When it comes to selling CBD oils, it is certainly not the same as selling marijuana. However, that does not mean that one would face not face any difficulties with finding a credit card processor. Furthermore, CBD products which make unsubstantiated health claims have even fewer options for credit card processing. This guide looks at the problems in CBD payment processing and how CBD oil traders can find a solution.
What Makes CBD Different from Marijuana?
CBD or Cannabidiol does not make the user high. It is an important difference. CBD is not used as a recreational drug, but rather to relieve medical ailments. However, most companies do not distinguish between marijuana and CBD when it comes to credit card processing. Besides, there is nothing which one can do to change their minds. For instance, if a processing company does not support the CBD sales, it is better to look for other options.
The fact is that CBD runs into many of the same restrictions which apply with marijuana credit card processing. This is why it is important to be aware of the limitations.
Is CBD Legal?
At the heart of it all is the Controlled Substances Act (CSA). It is the statute which has established the U.S. drug policies. Possessing, distributing, importuning or manufacturing certain substances are regulated under the CSA. The Drug Enforcement Agency (DEA) and the Food and Drug Administration (FDA) are in charge of the substances that are added or removed, keeping in view of the various schedules in the CSA.
CBD vs. Marijuana (According to the DEA)
CBD is the same thing as marijuana. It might not even fall under the CSA. The DEA has clearly indicated in certain schedules that CBD does not fall under the Controlled Substances Act. It is further stated in the DEA that mere presence of cannabinoids is not within the scope of the DSA. The only question is whether the substance actually falls within the definition of marijuana as stated by the CSA.
This suggests that mere presence of CBD (cannabinoids) by itself does not determine whether the product would fall under the CSA. The determination would be made on the basis of the product falling under the marijuana definition as claimed under the CSA. If anyone is unsure about where the product falls, an attorney or expert needs to be consulted for the drug classification.
Problems for CBD Sellers
One of the problems faced by CBD sellers is that which involves unsubstantiated health claims. The product would fall under the category of “pseudo-pharmaceuticals”, if the product makes a health claim which is not verified by the FDA. It refers to an unapproved prescription drug which still claims to have the benefits of a prescription drug. This is why it is harder to get a CBD merchant account when the product makes a health claim.
So What Are “Unsubstantiated” Health Claims?
When we look at the purposes of credit card processing, unsubstantiated health claims are basically claims which the FDA have not evaluated. A health claim is any suggestion that the product would positively impact health. The claim could even be as general as suggesting that the product decreases anxiety.
Some of the CBD companies suggest that the products would help with ailments that range from inflammation to difficulty with sleeping. However, the Washington Post has cautioned that at this time, the scientific backing for the effectiveness of CBD is limited. It does suggest that CBD might help with seizures if one looks at the preliminary evidence.
Is It Possible to Get a Regular Merchant Account, if the Product Does Not Make Any Health Claims?
Unfortunately, the answer would be probably a “no”. The truth is that credit card processors consider CBD products to be high risk by nature. It is due to the uncertainty of changing regulations and legalities. Hence, it makes it more difficult for the processors to ensure whether the business complies with the federal and state regulations.
Do keep in mind that most of the quick sign-up services, such as PayPal, Stripe and Square prohibit CBD. It is possible for the account to initially go through, but to be later shut down when the processing company finds out that you are selling CBD while conducting internal reviews. Therefore, it is better to save yourself from the trouble and not sign-up for any of the merchant service providers which explicitly prohibit CBD sales.
In certain cases, it is possible for one to obtain a high risk merchant account. But, it would be entirely at the discretion of the processor, whether or not to actually accept the business. It is possible for offshore merchant service providers to offer a CBD merchant account. However, it would be more expensive as compared to a domestic option.
Although, some CBD sellers in the past have managed to sign-up for payment processing with Shopify, the company had confirmed that the products which contain CBD would not be sold through Shopify Payments. It does suggest that one find a third-party gateway instead.
Shopify might shut down the merchant accounts actively for businesses which sell product that contain CBD. It is still possible to use Shopify for hosting an ecommerce store. The only thing is that Shopify Payments cannot be used to accept credit cards.
Elavon Stops Accepts CBD
The backend processor Elavon announced back in early 2019 that it would no longer support merchant accounts that are used by businesses selling CBD. It is a pioneer, when it comes to CBD merchant accounts, and most of the businesses had been caught off-guard by the sudden news.
This means that processing companies which operate on the platform would no longer be able to continue processing payments for the CBD businesses. Therefore, CBD businesses would need to secure an alternate solution. The good news is that there are still some processing companies out there which offer CBD sellers with merchant accounts.
Finding a Processor
Start with high risk companies when searching for a credit card processor for the CBD products. Comparison services can be used to see the pricing from the different high risk processors.