Square Launches Beta Program for CBD Retailers
May 24th, 2019
Cannabidiol, or CBD, has become increasingly ubiquitous in health food stores and online shops since the 2018 Farm Bill removed hemp from the Controlled Substances list. But, one of the most popular payment processors used by smaller merchants was unwilling to support CBD products — until now.
Square recently launched a pilot program to accept payments for select CBD products. Under the invite-only program, these merchants would be permitted to bypass the company’s rules and regulations that forbid marijuana and “related products” that are not legal on a federal level.
Many small merchants hope that the small pilot program expands into a larger new policy enabling any retailers selling CBD products to use the platform. In many cases, these retailers are forced to deal in cash or use lesser known payment platforms that may not integrate with their other sales.
Cannabis Banking Challenges
Square’s move to accept payments for CBD products comes as the wider cannabis industry struggles with how to handle payments from customers. While cannabis has been legalized in many states, the federal prohibition means that banks (subject to federal rules) have generally avoided the industry.
New cannabis banking laws aim to open up access to banks on a federal level, but many large banks are hesitant to jump on board. Cannabis payments require a lot of extra paperwork to process for banks, while any mistakes could result in substantial fines.
The key beneficiaries of these new laws are smaller state-chartered banks and credit unions that exclusively serve the cannabis industry. While there are a handful of these banks in some states, most cannabis businesses aren’t located in proximity to a bank and still deal exclusively in cash.
The large amount of cash transactions makes it difficult for regulators to track cannabis sales, as well as creates security risks for dispensaries and transportation companies responsible for transporting the cash.
Square’s move to accept CBD payments is a step in the right direction for the industry, according to many advocates, but federal-level legislation may be required in order to create any real and lasting change.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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