CBD And Payment Processors

Do you sell CBD products? If you do, or are planning on doing so, you know how difficult it is to get a payment processor on your side. These products are popular products so you would figure that payment processors would jump on getting on board with you but the responses have not been what you have wanted. Why is that?

What Is CBD?

Cannabidiol or more commonly known as CBD is a derivative of the cannabis plant. It has been shown to treat several ailments like inflammation and seizures. It comes from low-THC strains of cannabis and is crafted into a non-psychoactive oil that can be stored in a tablet or as a liquid. 

Why Won’t Payment Processors Get On Board?

The problem isn’t CBD itself, it is where it comes from. Cannabis, or more commonly known as marijuana, is a Schedule I drug in the US making it illegal from coast to coast. So if it’s illegal how can this product be sold? Well, the laws of several states and even municipalities have either legalized recreational use of marijuana and/or CBD products. In fact CBD products are legal in 38 of the 50 states and Washington DC.

These products exist in somewhat of a legal gray area where they are legal and yet still illegal. It is not like payment processors don’t want to get on board with this, they do. JLE Business Consultants is working hard to try to find a way to do this, but because of the federal laws processors like us are not able to do so without huge risk.

CBD Products Are High-Risk

Because of this legal gray area CBD products are considered to be high-risk and thus if a payment processor can be found (there are some who do process payments but they are rare) interchange fees will be very high. For some this may be worth it but many in this industry have chosen to just accept cash or checks (that’s if they can find a bank to do business with). 

As soon as a merchant that is in this industry tries to get a bank account or hire a payment processor red flags are sent up. Some processors and banks just simply don’t want the stress that comes with this. Federal law still trumps state or local law and if the federal government decides to press the issue the industry could dry up leaving both merchants and processors high and dry. At the same time the laws differ from state to state and municipality to municipality which further complicates matters.

What Is The Future Of CBD Products

There is growing sentiment in the US for the legalization of marijuana and other cannabis-related products. Not only would this cut down on costs associated with law enforcement and criminal justice it would also raise badly needed revenue. Colorado was the first state to legalize marijuana and pulled in over $266 million in revenue in 2018 alone from taxes, licenses and fees from it. Other states are following suit (click here for a map that shows the legality by state). Even some states that are not legalizing marijuana are allowing for the sale of CBD products as a medicinal product. It seems like it is just a matter of time before recreational marijuana is legalized at a national level like Canada has and that will settle the CBD question as well. When that happens payment processing for this industry will be much easier.

Until that happens payment processing for businesses in the CBD industry will remain the way they are. At JLE Business Consultants we are working hard and are getting very close to providing payment processing for this industry. We are looking forward to the day that this question is settled.