T1 Payments customer Herbstrong sits down with Retail Chain’s Dam Berthiaume and discusses CBD, regulations and CBD payment processing.
Exclusive Q&A: Online CBD retailer stays straight with regulations
Online retailer Herbstrong is leveraging technology, strategy and common sense to navigate the unique complexities of the CBD product market.
Chain Store Age recently spoke with Cathy Sweetman, COO of Herbstrong, an online retailer of legal CBD products, about the challenges of following varying rules and regulations and processing payments in the CBD vertical. CBD e-commerce is considered a high-risk business, which complicates the process of getting paid for online sales.
Because of this, online CBD retailers may find it difficult to find a payment processor who will work with them. It is also not uncommon for processors to suddenly close high-risk accounts without any notice, leaving these retailers unable to process credit cards. Additionally, CBD and hemp products come with local, national and global compliance issues.
How can an online CBD retailer manage compliance with differing local, state and national regulations?
For national regulations, we send test orders when in doubt. National is one of the most difficult for the average retailer in my opinion, because of all the paperwork that’s needed, the changes that we don’t necessarily hear about, and getting through customs. State and local regulations are a matter of researching the state or locality online, and there may be some that are too bureaucratic to deal with.
You have to decide how much business you will get in a given area, and if it is worth the fees and jumping through hoops. This would usually apply to getting your products into stores because, for consumers’ online sales, we have not experienced any issues. The best thing is to have legal counsel which specializes in the industry. This goes without saying across the board.
What unique challenges does selling CBD products online pose to payment processing?
The most unique challenge is probably finding a bank that accepts your product. If you are not fully transparent and the banking institution finds out that you are selling something they do not allow, they can close your account and money can be held for up to a year in some cases.
Are national financial institutions reluctant to work with CBD retailers due to federal regulations?
There are very, very few banks in the U.S. that are willing to work with CBD retailers/wholesalers, and there are even less that are properly educated in working with CBD/hemp products. We specifically work with (high-risk payment processor) T1 Payments because of this fact.
How can CBD retailers ensure that suppliers are complying with regulatory and sustainability guidelines?
That’s a great question. If someone is new to the industry and starting out, they are going to have a harder time. It has taken us years to acquire our contacts, which we trust. The only thing someone can do is ask for the certification. Also, buy American because it is far easier for to check the sources, the lab, etc.
We have been invited to hemp farms to look at the operations and we can easily jump on the phone to ask a question. For me, it is really a matter of trust and the ease of checking into things. It honestly just comes down to the fact that I have a trust in American operations, I have contacts over the years, and we are not so far removed from the process.”