Navigating the nuances of CBD payment processing

What is CBD?

Both cannabis and hemp plants produce compounds known as cannabinoids. One of the most famous of these is tetrahydrocannabinol, the substance well-known in marijuana to produce a psychoactive effect.

By contrast, CBD oil from the hemp plant is not an intoxicant. Instead, this legal substance offers users numerous therapeutic benefits that are just now becoming clear to scientists and medical practitioners.

Once the cannabinoid oil is extracted from the hemp plant, it can be formulated into a wide variety of products. These include edibles, topical gels, and sublingual tinctures.

It should, however, be noted that there is a major difference between CBD oil derived from hemp and products that come from the cannabis or marijuana plant (THC). Because industrial hemp contains less than 0.3% THC, it is legal for cultivation, harvesting, and use in the U.S. On the other hand, cannabis remains illegal under federal law since it contains more than 0.3% THC.

Starting a CBD business: It involves more than you might think.

Selling CBD products online has the potential to be very lucrative. However, success doesn’t come without a great deal of hard work.

In many respects, launching your new CBD business is no different from starting any other enterprise: You need a plan, stellar products, knowledge of your customers, a financial base, a topnotch staff, and the physical and technological foundations that will be the underpinnings of your endeavor.

However, this general preparation is just the beginning if you plan to sell CBD. That’s because this burgeoning hemp CBD industry, while legal, continues to require that you jump through many additional regulatory, legal, and CBD payment processor hoops. Although the government has not yet come up with a full set of laws concerning the CBD industry, it remains both highly scrutinized and misunderstood.

Because CBD products have not been clinically tested to the full extent, it is important to be careful in your marketing campaigns. For instance, you must refrain from making claims about the results your tinctures or ointments can bring about.

By the same token, you cannot yet buy paid advertising on platforms such as Amazon or Facebook. Instead, your advertising will need to come in large part directly from the positive testimonials of your customers through organic content.

Additional challenges to be overcome for CBD businesses.

Other obstacles may present themselves as you get your CBD company under way. They include the following.

• Bank reluctance. Because CBD products have only been legal since the passage of the Farm Act in 2018, it probably comes as no surprise that traditionally conservative financial institutions might be wary of jumping on board right away. Because of banks’ fear of extensive oversight or legal troubles, CBD merchants often find it hard to open accounts. At other times, an institution might close a CBD merchant account for little or no reason, leaving their sales stream interrupted.
• Gaining access to capital. It goes without saying that you will need an infusion of cash to start and maintain your CBD business, at least until it is self-sustainable. Finding this money can be more difficult for you because of investor wariness and lack of education about the legality of the products you plan to sell. As a result, you may find that you need to seek funds from alternative lenders and passionate investors that you find through your own hard work.
• Costly insurance. This is despite the products’ legality.
• Expensive payment processing. As with any ecommerce operation, you need to find a company that will provide you and your customers with secure payments. After all, protecting the cardholder data of your buyers is essential if you are to build trust and flourish. Because of the “edgy” nature of the CBD business as it currently stands, you will automatically be placed in the category of high-risk business by your payment processor. This means that you will have no choice but to pay slightly higher fees.

Although these issues may appear daunting, it is also important to recognize that thousands of motivated entrepreneurs are capitalizing on the popularity of the wide array of CBD products currently on the market.

Moreover, all indications point to continued interest in expanding the scope of what these hemp plant extracts can do for consumers.

How to spread the word about your CBD products.

As we said above, marketing this innovative merchandise in the traditional ways can often prove difficult. Even so, social media pages are brimming with content singing the praises of hemp-based ointments, tinctures, and edibles. The following are the most important strategies being used today.

• Extoll the virtues of your brand. You must share with your customers what sets your CBD wares apart from the rest. Use informational videos and industry surveys, and don’t be afraid to specialize in a particular type of CBD product.
• Reward loyal customers. It takes a lot more work to attract a new customer than it does to cultivate and retain an existing one. Foster a positive relationship with your ongoing buyers by generating content-rich newsletters and sending targeted promotions. When someone refers one of their friends, reward them with a free product or some other sort of discount.
• Stay on the good side of regulators by avoiding health or medical claims about CBD. When you do make a claim, be sure that it is substantiated by reliable sources. Finally, you should never sell cannabinoids as dietary supplements or add them to FDA-approved ingredients for resale.

If you are thinking of entering the world of CBD online sales, be ready for a wild and potentially profitable ride. Your success will depend not only on your ability to set up a standard business but also on your due diligence in following the ever-changing regulations governing the industry.

With motivation, high-caliber products, and a dynamic customer base, you may have everything you need to thrive in this exciting arena!