CBD, or cannabidiol, is a newcomer to the realm of natural wellness products. It is a non-intoxicating chemical developed from specific cannabis plant kinds. Cannabis types, as you may know, also generate marijuana, the well-known recreational narcotic. While THC is the psychoactive ingredient in cannabis that provides an intoxicating high, CBD has considerably lower effects and is widely used to treat pain, anxiety, epilepsy, and other common disorders.
CBD products have become legal to cultivate and sell all over the world in recent years as their medicinal benefits have been discovered. The legality varies by nation, but many European countries have approved CBD that includes only a trace of THC, typically 0.3 percent or less.
CBD is gaining in popularity all around the world. CBD can be used to treat epilepsy, physiological discomfort, stress, insomnia, anxiety, and a variety of other conditions. Because demand for CBD products is growing by the day, the majority of businesses want to sell them.
The CBD Industry’s Obstacles
CBD firms are springing up left and right now that CBD is a newly legalised sector. These businesses, on the other hand, confront some difficulties that other startups do not.
- Negative public perception
CBD firms face a lot of criticism due to a lack of understanding about hemp, CBD, and how they differ from marijuana. CBD, its numerous health benefits, and its calming properties are all unknown to most people. People are confused about the differences between hemp, marijuana, THC, and CBD. This is why many CBD businesses are scolded and denied merchant account approval.
- Licensing is time-consuming and costly
For growers and distributors, the legalisation of CBD products has brought with it seemingly infinite rules and legal processes. This is because the CBD sector, regardless of the items sold, is deemed high-risk. Even though most countries and states have different legislation, people still associate CBD with marijuana and its psychoactive properties.
- Chargebacks are more likely to occur in this situation.
CBD’s benefits, as well as its numerous products, are actively being studied. Customers are frequently unsatisfied and submit chargebacks soon away. CBD businesses face a significant challenge in this regard.
- Transaction processing and merchant account issues
CBD companies must choose a high-risk payment method, which is often more expensive and subject to severe rules and regulations.
To receive licensure, they must pay application fees and other relevant fees and then wait an unspecified amount of time, which might be months, before receiving a licence. Furthermore, obtaining financing for a cannabis-related firm is quite tough. Payment processors avoid these businesses because of a lack of information on CBD production and consumption.
- Strong competition
Despite the numerous hurdles, CBD is a quickly growing sector, and many companies are embarking on their CBD adventure at the same time, particularly in areas where cannabis laws are less stringent.
Why do Payment Processors classify a business as high-risk?
All CBD-related business is considered high-risk by banks and payment processing businesses, owing to the substance’s legal status. Cannabis is divided into two types in order to control its growth: hemp and marijuana. The 2018 Farm Bill only authorised CBD derived from hemp, therefore CBD derived from marijuana remains illegal, despite the fact that they have the same chemical makeup. The sole difference between hemp and marijuana is that hemp has less than 0.3 percent of THC, marijuana’s psychotropic ingredient. Even though they serve very distinct purposes, the two might appear, feel, and smell identical. This makes regulating hemp cultivation and the selling of CBD all the more difficult, which is something that most banks don’t want to deal with.
There are numerous intricate laws and restrictions regarding the types of products that can be sold, in addition to the similarities between legal and illegal CBD. Epidiolex, a CBD-based epilepsy medication, was authorised by the FDA in 2018. As a result, it is an FDA-approved medicine that cannot be added to food or beverage items. Although CBD sweets and supplements are popular, they are illegal in the United States, and sales must be restricted to oils or topical therapies.
Despite the fact that Epidiolex is an FDA-approved CBD medicine, there are a plethora of other medical claims for the chemical that lack scientific backing. CBD is commonly used to treat pain, anxiety, sleeplessness, and is even safe for pets, but it is not guaranteed to heal any of these conditions, and it affects people differently. As a result, CBD products are at significant risk of chargebacks due to the product’s failure to produce the promised effect.
CBD Merchants in the Future
The CBD business is on the rise. CBD products are used by one out of every seven adults in the United States. CBD product sales are expected to reach $23.7 billion by 2023, according to experts. And it’s only the beginning: As people become more aware of the benefits of CBD, demand for CBD oil in beverages and food will rise. This rising awareness is expected to aid the industry’s progress. CBD shops require a dependable and secure payment processing system in order to expand their businesses.
The Advantages of Having a CBD Merchant Account
There are numerous advantages to establishing a CBD merchant account. These are some of them:
-Accept a variety of payment methods, including credit card payments, online and in-store.
-Returns, refunds, and partial refunds are all handled in this department.
-Accepting cash is less secure.
-Improved financial management
What factors are considered in a CBD Payment Gateway
Not all CBD payment gateways are created equal. You’ll require the help of high-risk payment specialists who can:
-Process credit card payments in a timely and secure manner.
-Returns, refunds, and partial refunds should be processed as soon as possible.
-Enhance the online/in-store client experience
Partnering with a reputable and secure payment gateway like PayStudio for your merchant account is the best option for high-risk CBD business owners.
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