Does Square Accept CBD Payments?

Does Square process payments for CBD? Does Square process payments for hemp?

In a word — yes.

Square now allows CBD merchants to apply for payment processing on the Square platform. This application is extended to both online CBD merchants and brick-and-mortar CBD retailers. Square’s latest move in the payments industry is a bit of relief for an industry experiencing exponential growth while bogged down by regulatory uncertainties.

What is Cannabidiol or CBD?

CBD is shorthand for the term cannabidiol. CBD is a phytocannabinoid extracted from plants of the scientific name Cannabis (the genus) Sativa (the species). If you’re a marijuana merchant or connoisseur, this scientific plant name sounds familiar…

Both Cannabis and Sativa are terms used when referring to marijuana:

• Cannabis can be either marijuana or hemp

• Sativa is a term that refers to a specific strain of marijuana.

For instance, Cannabis may or may not contain psychoactive properties, whereas marijuana always has some level of tetrahydrocannabinol, or THC, which is the substance that typically gives users a feeling of relaxation or a euphoric high. CBD comes from hemp, which is a type of Cannabis, but the extracted cannabidiol has little to no THC content. In other words, those fruity CBD gummies won’t produce euphoria.

Marijuana has a certain percentage of THC depending on various factors, such as seed health, growth properties, and cultivation methods. An average THC content might be around 15%, while some high-end marijuana strains have tested at 37.5% THC. Strains this high aren’t available everywhere, not to mention that a typical “high” THC content is closer to between 25% and 30%.

While marijuana, Cannabis, and CBD have been legalized to some extent or in varying degrees over the past few years, this doesn’t mean everyone embraces these substances or desires to put their professional reputation on the line. The Farm Act of 2018 legalized CBD and hemp production and distribution in the United States at the federal level. But state to state, the laws are not as uniform as those of marijuana. Marijuana remains illegal federally, but, as evidenced by the many states creating their laws allowing for marijuana consumption, its control is largely left up to the states.

Most states engage in at least some form of CBD sales and distribution as long as the THC content remains below 0.3%.

What’s a merchant account for CBD sales?

CBD merchant accounts allow businesses to sell CBD products as long as the products meet the merchant account provider’s requirements. Some merchant accounts might allow a business to sell any CBD product they choose, while others are more stringent.

Certain industries, such as vape and eCig stores, are considered high-risk for various reasons, such as typical ticket prices, type of clientele, and more. Most merchant account providers consider CBD businesses extremely high-risk, placing them into a category all their own — even some high-risk merchant accounts servicers don’t partner with CBD companies. But Zenti specializes in high-risk merchant accounts. Reach out, and we’ll set you up with a CBD merchant account fast.

Does CBD’s legal status mean becoming a CBD merchant is easier?

Unfortunately, no. Despite these products’ legal stature, many banks, credit unions, and payment processors refuse to work with CBD businesses or offer CBD merchant accounts. Square has joined the ranks of payment processors willing to take a gamble on this lucrative industry. But for businesses with traditional merchant accounts that either don’t disclose (either partially or completely hide) the nature of their business, a sudden account closure could occur if the payment processor discovers the business is involved in the cultivation, sale, or distribution of CBD products. These merchant account closures often occur with little to no notice from the merchant account provider.

If you operate a marijuana or CBD retail or E-commerce business, Zenti offers high-risk merchant accounts for CBD merchants and vape and smoke shops.

What’s driving the growth of the CBD market?

Between 2014 and 2022, CBD product sales skyrocketed. CBD sales in 2014 totaled over 108 million USD. By 2018, that number had climbed to over 535 million USD. Statista projects that by the end of 2022, cannabidiol sales will top 1.9 billion USD and reach 23 billion USD by 2025. That’s quite a growth trajectory, and market experts don’t see this spike diving lower anytime soon.

This is just one of the many reasons opening a CBD merchant account with Zenti shows good business sense. Getting in on a relatively young and thriving industry while it’s still in its infancy could prove quite lucrative in the years ahead, especially as the pharmaceutical industry climbs aboard.

It’s somewhat surprising that Square took so long to get on the CBD train and why payments companies like PayPal still choose to keep their distance. A high-risk CBD merchant account offers your CBD business — online or in-store — a way to process your customers’ payments without fear of account closure.

Why are payment processors hesitant to process CBD payments?

The legally gray landscape of the industry could make payment processors cautious. In 2018, hemp was finally taken off the controlled substances list, which paved a path for CBD to become federally legal. However, in the same sense that marijuana is still illegal at the federal level but controlled by states individually, CBD is legal at the federal level.

