The federal agency authorized to ensure the safety and efficacy of the nation’s drugs, medical devices, and food supply plans to take steps to give some hemp products a thumbs up following the recent adoption of the 2018 farm bill.
The new law, which was signed in December 2018, designated hemp as an agricultural crop, essentially legalizing CBD oil and hemp products. Products must contain no more than 0.3 percent of hemp on a dry weight basis for it to be considered legal under the law. Though 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
Currently, the U.S. Food and Drug Administration (FDA), the federal agency responsible for testing and approving prescriptions, food, and other items for their safety and effectiveness, considers products that contain hemp-derived cannabidiol, or CBD, as mostly illegal. In light of the new law, the FDA has pledged to pursue actions that would allow businesses to legally market hemp products that contain the percentages outlined in the law, according to released issued by the federal agency.
Though it will take action to work within the confines of the new law, the federal agency pointed out that it has the authority to regulate products containing cannabis and would take legal action against parties that make unsubstantiated claims about the therapeutic benefits of CBD products, including those derived from hemp.
The FDA noted in the statement that it is considering whether specific circumstances warrant some cannabis-derived compounds being added to food or dietary supplements. Though these products legally cannot be introduced in interstate commerce, the federal agency can issue a regulation that permits the ingredient in food or a supplement.
Furthermore, the FDA stated it finished evaluations of hulled hemp seeds, hemp seed protein, and hemp seed oil and determined that the products are safe based on GRAS (Generally Recognized As Safe) standards. This means that products containing these items are safe for use in food products as long as the ingredients are listed on the packaging and are not marketed as a treatment for diseases.
Plans for the Future
The FDA plans to hold a public meeting to discuss the issues surrounding the legalization of hemp and its impact on products and the general public in the future.
What This Means for CBD Oil and Hemp Product Merchants
With the legalization of hemp and the other steps being taken by the government to push it into the mainstream, there likely will be a surge of entrepreneurs interested in getting into the industry. Despite its popularity and profitability, merchants that attempt to get merchant accounts, which are necessary to accept debit and credit cards for payments, will face uphill battles.
With the uncertainties surrounding the issue with the FDA, as well as how each individual state will react to the decriminalization of hemp, banks likely will not want to take a risk on CBD oil and related businesses. Legal ambiguity, excessive chargebacks, and industry types are some of the many reasons that banks turn high-risk businesses, such as CBD oil merchants away.
However, all hope is not lost. Third-party merchant account providers and payment processors will take a gamble on these types of businesses. Just be forewarned you will have to agree to higher rates and stricter terms. But, remember that is the price of doing business in a high-risk industry.
High-risk merchants should expect to be limited in terms of monthly transaction volumes, pay higher processing rates, and have to put up a rolling reserve. A rolling reserve is a pot of money that is set aside by a merchant service provider in case you shut down your business and do not pay debts or you fail to keep up with refunds and chargebacks.
Are You Ready to Apply for CBD Oil and Hemp Product Payment Processing?
As the nation and its agencies continue to move toward full acceptance of hemp, it is time for merchants to get in on the market. The savviest merchants will accept cash, credit, and debit cards for transactions.
When you are ready to begin accepting cards, turn to a merchant service provider, like eMerchantBroker.com (EMB). We specialize in working with high risk merchants and offers a simple online application process. Many get approved in as little as 48 hours. Apply today.