Square’s CBD program is now open for business.
The financial services company on Thursday debuted its Early Access program, opening its services to all CBD sellers following the launch of a pilot program for CBD vendors in May.
“We are just really excited to be able to offer this solution to an industry that has faced so many challenges and interruptions to their business. And now, no matter how they want to sell their products — whether it’s online or in-person — we have a payment solution for them,” Sivan Whiteley, Square's general counsel, said during a panel discussion to celebrate the launch at the Manhattan CBD shop Come Back Daily.
Square's pilot program was only supporting about 1,000 CBD vendors, but the Early Access program permits all CBD companies to apply to use the platform to accept payments for their products.
However not all vendors will be accepted. Square has developed its own due diligence for vetting companies to ensure that they are selling products that contain 0.3 percent or less THC; that they aren’t making egregious health claims; and that the companies are compliant with local level regulation, which can vary by state.
The additional steps translates to higher fees for vendors — about 3.9 percent plus 10 cents per transaction in-store, and 4.2 percent plus 30 cents for online transactions. For context, Square’s fees are typically around 2.6 percent plus 10 cents for in-store and 2.9 percent plus 30 cents for online transactions. In spite of the higher fees, companies who participated in the pilot program said it’s a relief just to have reliable payment services.
“It’s really nice that Square doesn’t treat us like we’re criminals,” Kevin Liebrock, chief operating officer of Bluebird Botanicals, said at the panel discussion Thursday.
The 2018 Farm Bill removed hemp and its extracts from the Controlled Substances Act, but banks have been reluctant to assist CBD clients with services. This vacuum in the industry has forced CBD companies to turn to high-risk credit card processors that charge prohibitive fees, and cope with inconveniences like transactional declines and quotas.
Hudson Gaines-Ross, co-founder of Plant People, which participated in the beta program, said Square’s services came as a relief after struggling with some of the same setbacks as federally illegal cannabis businesses.
“It just works,” he said. “We can just focus on hiring, growing, quality of product, our sustainability initiative and not have to spend 40 percent of every day trying to integrate our high-risk credit card processor and deal with sketchy people.”
Although Square’s Early Access services do not yet support businesses that deal in THC, because of cannabis’ illegal status, Whiteley said the framework the company has established for CBD provides a roadmap if and when regulations shift in favor of the industry.
“This program does not per se open up any [marijuana] opportunities, but I do think there is a lot we are learning from this program that will be applicable to marijuana should it become legal at a federal level,” Whiteley said.
Square’s announcement is just the latest development for cannabis and CBD financing, which has been gaining traction on the federal level. Just last week, the U.S. House of Representatives passed the SAFE Banking Bill, which provides safe harbour for banks that choose to service cannabis businesses in legal states. The language of the bill extends to CBD and hemp businesses, as well. The bill next heads to the Senate, where it faces a much harder sell among the Republican majority.