How to Find a CBD Merchant Account
When it comes to selling CBD oils not the same rules apply as selling marijuana. However, that does not mean that one will not face difficulties with finding a credit card processor. Furthermore, CBD products which make unsubstantiated health claims have even fewer options for credit card processing. This guide looks at the problems in CBD payment processing and how CBD retailers can find a CBD merchant account.
What Makes CBD Different from Marijuana?
CBD or Cannabidiol does not make the user high. This is an important difference. CBD is not used as a recreational drug, but rather to relieve medical ailments. However, most major credit card companies do not distinguish between marijuana and CBD when it comes to credit card processing. This is why it is important to be aware of the limitations.
Is CBD Legal?
At the heart of it all is the Controlled Substances Act (CSA). It is the statute which has established U.S. drug policies. Possessing, distributing, importuning or manufacturing certain substances are regulated under the CSA. The Drug Enforcement Agency (DEA) and the Food and Drug Administration (FDA) are in charge of the substances that are added or removed, keeping in view of the various schedules in the CSA. Currently purchasing CBD is federally legal as long as it doesn’t contain more than 0.3 percent THC, but some state laws have put restrictions on buyers.
CBD vs. Marijuana (According to the DEA)
CBD is the same thing as marijuana. It might not even fall under the CSA. The DEA has clearly indicated in certain schedules that CBD does not fall under the Controlled Substances Act. It is further stated by the DEA that mere presence of cannabinoids is not within the scope of the DSA. The only question is whether the substance actually falls within the definition of marijuana as stated by the CSA.
This suggests that the mere presence of CBD (cannabinoids) by itself does not determine whether the product would fall under the CSA. The determination would be made on the basis of the product falling under the marijuana definition as claimed under the CSA. If anyone is unsure about where the product falls, an attorney or expert needs to be consulted for the drug classification.
Problems for CBD Sellers
One of the biggest problems faced by CBD sellers is that which involves unsubstantiated health claims. These products would fall under the category of “pseudo-pharmaceuticals”, if the product makes a health claim which is not verified by the FDA. It refers to an unapproved prescription drug which still claims to have the benefits of a prescription drug. This is why it is harder to get a CBD merchant account when your CBD product makes an unsubstantiated health claim.
So What Are “Unsubstantiated” Health Claims?
When we look at the purposes of credit card processing, unsubstantiated health claims are basically claims which the FDA have not evaluated. A health claim is any suggestion that the product would positively impact health. The claim could even be as general as suggesting that the product decreases anxiety.
Some CBD companies suggest that their products can help with ailments that range from inflammation to difficulty with sleeping. However, the Washington Post has cautioned that at this time, the scientific backing for the effectiveness of CBD is limited. It does suggest that CBD might help with seizures if one looks at the preliminary evidence.
Is It Possible to Get a Regular Merchant Account if Your CBD Product Does Not Make Any Health Claims?
Unfortunately, the answer would be probably a “no”. The truth is that credit card processors consider CBD products to be high risk by nature. It is due to the uncertainty of changing regulations and legalities. Hence, it makes it more difficult for the processors to ensure whether the business complies with federal and state regulations.
Do keep in mind that most of the quick sign-up services, such as PayPal, Stripe and Square prohibit CBD. It is possible for the account to initially go through, but to be later shut down when the processing company finds out that you are selling CBD while conducting internal reviews. Therefore, it is better to save yourself from the trouble and not sign-up for any of the merchant service providers which explicitly prohibit CBD sales.
In certain cases, it is possible for one to obtain a high risk CBD merchant account. But, it would be entirely at the discretion of the processor whether or not to actually accept the business. It is possible for offshore merchant service providers to offer a CBD merchant account. However, it would be more expensive as compared to a domestic option.
Shopify Cracks Down on CBD Shops
Although some CBD sellers in the past have managed to sign-up for with Shopify and successfully utilize their payment processors, the company has recently confirmed that products which contain CBD would not be sold through Shopify Payments, suggesting that CBD vendors find a third-party gateway instead.
Shopify might also shut down the merchant accounts for businesses which sell product that contain CBD. Therefore while it is still possible to use Shopify for hosting an ecommerce CBD store, it cannot be used to accept credit cards.
Elavon Stops Accepting CBD
The backend processor Elavon announced back in early 2019 that it would no longer support merchant accounts that are used by businesses selling CBD. Elavon was a pioneer when it came to CBD merchant accounts, and most of the businesses had been caught off-guard by the sudden news.
This means that processing companies which operate on the platform would no longer be able to continue processing payments for their CBD businesses. Therefore, CBD businesses would need to secure an alternate solution. The good news is that there are still many processing companies out there which offer CBD sellers with merchant accounts. Take your time to see which one is best suited your business needs.
