Demystifying CBD & Banking
5 min read
Hemp is no ordinary crop — or market. Certain aspects of the CBD industry are still a tricky landscape to navigate, despite the overwhelming progress that’s been made on many fronts. And although most of what we see is positive for CBD companies and those who CBD benefits, there’s still the occasional setback.
05/29/19 Update: We are now working with a new US-based merchant processor so that we can continue to bring you the best CBD products available!
05/16/19 Update: It appears that our merchant processor, Elavon, has extended the termination date for CBD accounts to June 1. This means that we can continue to sell online while we finalize alternative options. Although this is great news, there could still be a temporary period of time until June 1 where we are unable to process payments. As promised, we’ll continue to keep you informed and we appreciate your patience.
The most popular U.S. merchant processor is backing out of CBD.
Many CBD companies, including us, are facing a potential setback as we lose access to the merchant processor that makes selling our products online possible. Our team is dedicated to keeping our products available to our customers, and we’re working diligently to finalize details with an alternative merchant processor.
The best case scenario? This transition will be seamless, and our ability to sell online won’t be disrupted. It’s also possible that there may be a duration of time during the merchant processor transition where we are unable to sell online. While we’re doing everything we can to avoid any inconvenience to our customers, we won’t know with certainty until our current merchant processor’s termination date of May 15th.
Even though our industry has its hurdles, it’s always worth it to us for one reason: you. Our ability to sell online may be disrupted for a short time period, but your wellness regimen shouldn’t be. To apologize for the inconvenience and to ensure that you remain supplied with your favorite Onyx & Rose products, we’re offering 20% off through May 14th with code TAKE20.
Want to know more about CBD and banking? We’ll break it down for you below.
Didn’t the Farm Bill legalize hemp and CBD?
It did. With the passing of the 2018 Farm Bill, hemp’s legal status was changed from a Schedule I substance to an agricultural commodity. This marked the first change in hemp’s legal status in 75 years! For CBD companies, the landmark legislation marked an optimistic shift that alleviated previous hurdles. What did this change? For starters, the Farm Bill allowed hemp and hemp products to be sold across state lines, allowed farmers to buy crop insurance for the first time, and gave banks, payment processors and credit card companies the green light to service the hemp industry. That last part was a game changer for CBD companies, including us. Working with payment processors subsidized by US banks was a huge win, and it’s something we look forward to being an option again in the near future.
So what lead to payment processors changing their tune on CBD?
Ultimately, it was poor risk management by the banks who did not have proper processes in place to vet merchants closely enough. This lead to an excess of chargebacks that made business unfavorable for the bank. A handful of merchants also took advantage of these payment processors by using their services to sell products that exceeded the Federal government’s legal limit of 0.3% THC for hemp products. Once the payment processors caught wind of this, they understandably decided to walk away from working with CBD companies altogether.
The Safe Banking Act
With marijuana being legal in 33 states, it feels unreasonable at times that there are still so many challenges when it comes to hemp-derived CBD. The good news is that as more states legalize marijuana, those states have resulting businesses that need banks on their side. If there’s progress made at the federal level in making banks accessible to marijuana businesses, CBD companies would also get the same access. That’s where the SAFE Banking Act comes in. In March, the Secure and Fair Enforcement (SAFE) Banking Act passed the U.S. House Committee on Financial Services with bipartisan support. If fully passed, the bill will allow banks to legally work with marijuana companies — and in turn, CBD companies, too. As the bill heads to the House, it’s picking up undeniable support and momentum.
The attorneys general of 38 states and territories sent this letter to congressional leaders on May 8th, urging them to allow banks to work with marijuana businesses. To take it a step further, the treasurers of 17 states have also issued this letter expressing their support of the pending cannabis financial services bill. It’s clear that everyday Americans and their representatives are eager to urgently and fairly resolve this matter. It’s safe to say that we are too.
Make your voice heard and let your representatives know that the time for making CBD easily accessible to all Americans is here. We’re inspired by the prospect of change, the transformative and healing power of CBD, and the people whose lives CBD positively impacts. As always, we’ll be sure to keep you informed as we make progress and find solutions.