The U.S. Food and Drug Administration will authorize the legal marketing of some hemp based products in response to Congressional passage of the 2018 farm bill.
The new law, signed in December, designates hemp as an agricultural crop for use in CBD oil and other hemp products. To qualify, dry weight hemp must contain less than 0.3% of THC. The law approves the production and sale of hemp at that concentration. It does not decriminalize marijuana at the federal level.
A Word from the FDA
The Food and Drug Administration (FDA) currently classifies products containing hemp-derived cannabidiol, or CBD, as illegal. The FDA has announced it will review this classification, allowing businesses to market hemp products that qualify for agricultural use.
The FDA will take action against anyone making unproven claims about the health benefits of CBD products. They will do the same for products derived from hemp. The agency reserves for itself, the authority to regulate any cannabis-related products.
The FDA is reviewing circumstances which may warrant use of cannabis-related compounds in food or dietary supplements. Although illegal for interstate commerce, the FDA can issue regulations permitting use of the ingredient in a food or supplement.
The FDA has classified these as ‘Generally Recognized as Safe’ (GRAS) hulled hemp seeds, hemp seed protein and hemp seed oil. Products containing these ingredients are safe for use in food products. The ingredients must be listed on the packaging and the product may not be marketed as a medical treatment.
Plans for the Future
The FDA has announced it will host public meetings regarding legalization of hemp, its impact on business and the public good.
What This Means for CBD Oil and Hemp Product Merchants
The legalization of both medicinal and recreational Cannabis and its introduction into the mainstream presents opportunities for entrepreneurs. Based on data from other nations where legalization has occurred, a huge industry is on the horizon. And yet merchants seeking to capitalize on this opportunity will face obstacles in obtaining online merchant processing accounts.
This is because the emerging Cannabis industry will likely be classified as high-risk by banks and traditional financial institutions. Despite legalization, a great deal of legal ambiguity is likely to persist where hemp is concerned. There is also the likelihood of excessive chargebacks on credit card transactions. These factors will lead to the high-risk classification for CBD oil and hemp product merchants.
The best path for those in the emerging hemp industry is to make use of payment processing providers who specialize in higher risk merchant accounts.
The hemp industry is likely to be considered high-risk by banks and traditional financial institutions. Prospective merchants should prepare for terms that include limited monthly transaction volumes and higher payment processing rates. Merchants may also be required to establish a ‘rolling reserve.’ This covers any unpaid debts in the event of a sudden closure of business.
Implications for the Future
Recent developments in the U.S. Congress mean imminent change regarding hemp, CBD oil and cannabis-related products in the United States.
Members of the United States House Judiciary Committee recently passed the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act. The act removes the marijuana plant from the federal Controlled Substances Act.
Thirty-three American states have laws regulating medical cannabis. One in four Americans live in a state where recreational cannabis is legal. Passage of the MORE Act will further loosen regulation of marijuana sales and use. For entrepreneurs, this represents a tremendous market opportunity.
Already established merchants will be best positioned to profit from the coming wave of deregulation. Actively building a CBD oil business will give entrepreneurs an opportunity to establish contacts within a growing industrial sector.
Are You Ready to Apply for CBD Oil and Hemp Product Payment Processing?
The emerging Cannabis industry presents amazing opportunities for entrepreneurs prepared to enter the market. The most successful will be those ready to accept cash, credit, and debit cards for transactions.
Let SecureGlobalPay provide your business with the guidance and expertise necessary to compete in this emerging market. Apply now.