2019 is a big year for the industrial hemp industry, but with substantial growth comes natural growing pains. Even with the Hemp Farm Bill of 2018 legalizing industrial hemp on a federal level, the industry is still facing significant hurdles as the market continues to boom.
Not only are industrial hemp and hemp-derived CBD companies eagerly awaiting regulations from the FDA, but many industrial hemp companies are now struggling to obtain CBD credit card processing. While the federal hemp reform was aimed to clear up the gray area regarding the legality of the hemp/CBD industry, many ancillary credit card services are refraining from working with CBD companies until further regulations are enacted.
CBD Credit Card Processing Before the Hemp Farm Bill of 2018
The 2018 Hemp Farm Bill was the first step in diminishing the federal gray area between industrial hemp and cannabis. Not only did the bill allow for United States agriculture to begin mass producing hemp, but it removed hemp from the Controlled Substances Act as long as it contains less than or equal to 0.3 percent THC. While a bill of this caliber was vital for the growth of the industry, the CBD marketplace was established well before the federal government took action.
Even well before the signage of the 2018 Hemp Farm Bill CBD companies and distributors were able to obtain minimal high-risk credit card processing. The ancillary credit card merchants willing to work within the CBD marketplace not only charged outrageous fees but were inconsistent and relatively unreliable. Regardless, there were CBD credit card processing services available even before the 2018 Hemp Farm Bill. Fast-forward to today, many of these available CBD credit merchants are pulling their services from the marketplace.
The Hurdles CBD Merchants Are Facing Today
Oddly enough, after the signage of the Hemp Farm Bill, many CBD companies are struggling now more than ever to find a reasonable and efficient CBD credit card processor. While the reason for this problem is relatively unknown, it is safe to say these ancillary services are merely awaiting further regulation. Elavon, one of the leading credit card processors in the CBD world, has recently pulled their CBD credit card services from the market.
Elavon Backs Out
Representatives at Elavon have yet to release the reasons behind this decision, besides a brief statement regarding the need for further regulations to make services available. Many are also theorizing the company may just be avoiding the potential public relation or investor risks of working within the CBD industry. Nevertheless, this decision is causing major headaches in the marketplace as multiple CBD merchants are now unable to take credit cards for their products.
How is it Affecting the Industry?
Aside from harming the e-commerce CBD marketplace, even brick and mortar locations are finding it challenging to obtain a reliable CBD credit card processor. For this reason, many of these businesses are being forced only to accept cash, check, or money orders for the CBD products. Not only does this turn away business, but it creates multiple problems within the industry.
- A majority of e-commerce CBD shops are facing a drastic decrease in the number of orders due to the inability to accept credit cards.
- Head shops, convenience stores, boutique shops, or any location selling CBD products are losing their credit card processing solely for selling CBD, which completely halts the rest of their business.
- The CBD marketplace is continuing down the path of being a primarily cash-based industry, which causes problems for employee safety, internal and external theft, and regulatory tracking.
- The costs of obtaining high-risk credit card processing is a detriment to the industry and does nothing but increase the price point of CBD products to the consumer.
Are There CBD Credit Card Processing Services Available Today?
There are still a variety of high-risk credit card processing services available to CBD companies, but the fees are insanely high. Not to mention, it can be rather difficult to find a trustworthy processor to handle sensitive credit card information. Failure to do the due diligence in finding a reliable processor leaves the CBD companies and consumers at risk. While Elavon is not the only primary credit card processor to work in CBD, they were one of the few reliable and trustworthy processors. With Elavon now out of the CBD game, the available CBD credit card processors are high-risk merchants.
Two Steps Forward, One Step Back
Aside from the available high-risk CBD processors, a few major players are beginning to develop reasonable and professional CBD services. In particular, the renowned credit card processor, known as Square, recently released a beta program to provide CBD companies with accurate processing. Granted, the beta program was only available by invitation only. Square is yet to open the program to the rest of the market but will hopefully have something available soon.
What Action is Being Taken Through Legislation?
This problem is not going overlooked; both state and federal representatives are quickly looking into this problem and attempting to find immediate solutions. One, in particular, is to continue pushing the Safe Banking Act of 2019 through legislation. The Safe Banking Act would not only establish banking regulations for the state legal cannabis industries, but it could also provide solutions for the industrial hemp market. In a gist, the bill would provide ease of mind to the banking sector to begin working with cannabis and industrial hemp companies.
Who Supports It?
State and federal representatives are not the only ones pushing for banking regulations to help the industrial industry. Bankers associations from every state have sent multiple letters calling for action to fix banking within cannabis and industrial hemp. Even the National Association of State Treasury approved a resolution supporting a legislative fix to the banking problems hitting the industry. Currently, the only significant piece of legislation is the Safe Banking Act of 2019, and it is yet to hit the House floor. Nevertheless, the bill is rumored to reach a house vote within the next couple of weeks.
Fixing the banking problem within the CBD and cannabis industry is one of the more pressing hurdles for 2019. The trickle-down effect of the lack of banking solutions puts significant pressure on the industry and harms both the consumer and businesses. It is essential for the hemp marketplace to have reliable CBD merchant services in order to continue the growth of this industry.
Even if our federal government is unprepared to pass the Safe Banking Act through legislation, there must be another solution for the industrial hemp industry. Hemp is federally legal and should be treated as such. Regulations for both CBD credit card processing and manufacturing standards are vital to the success of the industry. Without the ability to efficiently establish these regulations, many consumers and CBD businesses will continue to face these hurdles.
For the best deals on CBD and THC products, head to the Leafbuyer deals page!