These businesses need your help to navigate regulatory gray areas and banking and payment processing terms.
There’s increasing anecdotal evidence that cannabidiol (CBD) is beneficial to some people. WebMD lists claims of relief from chronic pain, inflammation, migraines, and anxiety. However, the site is quick to point out that research into these claims is ongoing and is not yet conclusive. Yet, CBD sales — and the demand for Sales Partners to sell merchant services — are on the rise in this market segment. ResearchAndMarkets.com predicts the global CBD market will grow at a phenomenal CAGR of 26.93% from 2021 to 2025 to reach $29.91 billion.
Entrepreneurs weigh the pros and cons of running a CBD business.
A sector growing at the rate of CBD is definitely going to capture entrepreneurs’ attention. However, there’s more to consider than just processing and selling products. Where CBD comes from and how it’s processed matters. The 2018 Farm Bill legalized the commercial production of hemp and its extracts. When CBD is extracted from hemp, it is comprised of 0.3% or less of THC, making it legal under federal law. On the other hand, CBD from cannabis has a higher concentration of THC, making it illegal under federal law. This makes it essential that CBD businesses test products to prove that they can sell them legally while certifying that they meet quality standards.
Additionally, the Food and Drug Administration (FDA) is still working on how to regulate CBD, so businesses need to be careful how they market their products and brands. The FDA prohibits claiming that CBD has health benefits, so companies need to be creative in communicating value and differentiating their products from competitors.
CBD companies need advice on payments.
Another facet of operating a CBD business is now to navigate the payments landscape — creating a substantial opportunity to sell merchant services and IT hardware and software applications that CBD businesses need. Because this market is so unique, solution providers will need to educate themselves about the processes businesses follow to produce or procure CBD products, test and track them, comply with regulations, and provide the best possible customer experiences.
You also need to understand the challenges CBD businesses face, one of the biggest being securing partners for banking and payments. Although CBD from hemp is federally legal, banks may view it as a gray area and potential regulatory risk. So, although these businesses don’t necessarily have to operate on a cash-only basis as most cannabis businesses do, they may find it difficult to establish a lasting relationship with a bank.
Furthermore, it’s theoretically possible for CBD businesses to accept digital payments, but terms from some processors may be prohibitive. CBD businesses are designated as “high-risk,” a category that typically requires them to pay higher payment processing fees, wait longer for their funds, and may result in a payment solution provider closing their merchant account with little notice. Because CBD businesses face uncertainty with their accounts and payment processing, they can use the assistance and advice of an experienced payment solutions provider.
How North American Bancard Partners can help.
As a North American Bancard Sales Partner, you can offer CBD businesses and other high-risk accounts a manageable way to accept credit card payments. We’ll help you work with your accounts to find the best possible rates and possibly even approve them for Next Day or Same Day Funding, depending on processing volume and average ticket.
Furthermore, you can offer your clients additional solutions and services, such as point of sale (POS) or mobile POS systems, free card terminals or readers, and labor management solutions that can help business owners with experience in CBD but not necessarily in running a business efficiently and profitably, operate successfully.
Expanding your portfolio now to provide solutions and services and sell merchant services to CBD businesses will meet increasing demand. Additionally, it will allow you to establish your place in a market poised for remarkable growth.
Contact North American Bancard today to learn how partnering with us to provide solutions to CBD businesses can help you grow your portfolio!
