When Aaron Argueta and his business partner Jay started Bailey’s CBD for Pets, they had 50 bottles of CBD extract, about $500 and a dog named Bailey. Nearly a decade later, the company has more than 20 products and distribution in over 400 pet stores. Getting there, however, meant surviving an industry that seemed determined to put them out of business.

On this episode of Keep Going, I spoke with Argueta, co-founder and CMO of Bailey’s CBD for Pets, about what happens when your payment processors stop working, your competitors have millions of dollars and you spend your days visiting pet stores that have absolutely no interest in what you’re selling.

The story actually begins with music. Argueta and Jay met while touring in bands in 2013. Both had experience with California’s cannabis industry, and Jay had begun experimenting with CBD extracts at a time when the market was still developing. Customers occasionally asked whether he had something similar for their dogs, so he put together a product with his pug Bailey’s face on the label.

The first batch consisted of just 50 bottles made in Jay’s kitchen. The response convinced them that there might be a real business there, and the two eventually reunited to launch Bailey’s CBD for Pets.

Then things got difficult.

When the money stopped coming in

The period between 2018 and 2020 was particularly brutal for Bailey’s. Following the passage of the 2018 Farm Bill, CBD businesses were entering the market rapidly, but financial services companies remained reluctant to work with them.

Argueta described how one payment processor, Elavon, abruptly stopped servicing smaller CBD businesses in 2019. Bailey’s lost its ability to process conventional credit card payments and relied on PayPal, which subsequently shut down its account as well.

The company suddenly had a serious problem. It could make products and find customers, but collecting payments online had become extremely difficult. Worse, payment providers could hold funds for months, leaving the founders without working capital.

At roughly the same time, California dispensaries began dropping hemp-derived CBD products because of regulatory restrictions. The company was losing sales channels just as competition was becoming more intense.

And this wasn’t a market filled exclusively with small startups. Argueta recalled competing against CBD brands associated with Martha Stewart, Willie Nelson and other famous names with considerably more money to spend.

For a business that had started with a few hundred dollars, those were difficult odds.

Twenty-five stores and not a single sale

Argueta’s response was to sell the old-fashioned way. He drove around Los Angeles and Orange County visiting pet stores, pitching products and trying to persuade owners to carry Bailey’s.

Some days he visited 20 or 25 stores without securing a single account. Retailers were already overwhelmed with competing CBD products, and many were skeptical about the category altogether.

Weekends weren’t much easier. Argueta and Jay attended farmers markets, dog events and retail pop-ups, selling products directly and explaining what CBD was supposed to do. Sometimes they would spend hours at a store that already carried their products without generating much interest.

Argueta admitted that the constant rejection was disheartening. What helped was a community of other entrepreneurs facing similar problems, along with a determination to keep the business operating as cheaply as possible.

They reduced expenses, took modest salaries and reinvested what they could. In the early days, Argueta said, there were times when even finding money for lunch was a concern. The founders also took on side work to bring in extra cash.

Their strategy was relatively simple: survive long enough for the market to settle down.

And eventually, it did.

At the SuperZoo pet industry trade show in 2019, Argueta remembers seeing more than a hundred businesses offering CBD products. By 2022 and 2023, that number had declined considerably. At the most recent show, he estimated there were fewer than ten.

Many competitors had disappeared. Bailey’s was still there.

Finding a business beyond CBD

Survival alone wasn’t enough. The company also had to find new ways to grow in a crowded market.

One important change was moving away from generic CBD dog treats toward products marketed for specific purposes, including calming and hip and joint support. These formulations incorporated additional ingredients and gave customers a clearer understanding of their intended use.

Argueta believes they should have made that change earlier. Instead of expecting customers to understand CBD and determine why they might want it, the company could explain what each product was designed for.

Bailey’s also expanded beyond CBD into products such as probiotic chews and mushroom-based supplements. That opened sales channels that remained unavailable to CBD products, including certain wholesale marketplaces.

Another opportunity came from manufacturing products for other brands. Argueta recalled losing an early contract because Bailey’s wasn’t organised to handle it. Rather than ignore the opportunity, the founders spent years building a private-label and contract-manufacturing operation. Today, he said, the company works with about eight consistent clients.

It’s an interesting development for a business that once struggled to compete with other CBD brands. Now, some of its revenue comes from helping other companies make their own products.

The problems haven’t disappeared

Bailey’s still faces restrictions on advertising and distribution, and Argueta described the difficulties of competing for attention on Google when many major retail platforms don’t allow CBD products.

The company has consequently invested heavily in organic search, blogging and website development rather than depending entirely on paid advertising.

There have also been regulatory problems. Argueta said Bailey’s received an FDA warning letter roughly a year and a half before our conversation and has been working through the agency’s concerns. He described a slow process of submitting changes and waiting for responses, with the warning letter creating additional concerns among retailers and customers.

These are reminders that surviving the initial wave of competition doesn’t mean the business suddenly becomes easy.

But the company has also found opportunities. Argueta said sales grew significantly during the COVID-19 pandemic as more people adopted pets and sought products marketed for calming and wellness. More recently, Bailey’s has been expanding its affiliate relationships and looking for additional distribution channels.

Why keep going?

I asked Argueta why he and Jay were still building a CBD company when they could have moved into an entirely different business.

His answer was the pet industry itself. Both founders enjoy working with pet owners, and Argueta said the customer feedback they receive continues to motivate them. He also spoke about Bailey, the original pug who inspired the business and died in 2024.

The dog may be gone, but the company still carries his name.

What I found most interesting about Argueta’s story is how little of it involves a sudden breakthrough. There was no enormous investment that solved everything, no single marketing campaign that transformed the business and no moment when the founders could stop worrying about money.

Instead, they kept expenses low, found alternative ways to sell their products, built relationships with other operators and gradually expanded into new areas of the industry.

A lot of their competitors didn’t make it through the difficult years. Bailey’s did, and that gave the company an opportunity to keep growing.