CBD has become an exceptionally popular compound for sale. Since its legalization in 2018, many vendors have taken to selling CBD, with many noting its purported ability to help people feel better and address a variety of ailments. However, CBD products remain highly controversial in some circles, and many major merchants do not allow the product to be sold on their eCommerce platforms.
At the moment, you cannot sell CBD on Etsy. Here’s more on why and what this means for your business.
What is CBD?
CBD is short for cannabidiol. It is a substance produced from the hemp plant and is essentially a cousin of marijuana. It has been around for centuries but was legalized for sale and consumption in the United States with the passage of the 2018 Farm Bill. Technically, the bill didn’t legalize CBD as much as it did remove it from the FDA’s list of controlled substances. As such, there are still many issues with the compound.
CBD is available in many forms. These forms include:
- Tinctures are CBD that has been diluted into some holding oil. Tinctures can then be mixed with food or drink or taken directly under the tongue.
- CBD Gummies are fruity, sugary snacks that can be used by any user and eaten just like a gummy snack.
- CBD Edibles can be eaten or drank like any other consumption-based product. CBD is routinely found in other snacks, like brownies and pretzels. Furthermore, there is a wide range of available resources for people to create their own CBD recipes. Many have used these to make their own CBD concoctions.
- Lotions, creams, or other skin care salves can be rubbed into the skin as part of an effort to address various skin or pain problems.
Since its legalization, the CBD business has been booming, raking in billions of dollars every year in a variety of brick-and-mortar stores as well as online merchants. Of course, to be able to do business, these online vendors must have access to a variety of merchant services. This includes merchant accounts, online processing, and more. Bankcard has all of these services at the disposal of many consumers and allows them to take advantage of various vendors.
The challenge? Many vendors will categorize CBD as a high-risk merchant account, owing to the remaining legal questions surrounding the product and the prohibition that many merchants – like Etsy – have placed on it. This classification may raise your processing fees and create more problems integrating CBD with your vendor. Fortunately, vendors like Bankcard offer high-quality products that allow you to access the merchant account services you need, but at prices, you can afford.
Why is CBD Controversial?
At its core, CBD is a cannabis-based product. This designation gives the compound a high degree of stigma. Furthermore, there are many questions about the long-term safety of the compound, questions that still have not been fully addressed by the United States Food and Drug Administration (FDA).
Furthermore, legally produced CBD can contain up to .3% THC, or tetrahydrocannabinol. THC is the specific cannabinoid in various cannabis products, including marijuana, that can get someone intoxicated. To be clear, legally produced CBD products should not have enough THC to result in any sort of “high.” Furthermore, applicable law allows CBD to be made with low levels of THC. However, the mere mention of THC can scare many traditional vendors, merchant account providers, and bankers. It can also frighten off merchants and force CBD sellers to identify other ways to sell hemp products like CBD.
Additionally, the FDA has explicitly banned businesses from making explicit medical claims about what CBD can do and how it can help certain medical conditions. While some studies have found that CBD may have a positive benefit for users — similar to the benefits of supplements — there has yet to be definitive evidence that CBD can genuinely make a positive physical or emotional impact on an individual. Indeed, there are some broad claims that CBD may cause liver damage, and it does have harmful interactions with certain drugs. These issues have created concerns with many online sales and online stores. Many vendors — like Amazon and Etsy — ban the sale of CBD on their platforms.
In instances like this, you will need to make sure that you are investigating merchant account providers that understand the legality of your product, even if they contain cannabinoids. Merchant account providers like Bankcard can work with you to help you identify affordable solutions for payment gateways and payment processors, even if your retail or online store has been tagged as a high-risk one. Payment processors who work with CBD businesses must understand these businesses’ unique challenges. Thankfully, that’s Bankcard.
How is CBD Sold?
Since its 2018 legalization, CBD can be sold anywhere, provided the local and state governments do not have prohibitions against its sale. As such, it is available for sale in most places in the United States. As such, you can buy CBD online, as there are no problems with shipping it across state lines, thanks to changes in federal law. Indeed, the eCommerce end of the CBD business is booming, but with that comes challenges: CBD businesses will need to do whatever they can to ensure the quality of their products. Doing so can allow them to stand out in the CBD market and build trust with customers. Furthermore, any CBD seller will have to work with a merchant account provider to reduce chargebacks and minimize returns on their product. A good vendor – like Bankcard – can work with the vendor to develop methods of reducing chargebacks and ensuring that processing fees are kept to a minimum.
CBD brands have tried to find various ways to sell their product. These methods include brick-and-mortar stores, online, and grocery or other retail stores exclusively. Since no set regulations surround the sale of the products right now, users have a wide range of ways to access and purchase CBD.
Why Can’t You Sell CBD on Etsy?
