Why is CBD still considered a “High Risk” product?

What is CBD?

Cannabidiol (CBD) is a naturally occurring compound found in the flower of cannabis, a plant with a history as a medicine going back thousands of years. Today the therapeutic properties of CBD are being tested and confirmed by scientists and doctors around the world. A safe, non-addictive substance, CBD is one of more than a hundred “phytocannabinoids,” which are unique to cannabis and endow the plant with its robust therapeutic profile.

CBD is closely related to another important medicinally active phytocannabinoid: tetrahydrocannabinol (THC), the compound that causes the high that cannabis is famous for. Both CBD and THC have significant therapeutic attributes. But unlike THC, CBD does not make a person feel “stoned” or intoxicated. That’s because CBD and THC act in different ways on different receptors in the brain and body.

History of CBD Processing

Since the passing of the 2018 Farm Bill, which was signed into effect by President Donald Trump in December 2018 and removed hemp from the definition of marijuana under the Controlled Substances Act (CSA), an increasing number of ecommerce business owners are searching for payment gateways that allow CBD merchant processing.

An influx of online businesses are introducing CBD into their ecommerce stores. As an industry poised to harvest $16 billion in revenue by 2025, is it any wonder why?

In an effort to meet consumer demand for CBD products, such as oils, capsules, supplements and topical solutions, the non-psychoactive cannabinoid is being stocked inside an ever-growing number of brick-and-mortar shops and online ecommerce stores.

With the CBD therapeutics segment alone on-track to earn $9.30 billion in 2026, there’s a lot of money to be made in this industry. However, getting involved in such a high-risk sector means that you’ll need to make yourself aware of what is required to conduct CBD business transactions legally.

CBD requires High-risk Processing

Although legal in most forms throughout much of the U.S., CBD is a high-risk industry. The FDA is still straightening out the regulatory framework for this industry, with the majority of regulations still unclear. However, you cannot ignore the fact that CBD’s strict regulation puts all products containing the cannabinoid in a high-risk category. As a result, many payment processors will be reluctant to work with CBD companies.

Underground manufacturers, shady companies and predatory business people have essentially ruined it for the rest of us. If all suppliers and resellers ran their business “above board,” regulations would loosen more and make payment processing in the CBD industry much easier and substantially less expensive. Unfortunately, where there is lots of profit to be made quickly, there’s also lots of shady people looking to exploit the situation.

When looking for a High-Risk processor, make sure your processor can handle/ support these types of industries. Examples of other High-Risk industries are as follows:

  • Adult products & services
  • Online gaming
  • Online dating
  • Cryptocurrency trading
  • Pharmaceuticals
  • Debt Collection
  • Telemarketing
  • Travel agencies and booking
  • Vape & e-cigarette products

Do your own research before picking a provider

In conclusion, take the time to ask a CBD payment processor about any additional and/or customizable services that they can offer. Since every company’s approach is unique, it is crucial that you can depend on a CBD credit card processing platform for all of your payment needs.

Regardless of your business goals, choosing a CBD payment processor is not a decision to be taken lightly. Dealing with regulatory requirements, fraud protection and data security, handling chargeback management and guiding you in the right direction are just a few essential services to be on the lookout for.

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