The CBD business is a fast-growing industry with lots of players bringing in billions in revenue yearly. According to data from Rolling Stone, the CBD industry is projected to be worth as much as $22 billion by 2022. Still, CBD product remains legally banned on a federal level and there are major restrictions still tied to the production, sales, and usage of hemp and cannabinoids products.
Asides from its recreational usage, one major factor that has accounted for the widespread popularity of cannabis and its derivatives is its proven health benefits. CBD and THC are the two main chemical products of Cannabis. While THC is responsible for the “high” feeling associated with cannabis use, CBD has shown several medicinal benefits and it is used in the treatment of various conditions such as chronic pain, eating disorder, cancer treatment, anxiety relief, and so on.
Most states have now legalized CBD usage and CBD products in form of tinctures, pills, oil, edibles, vape juice, candies, and other forms are now available everywhere. The growth of the industry means more and more CBD-based businesses are springing up.
But The legal restrictions and controversy surrounding the sales and usage of cannabis have several consequences on the business. If you are considering selling CBD products online or receiving credit card payment offline, for instance, one of the major problems you would encounter is finding a credit card processor for your business. The reason for this is simple, while CBD businesses are largely legal in most places, CBD businesses are still classified as high-risk.
What does it mean to be classified as a high-risk business?
In the world of payment processing, businesses classified as high risk will find it difficult to find a payment processor to take on their payment processing. Some popular credit card processors such as Stripe and Paypal don’t do business with high-risk companies. The payment processors that do take on these companies set a limit to the number of transactions they can take on per month. High-risk businesses are also charged higher fees for credit card processing
CBD businesses are not the only ones affected by this. Other high-risk businesses include game and gambling companies, adult entertainment companies, escort services, E-cigarettes, Forex trading. Companies in this category as so-classified because of the legalities and restrictions around the product or services they offer, due to a higher risk of charge-backs, or because they sell products or services that result in high dollar transactions.
Unfortunately, until the laws are revised to favor responsible CBD businesses, CBD companies will remain classified as high risk for lenders, banks, and payment processors.
What can you do if you run a CBD business and would like to receive card payments?
Even though CBD businesses are classified as high risk, this does not mean it will be impossible for you to register a merchant account and receive credit card payment online and offline. Sure, it will not be easy to find a payment processor that will be willing to work with you. Many regular payment processors will deny you their services outrightly. But you can find a high-risk payment processor to take you on.
High-risk payment processors specialize specifically in handling payment processing for high-risk businesses. There are many of them that will be willing to signup your business as a partner and offer transparent pricing and billing policies that will not affect the bottom line of your business.
Some of these processors also offer short term contracts that will not bind you to them for too long and you’ll get great customer support and excellent services. If you are a business owner in the cannabis industry, you should look for payment processors that specialize in high-risk payment processing like this with terms and policies that are favorable to your business.