Elavon, a subsidiary of US Bank and one of the largest online, non high-risk payment processors, announced this past Thursday (3/14/19) that they would stop working with any company using e-comm to sell CBD or Hemp derivative products. Well, shit. Full disclosure, CannaPlanners currently uses Elavon on our e-comm platform, which, when we introduced it, fundamentally changed the way our clients were able to connect with their customers. Now, it has changed their business again, this time in not such a positive way. You might be wondering what the point in sharing this is. They were, after all, our partners and by extension, creates an unfortunate obstacle for us, but we feel it is important to show the healthy and detrimental ways in which the legal CBD industry evolves. You can read the message from the company HERE.
Here’s some background; CBD and products derived from hemp fall into an online banking and e-comm category known as “high risk”. Hemp products share this category along with tobacco, online gambling, porn, legal services, MLMs (hun-bots), and other similar types of businesses. It basically means, that the business has a higher risk of failing than those that fit into more “traditional” models and therefore requires different banking strategies. Using a high risk payment merchant generally meant receiving higher transactional fees and required reserves (funds, usually ridiculously high, held in escrow for an indeterminate amount of time). With the passage of the Farm Bill, it seemed as though legitimate CBD/hemp businesses (and thus CBD websites) were in the clear, but now it seems as though institutions are trying their best to put the toothpaste back into the tube.
There’s little information as to why this decision was ultimately made, but it, along with the recent updates made by federal agencies (read about the USPS HERE, and let’s not forget whatever is going on with the FDA) is interestingly timed with certain large pharmaceutical companies seeming to vie for a seat at the canna-table.
Former FDA Commissioner Scott Gottlieb said before his recent resignation that his agency is investigating “possible alternative approaches” to regulating CBD. This is after the passage of the Farm Bill last year and the FDA giving the greenlight to Epidiolex, a CBD treatment for epileptic seizures from GW Pharmaceuticals. [Courtesy of Green Entrepreneur]
So while governing bodies, and banking institutions, and Big Pharma figure out a way to ensure their stake in the booming CBD industry, our clients who are farmers, parents, small business owners, entrepreneurs are left to again wait, for a sensible solution. Let it be known, that we at CannaPlanners are working to find a few different options to provide our clients, and hope that we can soon look back at these silly bygone days when things were more complicated.