The Q/A Session That No CBD Business Enthusiast Should Miss - We Discuss Payment Processes

Every cannabis enthusiast who has set foot in the economy of the cannabis industry knows pretty well how banks and major financial institutions react to the thought of involving their money in the cannabis business. Whether you are trying to get into CBD manufacturing or planning on starting your own dispensary or simply offering hemp for sale, you will need to know everything that there is about financing



We have tried to answer every possible question that arises while channeling the payment process, especially on how to choose one. Sit tight through this Q/A session to get the bigger picture of the cannabis business!

Q. How Easy Is It To Get Financial Support For Cannabis Businesses?

A. Actually, it should have been how hard it is! As for easy, it is not. Cannabis is still a schedule I drug on a federal level and despite your state’s liberal laws for cannabis; businesses might get into legal trouble at the federal level. Because everything involving cannabis becomes volatile, the trusted institutions never give a nod for the financial support the businesses need in this industry. So, basically, it is not at all easy to get any kind of financial services for cannabis businesses.

Q. Is There Any Law That Forbids The Banks To Loan Money For Cannabis Businesses?

A. As of 2017 reports, not more than 300 banks were expected to comply with legal cannabis vendors out of 11,000. So, if the 300 banks showed their agreement, it is obvious that it is not illegal to get into business with cannabis enthusiasts. In fact, the authoritative bodies have literally given the permission.

According to a directive of FinCEN (Financial Crimes Enforcement Network) published in 2014, the banks have the authority to provide their services and financial support to the cannabis companies as long as they comply with the laws and are not involved in any money laundering activities.

Q. But Then Why Do Large Banks Don’t Process The Marijuana Money?

A. As we discussed, cannabis and everything that is sourced from it including CBD comes under Schedule I substances. Banks are highly organized under the eye of federal regulations. Most of the banks don’t want to draw an unwanted attention to their dealings by getting associated with cannabis businesses.

The biggies like JP Morgan and Chase, Bank of America, Wells Fargo etc. have plenty of clients and are not looking for money that has risks as collateral which is why they have a plain policy of not dealing with marijuana businesses. Smaller banks, on the other hand, are much more flexible as they want clients as well as money for their institutions to make it big.

Many cannabis businesses are forced to deal in cash which is the biggest disadvantage of this business. Many people choose to be on the safer end by becoming CBD distributors instead of launching a business that needs more transactions such as dispensaries, production, etc.

Q. What Is The Most Important Thing To Consider While Choosing A Payment Processing Company?

A. There are many questions that are associated with the considerations needed for choosing the payment processing companies such as, will it be safe to choose a newbie, how knowledgeable must the companies be, etc.

The fact is, you have to choose an institution that has a thorough familiarity with FinCEN, BSA, DOJ, CSA, and Cole Amendment. The bank that you choose must have a clear understanding of the cannabis legal structure and is sport enough to handle any legal issues with the authorities.

Look for quicker access to liquid cash and make sure the company you choose has reliable payment gateways and has a stable and secure credit card processing system. Before looking for anything, scrutinize the bank as a customer who will use the payment gateways to pay you. If there are any glitches there, your business may shut down in spite of the qualitative standard of the products.

Q. Is It Necessary That The Company Has Different Processing Services?

A. Okay, we will understand this with the help of examples.

Suppose you are planning on launching an e-commerce store selling CBD at wholesale prices. You chose a payment processing company that provided online transaction services for your business.

It was all going well and you never had an issue until your digital success put a seed of opening a physical store in your mind. Now, the payment processing company doesn’t provide the solutions for managing money at the physical store.

This could have been a smooth transition will now require you to find another company or force you to keep the two separate. Both of the options will have a negative effect on your business. So, look for an institution that gives you a CBD merchant account that has each and every service possible for processing the payments.

Q. Do All Companies Charge A Monthly Fee?

A. It is quite the opposite. Most of the authentic institutions do not levy monthly charges on their clients. There have been instances where the payment processors have treated marijuana businesses differently than the others with hidden costs. You need someone who is upfront about their policies.

Most companies charge their clients per transaction which is fair. So it should be a big NO from your end if you stumble upon someone who charges a monthly fee. Mind you, because the cannabis industry has its own risks, the transaction fees are slightly higher than normal.

But the authentic companies will let you know that beforehand. Make sure you choose a company that has no hidden costs, charge no termination fee, and has no more than a 6% flat fee and 0.30 cents per transaction charge.

Have we covered it all? If you think you still have some doubts, leave comments below. All in all, you want a transparent payment processing company for your business. One that is comfortable to let you know how they earn through businesses. You have around 300 banks to choose from, so it’s time to start the selection process at once!

This blog was originaly posted in:Quora

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