A first for high risk merchant accounts: Is CBD no longer considered high risk?

A first for high risk merchant accounts: Is CBD no longer considered high risk?

Being a provider of high risk merchant accounts, we think this may be a first: A high risk industry reclassified as low risk.

We’re talking about CBD, the healthy component of the cannabis plant with barely traceable levels of THC. It is proven effective treatment in pain management, PTSD and anxiety, epilepsy, Crohn’s disease and other ailments.

CBD merchant accounts can be difficult to obtain due to its association with cannabis. Until recently, very, very few acquiring banks were willing to offer high risk merchant accounts, fearing the risk of federal prosecution for offering financial services for a Schedule I drug.

That’s all about to change. Now, consumers can purchase CBD products over the counter, effectively making it a low risk industry.

Dispensaries now have competition

On our way to the Instabill home office in Portsmouth, N.H., on Dec. 23, we passed a well-known fueling station and convenience market just off I-95 in Newburyport, Mass. The sign screamed out:


The sign made us laugh. We were also impressed — this fueling station/convenience market merchant is surely paying attention to the latest news. We also read an item in Newburyport’s local newspaper about a new botanicals shop moving into the heart of the city’s business district that will be selling CBD products.

For cannabis dispensaries in the legal states, this is the new reality. Anyone can sell CBD. Any dispensary merchant will attest that CBD is a significant part of revenue. As a result of the Farm Bill, we’re going to see CBD sold over the counter at the local pharmacies, grocery stores, physicians offices and even fueling stations.

Why is it legal and why now?

On Dec. 20, President Donald Trump signed the Farm Bill into law — perhaps the greatest legislative act for legal cannabis proponents — that legalized the cultivation and sale of hemp, which contains CBD. The new bill has had quite a trickle-down effect: Though the U.S. Drug Enforcement Agency still recognizes CBD as a ‘regulated’ substance, hemp is no longer associated with cannabis, and effectively neither is CBD.

What does it mean for online CBD businesses?

Online merchants will always need high risk merchant accounts, simply because selling products via the internet always carries a higher degree of risk than a business with a storefront.

The credit/debit card is always present with a storefront, enabling the merchant to ascertain the cardholder. That is not the case with an online shopping transaction — the merchant needs to take extra measures to authenticate their customer. Thus, an acquiring bank will always consider online CBD merchants as high risk.

Investors will flock to CBD

Recently we read about a study done by The Brightfield Group which predicts the CBD industry to reach $22 billion in revenue by the year 2022. As of September, heavyweights such as GW Pharmaceuticals, Cronos Group and CV Sciences as well as ChineseInvestors.com are investing for the reasons we mentioned previously: CBD’s benefits for epilepsy (a significant problem in China) an other ailments.

High risk merchant accounts: More options with Instabill

The competition for CBD merchant accounts is about to escalate significantly, and this is where the value of partnerships comes in.

Instabill continues to grow its vast network of partnerships with acquiring banks domestically and worldwide each year. We’ve been in the e-commerce merchant services industry for nearly 20 years — thus, with a 10-minute conversation, our merchant account experts will identify the best banking solution for your business.

We’re always up for a conversation at 1-800-530-2444, Monday through Friday, from 8 a.m. until 6 p.m., U.S. eastern time.

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