Cannabidiol, commonly known as CBD, has been famous in recent years for its potential health benefits. Many companies offer CBD in the form of various products such as oils, tablets, edibles, and topicals like creams and lotion. It is why there is no surprise that the CBD market has been growing at a significant pace since more and more people have been purchasing various CBD products. So much so that the global cannabis market is even projected to reach $90 billion in 2026.
Challenges for CBD Companies
Although the CBD industry has been gaining more positive attention in recent years, just like any industry, it faces its challenges and hurdles. One example would be the legality surrounding CBD products.
The legal status of CBD can be tricky and is different depending on the state or country you plan on selling CBD. Some states like California allow both the medical and recreational use of CBD, while states like Louisiana and Oklahoma only allow it for medical use.
Another challenge for CBD companies would be payment processing. The complex laws and complicated federal regulations surrounding CBD products are some reasons why CBD companies are considered high-risk merchants. It is also why major payment processors like MasterCard, Visa, American Express, PayPal, Square, Stripe, and Shopify all refuse to process credit card or online payments for CBD companies. In turn, CBD companies must look for payment gateways that offer high-risk merchant accounts.
The Reasons Why CBD Companies are Considered High-Risk Merchants
CBD companies are considered high-risk merchants because it operates within a high-risk industry, which involves safety and health concerns and numerous regulations from regulatory agencies such as the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC).
The legal status of CBD differs depending on the state or country. Through the 2018 US Farm Bill, hemp-derived CBD products are considered federally legal as long as they contain less than 0.3% THC. However, this may be illegal under specific state laws. On the other hand, cannabis-derived CBD products are considered federally illegal but maybe legal under specific state laws.
High-risk merchants are those businesses that may have the following qualities:
- The business operates within a high-risk industry.
- The business sells highly regulated products like cannabis.
- The business has potentially high chargeback rates.
- The business has a poor credit score.
- The government highly regulates this type of business.
Other examples of industries that are considered high-risk include electronics, gaming, and travel.
What are High-Risk Merchant Services and How Can They Help CBD Companies with Payment Processing
High-risk merchant services are considered to be the best solutions for the payment processing of high-risk merchants. They offer high-risk merchant accounts provided with services such as credit card processing, flexible payment solutions, online payment gateways, and much more. Additionally, these services allow CBD businesses to offer various payment schemes for their customers and do not limit them to cash payments only.
Make sure to partner with experienced and quality high-risk merchant services that are flexible and adapt to your business’s needs. Let eMerchantBroker be the solution to the payment processing dilemma of your CBD business!
EMB offers high-risk merchant account services at the most competitive rates along with the best support and customer experience. EMB is a full-service provider that offers other solutions such as Chargeback Protection, Crypto Payments, Check Processing, Payment Gateways, Business Funding, and much more!