Why is cbd still being considered high risk?
The high risk nature of the industry…
Currently there are three major reasons that CBD products remain high risk: legislation, risk of chargebacks, and reputation risk. Even though legislation over the CBD industry has become more favorable, the topic is still fairly taboo. Many people still associate CBD with medical marijuana, even though it does not have the same psychoactive effect. Because of the misconception of CBD oil, businesses that are legally selling CBD projects have to carry the burden of being associated with marijuana.
As the industry is still considered high risk, companies must find CBD merchant services in order to offer credit card processing for their customers. They are unable to get traditional merchant accounts for many reasons, but mostly because the products are considered to be unpredictable in nature. As the benefits of the cannabis plant, and CBD projects, are not vetted by the FDA, they have higher rates of chargebacks from customers who were not happy with the product.
Finally, CBD products, which can include oils, tinctures, lotions and even products you can smoke, are flagged as high risk because they came into the market so quickly. It was not long ago that these products were all considered to be illegal. Without clinical trials to back up claims that these products help tie things like epilepsy or cancer from the FDA, the quick emergence and claims of CBD products, is considered high risk. Now that these products have been legalized, the market is open for CBD businesses to grow and thrive in a new market.
For all these reasons provided and more, the CBD industry is still considered high risk. Hopefully, these have helped to shed some light on that. More than likely it will stay this way, until banks and other agencies get on board to make it easier to run a business in the market. High risk merchants have come in to help alleviate some of the stress and burden of not being able to work with traditional merchant services, providing payment gateways for businesses in CBD. Working with the right company, who can navigate through the rough waters of the CBD landscape can help make this risky business a little less risky.