sweet, floral aroma with possible anti-inflammatory properties
• Terpinolene: Has a complex floral, herbaceous aroma with potentially sedating effects

However, cannabis-derived terpenes come with some drawbacks. They’re typically more expensive due to regulatory challenges and limited supply. The extraction process yields relatively low returns, driving up production costs.

Additionally, identical product batches can’t always be guaranteed. Cannabis plants vary in their terpene profiles based on growing conditions.

Non-Cannabis Terpenes

Non-cannabis terpenes come from other botanical sources or are synthesized in laboratories. These terpenes fall into two main categories:

1. Botanical terpenes: Extracted from non-cannabis plants, flowers, fruits, and herbs. These natural compounds are chemically identical to their cannabis counterparts but come from widely available plant sources.
2. Synthetic terpenes: Created in laboratories using chemical ingredients rather than extracted from plants.

Botanical terpenes offer several advantages over cannabis-derived options:

• Legal status: They face fewer regulatory hurdles since they come from non-cannabis sources, making them legal in most countries worldwide.
• Cost-effectiveness: They’re significantly less expensive to produce because they can be extracted from readily available plant sources.
• Consistency: The standardized extraction processes for botanical terpenes ensure identical batches over time, unlike cannabis-derived terpenes which may vary between harvests.
• Versatility: They can be combined to create a wide range of flavors and aromas, offering greater flexibility for product development.

Common sources of botanical terpenes include:

• Limonene: Found in citrus fruit peels like lemons and oranges
• Pinene: Extracted from pine needles, rosemary, and basil
• Linalool: Derived from lavender, rose, and basil (found in over 200 plants)
• Caryophyllene: Sourced from black pepper, cloves, and black caraway
• Ocimene: Found in basil, orchids, and mint

While botanical terpenes are molecularly identical to cannabis-derived terpenes, some subtle differences exist in the final product. The scent and taste may differ slightly from cannabis-derived terpenes due to the absence of non-terpene residue that contributes to the complete cannabis aroma profile.

Both cannabis-derived and botanical terpenes offer similar potential therapeutic benefits. Research suggests terpenes may provide anti-inflammatory, anti-microbial, and stress-reducing properties. They might also help with sleep issues, anxiety relief, and mood improvement.

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Compliance Best Practices

For both cannabis-derived and non-cannabis-derived terpenes, there are regulatory aspects to consider. Keep your ad claims and labeling in check.

Marketing Claims

The FDA closely monitors claims made about terpene products, In 2025, enforcement has significantly intensified. In the first half of 2022 alone, the FDA issued 20 CBD-related warning letters, nearly triple the number from the previous year.

When marketing terpene products, follow these essential guidelines:

1. Remove high-risk terminology: Eliminate all disease-related terms and high-risk buzzwords from your marketing materials. Words related to medical conditions like anxiety, PTSD, Alzheimer’s, cancer, and insomnia can trigger regulatory action.
2. Structure-function claims vs. health claims: Structure-function claims describe how ingredients affect normal body structure or function (e.g., “supports a healthy night’s sleep”), while disease claims suggest treating or preventing illness (e.g., “helps insomnia”). Always use structure-function claims rather than disease claims.
3. Be cautious with research citations: Sharing studies on your commercial website can be interpreted as making claims. The FDA has issued warning letters to companies simply for citing COVID and CBD studies on their websites2. If you must reference studies, remove high-risk disease words from study titles and URLs.
4. Avoid “diseasifying” your products: Don’t turn your supplement or hemp cannabinoid product into a drug by making disease-related claims. For example, say a product “supports relaxation” rather than “treats anxiety”.
5. Comply with state-specific regulations: Research and follow the laws in every state where you plan to do business, as regulations vary significantly by location.
6. Monitor terpene content: For vaporized or inhaled cannabis products, ensure terpene content doesn’t exceed 10% of the total product composition, as specified in 2025 regulations.

Product Testing and Transparency

Rigorous testing and transparency are regulatory requirements that many sellers don’t pay close enough attention to. Here’s what to know:

1. Third-party testing: Verify terpene content and purity through independent laboratories. New regulations require more rigorous lab testing to prevent contamination and ensure potency accuracy.
2. Clear labeling requirements: Cannabis products must not contain less than 85% or more than 115% of the terpene content listed on the product label, as reflected in laboratory testing certificates1. Labels must also include expiration dates, serving information, and ingredient details.
3. Certificates of analysis: Maintain and make available detailed records about the source of all botanically derived terpenes used in your products, especially for vaporized or inhaled cannabis products.
4. Prohibited ingredients: Regulations specifically prohibit several ingredients in vaporized or inhaled cannabis products, including synthetic terpenes, polyethylene glycol (PEG), vitamin E acetate, MCT oil, and artificial food coloring.
5. Restricted flavors: Certain flavors are prohibited in vaporized or inhaled cannabis products, including menthol, cotton candy, bubble gum, candy, clove, vanilla, chocolate, ice cream, soda, cereal, and dessert flavors that might appeal to individuals under twenty-one.

Regulatory Compliance Strategies

Here’s a short guide on how to navigate the regulatory landscape for terpenes.

1. Partner with compliance consultants: Work with specialists who understand the nuances of cannabis and terpene regulations. These experts can conduct compliance audits, develop tailored strategies, prepare you for inspections, and keep you updated on regulatory changes.
2. Implement comprehensive security solutions: Security compliance has become integral to running a successful cannabis business. Invest in proper security measures to meet state-mandated requirements while protecting your assets.
3. Source responsibly: Work only with trustworthy suppliers that produce safe and legal terpene products. Request and review lab test results to verify THC content (less than 0.3% for hemp-derived products) and confirm the absence of harmful chemicals.
4. Stay informed about regulatory changes: The cannabis and terpene regulatory landscape continues to evolve rapidly. Regularly check official government websites and industry publications for updates on laws and guidelines.
5. Avoid prohibited marketing practices: Don’t use before-and-after images, promote overconsumption, advertise price reductions or customer loyalty programs, or use special branding materials unless specifically authorized.

Following these guidelines will help you avoid account freezes, fines, and other costly penalties. The payment ecosystem you choose also has a big impact on your bottom line. With DirectPayNet, you can negotiate your fees and get an account that fully backs your business.

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