square cbd processing

What Is Square’s Policy for Cannabis & CBD?

Although Roger Adams isolated CBD in the early 1940s, the cannabinoid didn’t become big business until recently. There was some…

Although Roger Adams isolated CBD in the early 1940s, the cannabinoid didn’t become big business until recently. There was some research into it in the last few decades, but nothing major. However, now that it is legal to grow industrial hemp in the United States, sales of cannabidiol are expected to skyrocket. In the Internet age, it is easier than ever to sell products online. Yet confusion over the industry means merchants are wondering if they can use services such as Square for CBD sales.

Can You Sell CBD Online in the U.S.?

Before we look into whether you can use Square for CBD processing, let’s look at the state of online cannabidiol sales in the United States. Already, it is a multi-billion-dollar industry. Sellers offer a huge variety of CBD products, including:

  • Sprays
  • Topical Balms
  • Capsules
  • Supplements
  • Oils

Unfortunately, it is also an unregulated industry, and one riddled with misinformation. One of the most damaging examples is the suggestion that ‘CBD is legal to sell in all 50 states.’ Once an online seller hears this phrase, they automatically assume it is possible to ship CBD products throughout the United States.

This is not strictly true. Much of the information stems from a misinterpretation of the 2018 Farm Bill. It legalized the growth of industrial hemp with a THC content of up to 0.3%. It did not legalize CBD or any other cannabinoid. The reality is this: The FDA hasn’t approved any CBD product, barring a GW Pharmaceutical offering called Epidiolex. It is often recommended to help patients with epilepsy manage their seizures.

The lack of federal oversight means that like marijuana rules, states are free to do what they like. Unlike cannabis laws, few states are clear on whether CBD is legal or not. There are a handful of states that seem to stand against cannabidiol, but most of them fail to provide clarity. Top CBD brands such as PureKana officially say they don’t ship to certain states. Services like Shopify also clearly outline a few places they do not support in terms of CBD sales.

What we want to know is whether Square CBD sales are possible. Does this particular merchant services aggregator permit the sale of cannabidiol? Let’s find out.

The Advantages of Using Square

The good news is that this financial services company does enable you to sell cannabidiol. Indeed, there is a special Square CBD guide where the organization outlines how you can use it to sell your products. Regardless of how you go about your Square CBD sales process, it has a payment solution. You can do the following:

  • Take Payments Online: Use your website or set up a free online store with Square to sell CBD.
  • Take In-Person Payments: It is possible to accept card payments on the move or at your store.
  • Receive App Payments: You can even integrate Square payments into your mobile app!

The company had launched a small invite-only pilot program to offer services to CBD sellers in March 2019. It went so well that Square decided to implement a broader rollout. The move came after years of Square refusing to work with CBD companies. All CBD products sold on the platform must come from hemp and contain no more than 0.3% THC. Please note that Idaho and South Dakota are, at present, excluded from the Square program.

Ultimately, Square provides merchants with everything they need to manage their CBD business. This includes helping with payments, payroll, hardware, and inventory management. The entire process works seamlessly to provide a total overview of your whole company.

Those who have used Square for CBD processing are full of praise for the service. They say that they get better rates and are treated with trust and respect. They also:

  • Get to eliminate the middleman, and can sign up in 15 minutes.
  • Have a flat fee option.
  • Have the option to view analytics to help future sales.
  • Benefit from fast payment processing.

Square CBD Processing Fees

Square tries to make its CBD-related fees as straightforward as possible. CBD sellers still miss out compared to other vendors who pay 2.6% and $0.10 per transaction. However, the costs are still competitive. You pay less if you have in-person payments compared to online, app, and key-in sales. Here’s a quick look.

  • In-Person: 3.9% + $0.10 per tap, dip, or swipe.
  • Online and In-App: 4.2% + $0.30 per transaction.
  • Keyed-In and Card on File: 4.8% + $0.15 per transaction.

There is no question that the transaction fees are relatively high. A $100 online sale would result in charges of $4.50, for example. Nonetheless, sellers are happy to take the hit for the opportunity to make CBD sales on Square. At least there is only one rate per card, so you won’t receive any unpleasant surprises. Until the financial sector fully welcomes cannabidiol, merchants will need to take what they can get.

While Square CBD processing isn’t exactly cheap in terms of fees, it opens a valuable avenue for vendors. If nothing else, the company’s rates are transparent, and they don’t try to sneak in statement, monthly, start-up, or refund fees. Once you sign up, you know what you have to pay. You can get set up extremely quickly, and begin growing your CBD empire! Square is a reliable option if you want to gain a foothold in the industry without needing to negotiate a slew of complexities.