However, many states either don’t yet have a law expressly forbidding or allowing the sale, distribution, and consumption of CBD or have regulations in place in varying shades of “murky.” Case in point: a Virginia resident must have a prescription for CBD, but a California resident can buy CBD chews for their dog at the local pet store with no prescription.

How Square CBD payment processing came to be

The year following the declassification of hemp brought sellers to the Square CBD payment processing arena — with some caveats. Like any great privilege, processing CBD payments through Square comes with great responsibility. It’s Square’s stance that they’ll continue to meet compliance and regulatory measures imposed on payment processors, and sellers must accept responsibility for staying on top of their compliance and regulations issues. Some compliance measures sellers must abide by include:

• Proper labeling

• Honest marketing

• Refraining from blanket, unsubstantiated medical claims

Sivan Whiteley, General Counsel for Square and Square’s parent company, Block, Inc., stressed that sellers are responsible for ensuring their businesses meet every letter of the law.

The risk of catching the ever-present, all-seeing eyes of regulators remains a risk Square is willing to take. This addition to Square’s payment processing prowess could benefit the company in the long run as the CBD industry continues to boom. Square’s current transaction fees for CBD payments range from 3.5% + 0.10 cents USD per in-person transaction, 3.8% + 0.30 cents USD per online transaction, and 4.4% + 0.15 cents USD per manually entered (or card-on-file) transactions, such as a CBD subscription.

Ask Zenti about our low- or zero-cost credit card processing fees.

Square’s CBD payments program is easy to understand

When Square began accepting CBD payments in 2019, its Early Access Program opened up CBD payments processing to a select few Square customers. However, one of the unique aspects of Square CBD payment processing isn’t necessarily a good thing: Those fees outlined above? Those apply to all sales processing by a member of Square’s CBD payment processing program — not just sales of CBD products. For businesses with negligible CBD transactions, customized rates are available. Square outlines all its rules for participating in the CBD payment program, such as the types of products allowed for sale and how to join the program.

Can Square review your account and impose transaction limits?

As the CBD industry continues to grow to that projected 1.9 billion USD figure, Square CBD payments beginning in 2019 might have been a way for the company to analyze the earnings potential from this revenue stream. The goal may have been to work out any kinks before turning it into a more relevant, mainstream payment processing program.

At launch, the Early Access Program’s participants were likely guinea pigs because it was a brand new direction for the company headed by Block CEO — or, as he calls himself, Block Head — Jack Dorsey. Over the past few years, the kinks have been largely worked out. Even participants who aren’t happy with the program can call and request a review and adjustment of their program terms, such as Early Access’s account limits.

What kinds of CBD products can you sell through Square?

Any cannabidiol products sold through a Square account must:

• Have no more than 0.3% THC content

• Have a lab’s confirmation of product THC levels for products such as hemp flower

• Have a CoA, or Certificate of Analysis, proving that products, such as CBD vape oils and cartridges, meet regulations

• Not have any health claims in the product marketing

Additionally, the seller must be located in a state or jurisdiction where the sale of CBD is not considered illegal.

If a product line’s labeling has health claims, this company works with sellers to redesign their CBD and associated product labels. For an idea of the types of phrases or claims that cannot be on your CBD packaging, look at the companies the FDA has sent warning letters to regarding their CBD packaging. In this letter to a company in violation, the FDA shows they mean business — they’ll review your social feeds, website, landing pages, marketing materials, and more, in addition to labeling your CBD products. Note: the sale of any item containing Delta 8 THC is forbidden.

What about businesses only casually selling CBD products?

When Square opened its Early Access CBD seller program, casual CBD merchants (those whose primary business was something other than CBD sales) were not allowed to participate. That has changed in the years since, and now, anyone selling any type of CBD product must be enrolled in the CBD payment processing program. However, customized programs and transaction rates are available for businesses with only a very small percentage of sales derived from CBD or hemp sales.

Some payment processing companies, like Square and Squarespace, support sellers’ rights to sell CBD products that conform to local and state CBD laws and regulations. Other companies like PayPal do not allow CBD payments through their platform. PayPal doesn’t support any businesses in high-risk industries.

Square’s unique features support eCommerce CBD sales and offer inventory tracking, sales fulfillment integrations, and even an eCommerce website to host your products.

Open your CBD Merchant Account with Zenti

Any high-risk merchant that chooses a traditional payment processor will hit a snag at some point. Payment processors like PayPal just can’t handle a high-risk merchant’s unique and varied needs.

Zenti’s high-risk merchant account for CBD sales gets you set up and accept payments online or in-store quickly and easily. Reach out to one of our high-risk payment processing experts today and learn how to start selling CBD in your store.