The CBD industry has set many breakthroughs and set just as many precedents. There are also some setbacks.

The 2018 Farm Bill defines “hemp” as any part or derivative of the Cannabis sativa L. plant containing less than 0.3 percent tetrahydrocannabinol (“THC”) by weight. This definition includes hemp plants that produce the concentrated liquid extract known as cannabidiol (or CBD) oil. CBD oil has rapidly gained traction through recent years as a wellness product and is now legal in numerous states.

Why are CBD based businesses so risky? It is related to Cannabis, so there is a judgement and assumption that it is an illegal drug. Technically, Visa, MasterCard, Discover Card, American Express Card and other credit/debit cards being used to purchase medical Marijuana or Hemp CBD products is illegal, due to them being included on the Federal Governments Schedule I List. Some drugs on this list are Heroin, LSD, Marijuana (THC), Mescaline, GHB (acid), Ecstasy, Bath Salts, Magic Mushrooms, and CBD.

The Hemp industry business has a reputational and legal risk for banks and lenders because of FDA regulations in the US and other laws overseas. These regulations and stipulations make it harder to find a merchant that will take on your business. Some merchants will charge higher fees and interests for their services.

Payment processors are companies that securely process transactions online, such as Square, Paypal, and Stripe, to name a few. Some of these are CBD friendly, some aren’t. This means that should your transaction from a CBD sale get flagged, the participating institution can cancel the card related to the account. Since CBD is considered a high risk product in the banking industry, this means US banks will not allow processing for the products.

There are other methods of payment that aren’t as popular, yet still effective. This is called e-check. An e-check payment method is secure, and potentially avoids any legal issues related to using a credit or debit card.

E-checks, or electronic checks, are an easy way to accept payments online.

All the customer needs is a bank account and routing number, which is less information than they’d need to place a credit card order. Customers with a checking account can pay using an E-check. Transactions clear in as little as a day. The money is electronically withdrawn from the customers checking account, transferred over the ACH network, and deposited into the business’s checking account.

Electronic check processing is similar to paper check processing, only faster. Instead of a customer manually filling out a paper check and sending it to the business they need to pay, today’s technology allows the process to happen electronically, saving time.The E-check clearing process varies slightly between providers. Usually, funds are verified within 24 to 48 hours of the transaction being initiated. As long as the payer has the funds available in their checking/bank account, the transaction is cleared within 3 to 5 business day. The funds are moved from the payer’s account to the payee’s account.

The taboo relationship between CBD businesses and the banking and financial institutions now have safe solutions to pay for your products. E-checks may be unpopular, but they are gaining recognition for being secure and quick.

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