Cannabis doesn’t have the bad rap that it used to back in your parents’ or grandparents’ day. Part of that trend is thanks to a growing field of scientific research, public awareness and the passage of the U.S. Farm Bill in 2018. This bill provided for a new federal hemp regulatory system that aims to facilitate the commercial cultivation, processing, and marketing of hemp.
Cannabidiol (CBD) is a byproduct of the hemp plant and has become increasingly popular for treating medical conditions such as seizures, insomnia, chronic pain, inflammation, and anxiety. This differs from marijuana, which has high levels of Tetrahydrocannabinol (THC) that is responsible for creating its trademark “high.”
This has opened up a profitable market that focuses on CBD products, such as salves, creams, tinctures, concentrates, and vapes. Even dog treats and cosmetics are benefiting from the green boom.
There’s no denying it; there’s a profit to be made from entering the CBD industry. In 2018, CBD products brought in $2 billion worth of sales and projections put growing revenue at $16 billion by 2025.
The CBD craze isn’t unique for America either. Major countries such as Australia, Germany, and Brazil have all legalized access to medicinal cannabis, creating a spike in consumer demand. Even in places with a history of supporting all-natural remedies, such as Asia, there is unprecedented growth of cannabis crops to fulfill the thriving trade.
So how do you get in on all the action? Finding a CBD merchant account can be key.
Obtaining a CBD Merchant Account
Despite its new popularity, cannabidiol (CBD) is still facing pushback from traditional merchant account providers such as banks.
While hemp has lower amounts of THC and higher amounts of CBD, it can fall in an uncertain section of the law. Any product made with more than 0.3% THC is completely illegal at the federal level. There’s also a ton of regulations regarding CBD and the FDA has yet to weigh in with their own set of regulations besides prohibiting the addition of cannabis to food or making health and wellness claims.
There’s also a higher risk of chargebacks for businesses products CBD products or services because many of them operate online or internationally.
This uncertainty and risk make traditional providers unwilling to provide CBD merchant accounts more often than not.
The only option for businesses that want to provide their customers with credit and debit card processing is to create a CBD merchant account with a company that specializes in high-risk accounts, such as EMB.
The Future of CBD Businesses
It’s hard to say what the future will hold. Is CBD truly the modern-day Gold Rush that it’s made out to be or will the explosion in the market lead to more competition and reduced prices faster than expected?
In 1998 in Canada, hemp was legalized for production and farmers greatly benefitted as the demand for their crops grew. However, by 2015, China had become a less expensive supplier and pushed Canada out of the market.
Mark Mees, CEO of Setek Therapeutics in New Zealand, cautions, “You get a few hippies and that’s great. One thing that’s missing is old-fashioned business sense. We will see a train wreck of small companies that completely underestimated the costs and the complexity of what they’re trying to do.”
Whether or not his predictions come true remains to be seen. Either way, Canada isn’t being slowed down by their experience in the hemp market. As they make way for the CBD market to continue to grow, they’re expecting to double their current acres’ worth of hemp.
We believe that the market is what you make of it and part of that is providing competitive rates and services by partnering with the right CBD merchant provider.