It’s no surprise that the medical marijuana industry has garnered a tremendous amount of interest as well as sales up until now. In 2018, a BDS analytics quoted in a report that $10.9 billion had been done in sales worldwide for cannabinoids. Projections going forward are quoted at an estimated $19.3 billion for 2019 and $24.4 billion for 2021. As you might imagine, those projections only increase in the following years. Yet despite all of this interest, why is CBD still considered high-risk by payment processors?
What is High Risk in the Payment Processing World?
High-risk merchant accounts are often defined due to the understandable fiscal risk involved with doing business in that industry. For example, the travel industry is notoriously high risk due to the often unpredictable reasons people have to cancel travel plans and associated expenses that are reserved.
Why is CBD Considered High Risk?
If you own a CBD shop or are trying to sell cannabinoids in general, you’d know that getting a merchant account for this type of business is still difficult despite the solidified legality of it. Marijuana is understandable, as out of the 50 states there only 11 states in which marijuana is fully legal, though 47 states allow for it medically.
While many voters believe that this will only increase, there is still significant pushback on whether legalization is acceptable. Whether that is due to decades of drug campaigns painting marijuana as harmful or due to unclear long-term effects of legalization is unclear, but what is clear is that this contentious fight for legality makes acquiring a merchant account for marijuana and marijuana-based products difficult.
CBD is in part high risk due to the fact that it is closely related to marijuana, which is a polarizing substance due to its legal history.
CBD is High Risk Due to Medical Uncertainty
Plenty of studies show that CBD is safe and sufficiently lacking in any psychoactive compounds that it can be sold in drugstores over the counter. However, much of the benefits attributed to CBD are not yet substantiated by the medical literature. While CBD itself is not new, up until now there hasn’t been enough interest to fund studies on its concrete benefits.
Many people claim CBD has helped with arthritis/joint pain, anxiety, and even chronic diseases. There is certainly a growing literature that is substantiating some of these claims—and it shows great promise, however, for every CBD company that is responsibly labeling and advertising their product, there are many vendors who are making ludicrous claims that CBD can cure everything from joint pain to serious illnesses.
Because of the wide range of claims about the usage of CBD, it is a high-risk industry. There is no telling where the industry will go despite its apparently tremendous growth, but the crux of this article is to say that CBD is currently high risk because of these reasons:
- Despite often having no THC, it is still associated with cannabis which is not fully legal throughout the United States.
- The wide range of claims about its applications leaves much to be desired when consumers feel like what they’re taking is not effective at all, leading to many instances of chargebacks or processing refunds.
- Banks are very conservative about embracing new industries, vaping—despite its nearly decade long success is still considered high risk due to bad publicity and the fact that it’s long term effects are not well studied. This is interesting when you consider that cigarettes do not fall under the same scrutiny despite their well-studied health risks.
CBD Payment Processor
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