If you offer products containing cannabidiol (CBD), you are aware that legislation enacted in 2018 made it legal to produce and sell those products. There is now a distinction between hemp and marijuana, making it legal to grow hemp and capture the CBD it contains. This, in turn, has opened the door to a wide range of health and wellness products containing the substance.
Payment Processing: A Hurdle for CBD Companies
From oils to supplements to topical solutions, CBD is a market segment that is growing exponentially. Some experts predict that revenues from CBD products will exceed $15 billion by 2025. However, as businesses look to capitalize on this new market, they are running into significant challenges.
Many payment processors are reluctant to work with CBD companies. Why? There are a few reasons, including:
- General confusion about hemp and marijuana. Hemp and marijuana are the same species of plant. The difference is that hemp plants have 0.3 percent or less tetrahydrocannabinol (THC), the primary psychoactive compound in marijuana. And while payment processors understand this difference, there is enough confusion in the market that many of them are refusing to work with CBD companies.
- An evolving legal environment. Because hemp was legalized fairly recently, the FDA is still working out the kinks as far as how to regulate the industry. Consequently, some processors are wary of getting involved for now.
- Elevated risk. Because CBD is a new industry, it is prone to chargebacks and payment card fraud. Processors uncomfortable with managing high-risk businesses steer clear of CBD as a result.
When processors do get involved with CBD businesses, often they do so without sufficient understanding of the market and the risk and compliance issues involved. As a result, many have abruptly cut ties with merchants, leaving them scrambling to find another provider. Fortunately, Base has expertise in the CBD market and the willingness to partner with merchants to provide the payment services they require on an ongoing basis. The CBD businesses we work with can be confident that we’re committed to meeting their needs, both today and down the road.
CBD Payment Processing and Compliance
When it comes to CBD, everything from government oversight to public perception is rapidly evolving. Consequently, one of the most important characteristics to look for in a payment processor is its understanding of the compliance issues faced by CBD businesses. And that doesn’t just apply to where the industry is today. Your payment processor should collaborate with you and help you navigate any future changes in the industry.
At Base, we’ve been very proactive about understanding CBD regulations since the legislation legalizing hemp was first passed. And we continue to monitor developments in this area so that we can provide insight to our clients as they work to open, promote, and grow successful CBD businesses. For example, we offer a CBD Website Compliance Checklist that includes items like confirming that all products contain less than 0.3% THC and less than 3.0% cannabinol (CBN), another compound found in hemp plants.
Clients know they can turn to us for this expertise, as well as:
- High-risk processing availability
- Easy software integrations with our Prebuilt SDKs
- Competitive fees
- Exceptional support
The turbulence in the CBD market will subside as government entities and consumers become more familiar with all that this therapeutic substance has to offer. And as the market continues to expand, CBD companies that have established a strong relationship with a payment processor will have a distinct advantage over competitors that are still trying to address this critical need.
If you have questions about the CBD industry and the role played by our suite of payment acceptance solutions, we’re happy to answer them.