Cannabidiol, better known as CBD oil or medical marijuana, is a type of natural treatment that offers people with long-term conditions physical relief. For example, many people with neurological conditions use this treatment to control seizures or chronic pain. Unfortunately, despite the medical benefits, the sale of CBD oil is still considered controversial and selling this substance can be challenging. The majority of problems begin with the misinterpretation of laws and sharing incorrect information on CBD oil. This can make selling CBD oil very difficult and obtaining a merchant account to sell online even more problematic.
A person may question why using a merchant account for a CBD oil business is necessary. Surely a cash and check business would be as beneficial? While this might be true, using a traditional method without online payments can reduce the sales profit margins. Banks avoid working with CBD oil companies because of the risk, but this is not the only option available when opening merchant accounts. This article will act as a beginner’s guide on how to set up a merchant account for your CBD oil business.
What Exactly Is CBD Oil?
The majority of controversy surrounding CBD oil is caused by misinformation and misunderstanding regarding CBD. CBD or cannabidiol is one of the various cannabinoid elements found in a marijuana plant; however, unlike THC, it does not provide any mind-altering effects. This means that it offers medical benefits without the chance of hallucinating. THC is the element in the marijuana that offers a ‘high’ and presents the risk of addiction. What CBD oil does is offer a relief from anxiety, inflammation, pain, seizures, and other types of neurological disorders.
What Are The Laws Concerning CBD Oil?
While CBD oil is acknowledged for the medical advantages, traditional banks continue to deny businesses merchant accounts for CBD oil sales because of conflicting state, federal, and international legislation. According to the Agricultural Act of 2014, marijuana can be legally grown and processed on an industrial level; however, the law only allows states to use this legislation if the state agricultural department oversaw pilot programs. Moreover, the Agricultural Act did not specify who would be selling the products or derivatives of the marijuana making government officials question the intent of merchants.
While state laws are complicated, the federal legislation can be even more complex. As of 2016, marijuana has been deem an illegal drug in the United States placing it in the same class as dangerous and addictive drugs, such as heroin, methamphetamines, and cocaine. This means that all elements in marijuana, including its derivatives, are illegal based on federal law.
On the other hand, marijuana used for medical purposes is classified as a legal substance in 29 US states with recreational marijuana being legalized in California, Maine, Alaska, Massachusetts, Colorado, Oregon, Nevada, and Washington. All states permitting medical and recreational marijuana as legal substances also, by default, classify CBD oil as a legal substance. Attorney General Jeff Sessions rescinded the Cole Memo in January 2018 noted that state-sanctioned marijuana can be used for business purposes; however, despite this action, state law enforcement continue to divide between anti-marijuana and pro-marijuana legislation.
If an authority finds that the purchase or sale of CBD oil has a conflicting ingredient discrepancy, the authority has the right to not only confiscate the goods but also close the business. Evidence has shown that this action can leave banks or merchant account providers liable for refunds to consumers when the business is closed; therefore, it is important to understand the legal permissions when planning to sell and distribute CBD oil.
What Is A CBD Oil Merchant Account?
A merchant account can be compared to a bank account for companies that are selling and distributing products or services, in this case CBD oil. Along with the merchant account, there is a payment gateway that will allow the business to accept online payments from the consumer. The associated bank operates by capturing the consumer’s card details, charging the card for payment, and consequentially depositing the funds into the merchant account.
In the majority of industries, the merchant account is considered a formality; however, because of the stigma associated with CBD-related services gaining a merchant account for CBD oil providers can be difficult. CBD oil merchants are often considered to be high risk and, as such, many typical avenues for gaining a traditional merchant account are not available.
What Are The Different Steps To Acquiring A CBD Oil Merchant Account?
Regardless of the controversy surrounding the sale and distribution of CBD oil, it is possible to obtain an online merchant account. Below are three techniques available to increase one’s chances of obtaining a CBD oil merchant account.
It is common for merchant account providers to refuse investment unless they can be assured that there is an interest in the product or service. Maintaining a large volume or stable volume of transactions per month will show the merchant account providers that the investment is worthwhile.
By maintaining low chargeback ratios, you can demonstrate a solid business model with trained customer service staff and quality products to all merchant account providers. Most new businesses do not present processing history to potential merchant account providers and will need to show bank statements. The ideal financials should ideally portray a good processing history without any periods of low balances or overdraft rates.
It is important to find out if the state you reside in permits sale and distribution of CBD oil. If it does, it is essential that you obtain the necessary licenses and comply with any other required regulations. It is common for merchant account provider services to request a copy of the license when applying for a merchant account.
Final Words On The Matter
As can be seen, it is important to obtain a merchant account if you are interested in becoming a seller or distributor of CBD oil online. Using the information above, you can determine if this is an area you would like to explore and how to go about setting up a merchant account for a CBD oil business.