Unless you’re living under a rock, you’ve seen it: CBD. It’s everywhere these days, and since its 2018 legalization, the product has practically exploded in popularity. These hemp products have been used by a startlingly high number of adults, many of whom believe that CBD has helped them address various issues they previously suffered from.
Unfortunately, many merchant account providers view CBD or any product that contains Delta 9 as a high-risk product. This classification can make accessing merchant account services — like processing credit cards — challenging to obtain. Thankfully, these services are still available to vendors.
Why Is CBD With Delta 9 High-Risk?
Much of the challenges behind Delta 9 ultimately tie back to the perception of Delta 9.
Let’s start at the beginning. CBD is short for cannabidiol. The product has been around for centuries and is believed to have many positive benefits. These benefits come from the impacts CBD with Delta 9 has on your endocannabinoid system.
However, until recently, CBD could not be purchased anywhere. That’s because it comes from the hemp plant, a cousin of the cannabis plant. Hemp and cannabis are closely tied together, and the FDA had CBD on its Schedule One list of drugs, prohibiting the substance from being sold publicly.
There is also Delta 9 THC. Delta 9 THC is a specific type of THC. THC is short for tetrahydrocannabinol, a particular type of cannabinoid that is responsible for intoxication in marijuana. There are many types of cannabinoids out there today, including Delta-8 THC, Delta-9 THC, and Delta-10 THC. Delta-8 and Delta-10 are both legal to sell right now, thanks to a specific legal interpretation of the 2018 Farm Bill. Delta-9 THC, however, is more limited.
In compliance with federal law, a product must contain no more than .3% Delta-9 THC to be sold in CBD. This legal limit is not optional or movable in any way. Keep in mind that this is a very low level of THC and well short of what is required to result in intoxication. A product may also contain certain levels of other minor cannabinoids, like CBD or CBN, and still be sold.
Using CBD that contains Delta-9 THC will not get you high, and the effects of Delta 8 CBD and THC are not comparable. Indeed, these hemp products are used by people for medicinal reasons, not for intoxication. In addition, reports from various organizations, including the World Health Organization, have found that CBD is nonintoxicating, non-habit forming, and well tolerated in humans, meaning they have relatively tolerable side effects.
Want to complicate the issue even further? CBD does not have to contain THC. However, Full Spectrum CBD has THC, while Broad Spectrum does not. Full Spectrum CBD allows users to feel what is known as the “entourage effect,” which is the idea that CBD works best when it contains all of its naturally occurring components, including THC. However, many users prefer Broad Spectrum products, citing concerns over positive drug test results.
Both products are commercially available. However, it doesn’t matter if you sell CBD with or without Delta 9: The product will be high risk. This means you will need to take advantage of high-risk merchant account services, including those offered by Bankcard.
Isn’t CBD With Delta 9 Legal?
It sure is!
No merchant account provider will work with knowingly illegal products. No matter the vendors’ high-risk products, they will not do business with any vendor selling illicit goods. To be clear, CBD is legal, even CBD that contains Delta 9.
As noted above, this is a relatively recent change: The 2018 Farm Bill formally removed CBD from the list of Schedule One drugs that the FDA maintains, allowing the product to be produced, transported, and consumed in the United States. As a result, the product is entirely legal. In many ways, it’s more legal than alcohol: There are no age restrictions on purchasing CBD, and the drug is not as widely regulated as alcoholic sales.
However, that is not to say that CBD can be used and marketed like any other product. According to government regulations, there are limits on how the product can be sold. For example, no merchant can market CBD as if it was a drug capable of having any medical benefit. These statements have yet to be evaluated by the FDA. As such, no business can try to sell CBD like a regular medical product, and companies that have claimed CBD’s ability to address medical issues have received warning letters from the FDA. This also explains why many CBD products contain disclaimers that warn against using the product for explicit medical reasons.
To be clear: CBD is not cannabis. It will not get users high, and it is a legal product that can be consumed, solid, and transported over state lines. Unfortunately, many merchant account providers still refuse to deal with delta-9 THC products, making it very difficult for individuals to get involved in this industry. Thankfully, this doesn’t mean that you will be unable to process this type of credit card. By finding the right merchant account provider, you can still sell total spectrum THC products. At Bankcard, we work with high-risk merchants in various industries. We understand the unique struggles that many of these merchants face, and we can help you get your products into the hands of your customers.
How Can CBD Be Used?
There is no shortage of ways that CBD products can be consumed. This includes:
- In food products, such as gummies.
- In skin-care products, like lotions, creams, or balms.
- In tinctures, which can be consumed sublingually, or capsules.
