Hemp CBD products continue to be high risk for many reasons, but more precisely, there are three main factors: reputational risk, legislation, and risk of chargebacks.

Now, while legislation has become more supportive with respect to any by-products of hemp or cannabis, for most processors, this industry is unfortunately still an idea that is frowned upon. This primarily comes from an association of the CBD compound with the physical cannabis plant and how it can be comprised of THC. And while the CBD hemp products we back do not have any psychoactive properties, they sadly get put into illegitimate categorizing with THC products.. The misinterpretations continue and merchants with legitimate businesses selling legal and regulated CBD products are penalized for it to this day.

There’s a second reason CBD merchant accounts are classified as high risk and that is because of the sometimes uncertain nature of the merchandise The alleged advantages of CBD oils can’t be fully substantiated aside from personal testimonials of use and thus can sometimes have a higher rate of customer chargebacks when their assumptions aren’t met. Nonetheless, the chargebacks can be alleviated by providing clear and concise definitions of products together with other approaches to prevent this type of interaction.

Last and not least, cannabidiol products such as oils, skincare products, and tinctures can be labeled as high risk due to the rapid explosion of these products into the market. There used to be a time that all cannabis products (containing minimal amounts of THC or not) were presumed federally illegal and therefore merchant accounts just simply could not be procured. Two years ago, the Farm Bill of 2018 allowed for cannabidiol products to shake the ‘Substance 1’ stamp (substances that are containing over the accepted and regulated level of THC). Despite the overall federal decision, this bill grants individual states to construct their own guidelines around CBD products.

The bill being passed is the dominant element in why cannabidiol is on everyone’s minds. Business is now open for operations to boom in a market that was untapped.

These elements all combine to cast a light on why any business selling cannabidiol goods is immediately classified as ‘high risk.’ Then banks will turn you down to avoid the risk of being linked to these businesses that sell CBD. Further down the road, providers of payment gateways that have teamed with these exact banks will not have the ability to provide service to ‘high risk’ merchants. Disregarding the rationale of something as straightforward as selling CBD products.

Fortunately, here at Vector Payments we fight by your side, and so do the processors we team with! All because getting high-risk merchants approved is our specialty and because we are able to service a more expansive variety of organizations that may have been previously denied. Contrary to other service providers, the banks we partner with won’t flag your business just because of your association with selling hemp or CBD products.