Unfortunately for many CBD users and vendors, Etsy’s community policy prohibits users from creating their own CBD stores.
There are many reasons why this is the case regarding Etsy. First and foremost: There are still legal questions around CBD. Some states have made it harder for users to get CBD, conduct their inspections of CBD or hemp-related products (even federally legal ones), or outright ban the substance. Furthermore, Etsy does sell to international customers, and not every country has legalized CBD. Indeed, some have explicitly cracked down on the substance and banned it outright. As such, Etsy could bear legal responsibility if it sold CBD over the mail.
It is also worth noting that there are quality concerns within the CBD industry. To be clear, many CBD vendors adhere to strict quality standards, use third-party Certificates of Analysis to confirm their product ingredients, and ensure honest labeling and transparency with their marketing.
However, that’s not always the case.
Multiple studies have found that CBD vendors often inaccurately label their products as being THC-free when that’s not the case. Since most states do not have a strict inspection regimen, it is far too easy for users to sell compounds that may be wrongly labeled or contain potentially harmful ingredients. Selling these products would violate Etsy’s explicit concern about ensuring that only high-quality products that are “consistent with their values” are sold on the platform.
Will this change as the CBD industry becomes more regulated? It is possible. Etsy does allow for the sale of many foods and drinks substances. However, it seems possible that this may never be the case and that CBD will always be in a category that is forbidden to be sold on the platform.
What Else Can’t You Sell on Etsy?
As you can likely imagine, Etsy’s policies expressly prohibit the sale of a variety of other products. This includes:
- Alcohol, Tobacco, Drugs, or medical products. This also includes drug paraphernalia and anything related specifically to the cannabis industry. This is the case despite the increasingly liberal laws surrounding cannabis. However, since cannabis remains illegal at the federal level, it cannot be sold in the mail. As such, Etsy would open itself up to considerable legal and financial exposure if it used its platform to facilitate such sales.
- Animal/Human remains
- Dangerous items, like weapons
- Hate items
- Anything illegal
- Internationally regulated items
- Any items that deal with violence
If you are looking to sell these items, you’ll have to find another platform for their sale.
What Alternatives To Etsy Can You Use To Sell CBD?
Users who want to use Etsy to sell their CBD products will have to find alternative methods of selling their CBD. Thankfully, these options exist in a variety of ways.
Brick and mortar store
CBD can be sold at a brick-and-mortar store. Indeed, many hemp, cannabis, and CBD stores have popped up since the legalization of CBD and hemp sales in the 2018 Farm Bill. Selling marijuana – even in states where it is legal – may be complicated, as accessing merchant services is a form of eCommerce that is not legal, given the current federal restrictions on marijuana. However, selling CBD and hemp is legal at the federal level. As such, there is no reason you cannot access merchant service. These include a variety of the products that Bankcard offers, such as:
- High-risk merchant accounts are specifically geared towards high-risk businesses that need to access merchant services.
- Retail merchant accounts are geared toward helping retail stores process their goods and ensure that they can do so at a rate that is affordable and accessible. These accounts are more than just actually processing payments: You will also need to find a processor that supplies you with the necessary equipment, gives you the right terminal reader, and integrates with your existing POS, accounting, and inventory system.
- ACH Payments for high-risk businesses.
- Depending on your specific CBD niche, you may also need to explore zero-cost credit card processing, which allows you to process credit cards at 0% per transaction. There are other costs associated with this processing method, so it may not be suitable for everyone, but it is certainly worth investigating to see if this method of transaction is right for you.
Sometimes, you may not even need to open your store to sell your products. For example, if you create CBD, you can always partner with an existing vendor to sell those products. However, depending on the specific circumstances of that vendor, it may result in a vendor becoming a “high-risk” one. You should be aware of these issues and ensure that the other store works through them with their merchant account processor.
Regarding credit card processing, websites have similar needs to brick-and-mortar stores, but not identical ones. There’s no need for physical equipment, but there is a need for further technical integration and a robust and secure transaction system. Like a retail store, your needs will include specific accounts for high-risk merchants and ACH payments. Additional requirements may include:
- A high-risk payment gateway allows for high-risk merchants to take payments over the internet and integrate those payments with a number of processors.
- Cryptocurrency gateways are attuned to current crypto values and can allow you to accept payment in crypto in a manner that is both safe and secure.
- eCheck processing, which allows you to process eChecks.
It doesn’t matter if you have a brick-and-mortar store on an online store: You need access to high-quality merchant services that are affordable, accessible, reliable, and won’t make you pay an arm and a leg for access to their merchant processing solutions. That’s Bankcard. We’ve worked with a slew of industries — even high-risk ones — to ensure they have access to all of the merchant solutions they need. Want more information? Contact Bankcard today, and let us help your CBD business succeed.