By 2022, sales of products containing cannabidiol and other types of hemp will soar nearly 10-fold to $2.6 billion in 2022, according to the cannabis research firm, New Frontier Data.
These stats were before the federal government’s landmark move to remove industrial hemp off its list of controlled substance. Thanks to this move, the plant’s popularity may catapult into a realm beyond what anyone could have predicted.
When President Trump signed the farm bill in December 2018, he opened the door for hemp producers and sellers to make a breakthrough in the market. This will not only boost demand, it is expected revive struggling farmers, and send hemp merchants moving ahead quickly and seeking payment processing for their products.
Despite the legalization of hemp, do not expect the process to be challenge-free if you apply for a hemp merchant account from your regular savings and loan institution. However, getting a merchant account, which allow you to accept debit and credit cards for transactions, is not impossible if you know what to do and expect.
About the New Law
Until Trump signed the farm bill into law, hemp and CBD extract were classified as a Schedule 1 substance, which is the federal Drug Enforcement Administration most restricted category. Now, any part, extract, or derivative of the Cannabis plant that has a THC concentration of not more than 0.3 percent on a dry weight basis is legal. Nothing in the federal law legalizes marijuana, which also comes from the Cannabis plant.
Issues with the Law
Banks and traditional credit card processors are resistant to work with merchants that sell hemp because they are afraid they may be penalized if they fail to operate legally. Another problem is that the new law does not clarify everything a bank would want to know before they approve a merchant account.
Though the law requires a regulatory framework for the required licensing and oversight of the industry, these frameworks have not been established yet. The law also fails to address states’ roles in the new program. Just like the many states that have adopted their own medical and recreational marijuana use laws, the federal government has not decriminalized the use or sale of this part of the Cannabis plant. This means states could establish different hemp rules that are quite different from the one adopted by the federal government.
With all of these questions still up in the air, many banks may not be too quick to approve a hemp merchant account. Therefore, in order to operate, your best approach is to see one from a high-risk lender.
What to Expect When Applying for a Hemp Merchant Account
When you are approved for a hemp merchant account, you may be asked, as part of your contract, that you notify your acquiring bank or payment processor if you are notified that you violated any state or federal laws.
Additionally, you may be asked to provide an updated license each year or whatever schedule the state or federal governments agree upon, as well as follow any database or list that keep tabs of violations and licensing status.
Make Hemp Merchant Account Approval Easier
If you want to increase your chances of getting a hemp merchant account, get your finances and business plan in order. Prior to applying, you should ensure you have several months of good processing histories and few chargebacks. Processors also like businesses to have a decent number of monthly sales and some money in the bank, in case of emergencies. Overall, when processors view your business, they want to see a legitimate venture that is running on a solid business model.
As the hemp and CBD oil industry grows, banks and payment processors will have to adapt. While they try to catch up, turn to eMerchantBroker.com (EMB). It specializes in solutions for all types of businesses, and it offers hemp merchant accounts. Submit an online application today. The process is fast and easy.