Cannabidiol oil or CBD oil comes from low-THC strains of the cannabis plant. It has been proven to have great potential when it comes to treating certain ailments like seizures, chronic pain and anxiety. Currently Cannabis products are Schedule 1 drugs in the United states under federal law, but things have been changing as more states have recognized its medical value and have begun to legalize the production and sale – for medical reasons find out more at https://thesoutherninstitute.com/cbd-merchant-account/. Merchants who sell Cannabis oil and other Cannabis derivatives have often found it hard to open merchant accounts to process credit card payments. This is because the business itself is regarded as high-risk and most banks either do not offer merchant services to CBD merchants or they may charge for higher transaction rates. Besides higher than average rates, merchants may also experience occasional holding of funds or rolling reserves. Most growers and sellers end up being cash only businesses because they are marginalized by banks and cannot enjoy the convenience and safety that comes with being able to accept credit card payments.
The rise of the Cannabis/ CBD oil industry
Although issues around legality are murky the number of states where it is legal to sell CBD oil has risen and do has the number those that have legalized medical cannabis. The industry is expected to be worth $3billion by 2021. This has attracted a lot of entrepreneurs who realise the huge growth potential of the cannabis industry. However, because of the stigma attached to cannabis, trying to run this type of business like any other conventional business is hard. CBD oil merchants find that it is harder tho run an online store and expand customer reach because financial institutions regard the business as high risk. Major banks have purged CBD merchants in the past and are known to be particularly stringent.
What’s available out there?
There are some credit card processors who promise a 100 percent US-based merchant account for processing credit cards without being clear on whether that applied to all kinds of merchants, those that sell topical ointments and those that sell ingestibles as supplements.
There are US merchant account providers who offer US based accounts for high risk businesses. Some of these vendors offer services only for companies located where the selling and use of CBD is legal.
Cannabis merchants do have the option of going offshore. Offshore merchant accounts are high risk. They are often accounts where the provider is attempting to hide dubious money transactions by aggregating a bunch of accounts into one. These accounts tend to be expensive. And then there is the risk that it means your money is in a foreign country in an account run by a merchant account provider who could be shut down for various reasons at any moment which could cripple your business.
To avoid financial catastrophes you should have a transparent and reliable payment option whose methods are known and condoned by the financial institution you are working with. There are a couple of reputable processors that are gaining traction in the cannabis industry. However, while the legal issues remain unclarified, it might be a long way before traditional merchant providers accept CBD sellers with wide open arms.