The Current State of the Market

• Selling CBD only became federally legal recently, thanks to the passing of the 2018 Farm Bill. It has to contain less than 0.3% THC and has to be sourced from industrial hemp. However, its association with marijuana (which is still illegal under federal law) creates problems with payment processors and getting approved for a merchant account can be difficult. The usual companies like Paypal, Stripe, and Square don't allow this transaction yet.
• Because of the perceived high risk of these transactions, CBD sellers have often had to rely on processors that charged high fees and added charges. Some examples of these are eMerchant Broker, DigiPay, and Authorize.net, which may take 6-8% or more per transaction.
• In October 2019, Square launched a payment-processing system specifically for CBD sellers. It serves as a liaison between merchants and credit card companies, basically assuring the latter of due diligence and allowing merchants to get access to better processors. It also lets merchants track sales through a single platform.
• However, all is not smooth sailing- in June of the same year, Stripe (which used to service the nonprofit U.S. Hemp Authority) dropped them as a client as they were considered a liability. The US Bank's processor, Elavon, also began shutting down hemp-related accounts in April of that year.

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