Once you use Square, you have the chance to use its impressive array of services. These include payroll and inventory management. If you elect to use Square to sell CBD, make sure it comes from hemp and contains no more than 0.3% THC. We also recommend checking to see if you are legally allowed to sell to the areas where your target audience mainly resides. Contrary to what you hear or read; CBD isn’t necessarily easy to ship to all 50 states.

Merchants received a boost when Square announced it would allow CBD sales on its platform. It is easy to set up an account, and the fees are transparent.

Beyond Square for CBD Processing

MMJ FinSol
Jan 14, 2020 · 5 min read

The ability to accept credit cards is a primary function of your business. Yet for CBD business owne r s this is not the easiest of tasks. The last year has seen a roller coaster since Elevon entered and then promptly exited the market. At that time Square started their invite-only Beta Program and by the Fall they had expanded it to allow all CBD companies to apply. Let’s explore where to next if you were not accepted into Square’s CBD program; are awaiting a reply to your application; have been shut down by Square, or are looking for options beyond Square.

Stability Should Not Lead to Complacency

As of this writing in mid-January 2020, the CBD merchant processing space has reached some point of stability. It has taken many months to reach this point, and if the Square option for CBD processing were to go away at any time in the coming year, it would likely wreak havoc on the emerging CBD industry. It would take some time to get all of those companies onto other compliant solutions and the backlog will be significant. What we currently see as 1 to 2-week onboarding times will balloon to 1–2 months, especially for start-ups without proven volume.

Square has many benefits from a simple application, a full suite of services with the point of sale integration, and some of the lowest processing rates for CBD. However, for those who are just now applying they currently have around a six-week waiting period since they are so backed up. Once companies are up and running they can also be shut down and when that happens there is no court of appeals. Getting shut down means a company loses their ability to accept credit card payments until they have been approved by another compliant CBD processor and then have that solution integrated into their business, whether it is online or retail sales.

Processing History and Volume

There are three types of CBD companies and how to proceed depends on which category one falls.

  1. Those with processing history and monthly volume exceeding $50,000.
  2. Those with processing history and monthly volume over $10,000 but less than $50,000.
  3. Those with no processing history or monthly volume less than $10,000.

Looking Out For Large Retailers

For those who have high revenues, they will be the first ones picked up by other processors who prioritize by volume. However, even a week without credit card processing would be a significant loss for the company. They need to consider the value of finding alternatives and getting back up credit card processing in place so that there is no disruption to their business. The rates for the other solutions goes down based on the volume, so they are likely to get the best rates which may in fact be comparable to Square.

Hedging Bets for Healthy Companies

For those who are in the mid-range, they will also be able to get onto other processing solutions with relative ease within a week or two. Similarly, being without processing for a couple of weeks could hurt the company. Looking into other high-risk processing solutions and making the transition might ultimately prove to be in their best interest. The rates and fees might be a bit higher than Square but the security that it can provide may be well worth it.

Reducing Start-Up Risk

Lastly, the ones who have less than 3 months of processing history or historic history of less than $10,000 will have the hardest time finding credit card solutions. This is the group that needs to be the most pro-active in getting onto other solutions before the tidal wave hits. The sweet spot is once they have 3 months of processing statements, the need to prove themselves lessens. Otherwise, they need to be prepared with business plans, bios, and proof of capitalization. The acquiring banks who support these high-risk solutions want to have the confidence the CBD business will be up to $10,000 volume within 90 days.

There are 5–7 Compliant Solutions

There are just a handful of compliant domestic credit card solutions and one popular offshore solution that are wrapped and sold by hundreds of agents, and many of them work with each other. The key is to make sure that your company has a good relationship with a team that can help. If any of this becomes industry-wide issues existing relationships will serve you better than looking to establish new relationships in the face of a crisis. This can be affirmed by anyone who was released by Elavon last Spring and was one of 40,000 businesses looking for a new solution, with only a handful of options available at the time.

The Year Ahead

Will Square be accepting CBD business a year from now? It’s probably anyone’s guess. But does your business really want to take that chance knowing that it might not be the most secure solution for your business? Look at the future and see if it is worth it for you to be paying a bit more for a solution that removes your risk of losing credit card processing and not being able to easily replace it in the face of thousands of other companies faced with the same issue.

Build Your Team Now

Our business is focused on compliant banking, and some of the other solutions do require CBD merchants to have a transparent banking relationship. Those who are hiding their business from their bank may also get caught in the tangle in needing to secure a compliant bank before they are able to apply for another merchant processing solution. Our message is to think through all of your needs and not get complacent when it comes to banking and processing. This is not easy and it is not likely to get easier. Getting ahead of it and knowing your options is by far the best course.

If you want to get a rundown of the lay of the land beyond Square — feel free to reach out.

The ability to accept credit cards is a primary function of your business. Yet for CBD business owners this is not the easiest of tasks. The last year has seen a roller coaster since Elevon entered…