CBD oil (or Cannabidiol) is a healthy, organic medicine. It can offer people relief from long-term conditions like chronic pain and seizures.
Unfortunately, this wonderful product can be difficult to bring to market. There is plenty of misinformation abounds about CBD oil. Attempts to market the product via the internet can lead the merchant into a tangle of conflicting state and Federal laws. Most problematic of all is the difficulty in obtaining an online merchant account for a CBD oil business.
A merchant account is critical for any web-based business. Merchants accounts allow businesses to effectively process online debit and credit card transactions. Unfortunately, most banks and traditional financial institutions view the CBD oil business as high-risk. High-risk businesses face special obstacles when it comes to obtaining merchant accounts.
What is CBD oil?
CBD oil is a cannabinoid – or, naturally occurring compound found within cannabis. Cannabis is the plant from which hemp and marijuana come. Its various components contain differing levels of THC.
THC is the active ingredient in marijuana – the chemical that makes you feel ‘high.’ But some components of the cannabis plant, such as its hemp stalk and CBD oil, contain little to no THC. Due to these low levels, you can use CBD oil without feeling high. CBD oil offers relief from pain, inflammation, anxiety, seizures, spasms, and other neurological conditions.
Know the laws concerning CBD
Despite CBD’s lack of THC and its medical benefits, traditional banks and credit card processing services are reluctant to provide merchant accounts to CBD businesses. This is due to the number of conflicting international, federal, and state laws.
In 14 states including Kentucky, Colorado, Oregon, Tennessee, and California, farmers can legally grow and process industrial hemp and hemp seeds. This was the result of state laws passed to implement the Agricultural Act of 2014. These laws fail to clearly specify who can sell products and the derivatives of hemp.
Much remains to be worked out in the industry. But if nothing else, it enables hemp research to see if hemp can be a viable cash crop for struggling farmers.
Federal laws complicate matters even further. Marijuana is classified as an illegal Schedule One drug in the United States. This places it in the same class as dangerous drugs like cocaine, heroin and methamphetamines. This means anything that comes from the cannabis plant, including some forms of CBD, are illegal.
Medical Marijuana is legal in 29 states and Washington, D.C.. Recreational Marijuana is available in Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Washington and Washington, D.C. In states where medical and recreational marijuana is legal, CBD oil may also be sold.
In January 2018, Attorney General Jeff Sessions rescinded the Cole Memo. The 2013 Department of Justice memorandum facilitated growth of state-sanctioned marijuana businesses despite the conflict between state and Federal laws. Lawmakers continued to support their pro-marijuana laws and advance marijuana reform legislation.
CBD oil merchants must operate with great care lest they inadvertently break the law in a given state. Authorities will shut down and confiscate the assets of businesses that market products with conflicting legal or material (ingredients) discrepancies.
Banks and merchant account providers may be left responsible for any debts left behind by a business that gets shut down. Merchants can prepare to succeed by understanding the applicable laws in their target market.
3 Easy Steps to take to get a CBD Oil merchant account
Merchant accounts are still possible to obtain despite the controversy and conflicting laws surrounding CBD oil. Here are three ways to increase your chances of getting a CBD oil merchant account:
- Maintain the absolute best credit card credit processing history possible. Keep chargeback ratios low to help demonstrate to merchant account providers that you have a solid business model. Maintain skilled, trained customer service staff and always offer quality products. Be prepared to show bank statements that are properly funded. Financials clear of overdraft fees and healthy account balances stand the best chance of obtaining a merchant account.
- Keep high or stable processing volumes – Maintain a large monthly volume of bankcard transactions. This will help demonstrate to account providers that there is a demand for your product while keeping the banks interested in their margins. High demand merchants are always a sound investment for banks and financial institutions.
- Comply with laws – Know and comply with all state and Federal laws and regulations regarding CBD oil. This is a Must! Obtain any required licensing. Credit card processors will most likely request a copy of the license when you apply for merchant account services.
The final say
SecureGlobalPay understands the challenges high-risk businesses face in obtaining merchant accounts. The ever-evolving legal and marketing environment of the hemp and cannabis industries represent unique challenges to the entrepreneur. Fill out our online application form and qualify for a merchant account in as little as 24 hours.