CBD Merchant Accounts – Why They Can be Difficult to Secure, and How to Move Forward

CBD (Cannabidiol) products are ubiquitous these days. Going to the salon to get a haircut? There are shelves of CBD infused shampoos and oils being touted to help with multiple ailments. Going to the corner store to grab a bottle of water? How about that CBD infused bottle placed inconspicuously next to the quart of milk? Like many merchants out there, you may have decided to jump on the CBD sales train. CBD is one of 113 active cannabinoids present in cannabis. The oil is a compound in marijuana that can offer a myriad of benefits without the psychoactive effects. In this blog post we will discuss why CBD merchant accounts are considered high risk to many credit card processing providers and what you can do to move past this.

Why Credit Card Processors are Wary

Let’s dig into why many payment processors are still wary of CBD merchant accounts. There is quite a lucrative market for CBD infused products, and they work miraculously to relieve symptoms of particular ailments for many people. Sales of CBD products in the U.S. stood at $4.6 billion dollars in 2020, and by 2026, this market is expected to grow to $16 billion dollars in value, according to a Statista report.

Unfortunately, because CBD is often associated with cannabis, many credit card processing providers refuse to approve credit card processing accounts for businesses selling CBD related products. Often, a merchant account will be approved, and the account will get shut down after the business starts running CBD transactions. Mainstream payfacs such as Square are now limiting how many CBD merchants they are approving, worrying many merchants that their current accounts will get shut down. Other “high-risk specialty” credit card processors approved thousands of CBD sellers for CBD merchant accounts, only to shut the accounts down 3 months later, after the bank decided that it didn’t want to take on the risk.

The Farm Bill passage in 2018 legalized hemp and hemp derived CBD products as long as the levels of THC are no more than 0.3 percent. The bill lists provisions that remove hemp and hemp extractions from the DEA’s Controlled Substances schedules. Because CBD is still considered to lie in the gray area legally, banks that grant CBD merchant credit card processing are exposing themselves to the risk of card brand fines and regulatory intervention.

Even though the CBD industry has made great gains with the Farm Bill, there are still FDA regulations in place that prohibit selling CBD as a food or dietary supplement. Additionally, state laws vary vastly when it comes to the usage of CBD. Some states, such as Idaho, still consider hemp derived CBD to be a controlled substance, regardless of the Farm Bill. What this means for merchants, is that they must obey state laws, and are prohibited from shipping to states where CBD use is restricted.

Types of Transactions

The origins of CBD began in the brick and mortar world. Smoke and vape shops began adding CBD inventory to their arsenal of products, with the ability to accept cash only. After the Farm Bill was passed, this allowed shops to accept credit cards during card present transaction. Today, CBD is sold via e-commerce through various online storefronts, as well as through MOTO (mail order/telephone order) with cards not present. The ease of online storefronts has increased accessibility to CBD, contributing to the rising sales of the product. This has been even more true in a post-COVID marketplace, where consumers have been accustomed to having their favorite brick and mortar stores closed for periods of time. E-checks are also a popular choice for CBD processing. 365 Glacier Payments can set you up with any of the aforementioned forms of payment at the most competitive rates. We customize our business options to what fits you and your business best.

What You Can Do

Fortunately, 365 Glacier Payments is one of the first in the credit card processing industry to enable CBD merchants to accept credit cards since the passage of the Farm Bill in 2018. We do not shut down accounts due to business type once they have been approved, as we see so often with mainstream processors such as Square.

Below is a list of just some of the CBD products that 365 Glacier Payments frequently works with:

• CBD Beauty Products
• CBD Flower
• CBD Creams
• CBD Vitamins
• CBD Gummies
• CBD Vaporizers
• Hemp Oil
• CBD Tinctures
• CBD Supplements
• CBD Terpenes
• CBD Edibles
• CBD Vape Oils
• CBD Isolates

If you would like to open a merchant account to enable your CBD business to accept credit cards, contact 365 Glacier Payments today at [email protected] or book a meeting with us here. We look forward to hearing from you!