- In powder that can be eaten directly or dabbed.
To be clear, using these products in this manner is legal. However, in some ways, it adds to the reputational challenges the CBD industry faces. For example, vaping products are considered to be a high-risk industry in and of itself. However, there are also plenty of THC gummies on the market today.
These similarities add to the burden of vendors trying to sell vaping products and help drive home the idea that CBD vendors will need high-risk services. Many of these vendors treat CBD products like they are controlled substances. Unfortunately, this also helps to explain why some people confuse CBD with other cannabis products.
So…What Does This Mean for My Business?
If you want to sell CBD and access traditional merchant account services, you will have to look harder than you would for another type of product. Unfortunately, any merchant account service will tag a CBD vendor as high-risk if they do business with you.
This reality can be challenging for your business, as it will dramatically increase the cost of processing credit cards or transactions over the internet. Indeed, this can be the worst part of trying to sell CBD that contains Delta 9: The cost of doing business will increase dramatically, and this will happen in multiple ways. For starters, you’ll have to pay a higher percentage fee for every credit card transaction. High-risk credit card processing services can cost double their low-risk counterparts. You can also expect higher prices on each transaction run and higher fees for chargebacks that you get hit with. These fees all add up.
That’s not to say that you are locked in on these fees. You can work with a merchant account processor to see what alternatives there may be and if there are any steps you can take to get your business categorized as low-risk. A processor may be able to lay out a series of steps that you can take that can result in you landing in the lower-risk category. Unfortunately, this may not be the case. However, there still may be alternatives.
For example, Bankcard offers zero-cost credit card processing. This option puts the cost of the fee on the customer. To be clear, it may not be appropriate for your business model. However, it may be worth examining, and at Bankcard, we can help determine if this option works for you.
Remember that other costs are associated with high-risk accounts, particularly if you get a vendor with stringent requirements. For example, you may have to keep a higher amount of reserve in escrow at the merchant in question, as they may cite a need to offset the risk your business creates for their business model. You may also have to provide additional credit and bank statements and answer more questions before you are cleared to start processing cards. There is no question that this can create significant dilemmas for your business, particularly if you quickly need an account.
What Products Does My High-Risk Business Need?
If you run a high-risk business, you need specific products customized to your individualized needs. This is not a small matter: Your goal will be to keep chargebacks to a limit, reduce processing costs, and provide the array of payment services your customers deserve. Furthermore, you’ll need to make sure that you can purchase affordable services that are charged in a manner that is fair and reasonable. You can’t afford to pay for services that you don’t use.
Among the options of services you need are:
- Offshore Merchant Accounts: Some businesses need to accept money from banks or credit accounts outside the United States. As you can imagine, the fees for these counts can be relatively high — particularly for high-risk businesses. As such, you’ll need services that are affordable and customized to your needs.
- Internet payments: A payment gateway is used to take credit and debit cards over the internet. Thankfully, setting one up isn’t tricky, but you may need assistance getting the proper programming on your website to make these payments. Furthermore, you will undoubtedly need help enacting the right security measure on your website. After all, it can be easy for bad actors to charge a credit card over the internet wrongly. You must work with a merchant account processor to keep these charges down.
- Retail: Retail services are also essential for the vast majority of businesses, as you’ll need in-person POS devices that can process credit cards and maintain the information processed in a manner that is safe and secure. Furthermore, today’s technology enables most retail POS machines to integrate with your marketing efforts quickly. For example, when you run a credit card, you may be able to capture an Email address. As such, you’ll have to work with a vendor who has access to the Integration services you need and can ensure that your sales, financial, and marketing information are all speaking to each other and operating from the same page.
- eCheck processing: Remember, credit cards aren’t the only way people pay for goods over the internet. In many cases, eChecks are used to pay for goods. It is less common but still essential, as you want to make sure you use whatever you can to give your customers the ability to pay in a manner that works for them.
- Cryptocurrency: Cryptocurrency has become exceptionally popular over the past few years, but not just as an investment vehicle: More and more people are paying for goods directly with crypto. This means you need to have payment processing established to accept crypto as a form of payment. This is even more important when buying CBD: Many buyers are younger and more likely to use crypto.
If you need merchant account services for hemp products, CBD, THC, or more, you may be challenged to find a provider that is affordable, reliable, and capable of giving you all of the various services that you need. Thankfully, Bankcard is here. At Bankcard, we have decades of experience working with high-risk industries, helping to ensure that they have access to the financial tools that will allow them to succeed as a business. So, if you are looking for world-class services, contact Bankcard today, and learn more about how we can help your business thrive.