Category Archive : CBD and Law

Finding CBD Merchant Accounts to Sell CBD Products

Ability to sell CBD products.

Having the ability to take payment for the product and service rendered is not easy, far from easy, but this will help straighten out the process and give you a much deeper understanding. We see a lot of news about the banking process “easing” up, but in reality, it’s not yet.

Having an online business or any business for that matter requires payment unless you are just charitable. And in the CBD world, to put it bluntly, it is much, much harder than normal High Risk categories such as the “normal” high risk categories. First off, online sales, is automatically in a tier of its own, makes no difference if it just teddy bears, clothing, and things some would never consider “high risk”, so why is this? Simple. It’s an online transaction and a “not in person” transaction, which leaves the transaction, no matter how innocent it may seem, in a high risk category. In person transactions, you can ask to see ID, be able to visually spot something not right, etc., but online, you have no idea who it is. And banks, well, to them it’s a risk of a higher nature – credit card fraud is largely to blame.

How banks view CBD.

Banks do not like cannabis, plain and simple. Straight to the point of their view on CBD and other related products to Cannabis. They, no matter how much they are worth, just do not like providing assistance with any business selling CBD. And it is simply due to the laws in this country, so much the bank itself.

There is no way around this. So if you own a store front, you might a bit shocked to learn that in the event you want to dip into the worldwide web you WILL be paying more than “in person”. Instead of the 1.75% you might pay now, expect the rates to be from 2.75% to as much as 10% per transaction.

Enter CBD products. There is this large grey area and this is largely in part, even though federally legal. It is frustrating to all involved, even to the big companies as they are paying into this category of “high risk”. But as they are more established, and process much more, the banks available are more attainable and much more willing to negotiate. So don’t think just the smaller companies are the ones that have the hardest of times. But as the expression goes, “Money talks… and…” well, you know the rest.

Listen to others who been through the process.

From experience, I can tell you that most of the time, the bank will need to see that you have inventory on hand (IOH) with respectable lab certificates and wholesale proof of purchases. This is where the “rock stuck in a hard place part” starts. So after establishing the legality of your business, you have to invest in product, then you can start to really play ball. The more stock you have, the more likely they can assist, as they see the stock as a sign of seriousness and profit for them.

Buying a few products just will not cut it, unfortunately, so it is best to buy as much as much as you can first, but remember, you will also need a “live” website, one that is built on a platform that is friendly to the banks software needed on your site. So please, make sure your site is built on something such as WordPress/WooCommerce, Magento, or BigCommerce. Shopify, is slowly easing its way in to the crowd, but it’s still not as processor friendly as the big three mentioned.

Knowledge is power.

Thankfully I knew this portion as I dealt with high risk products prior to CBD, so I already had an idea, and I hope I am conveying that to you now, so later down the road you are not stuck in a costly bind! I am sure there is not too much that is more frustrating than buying $10-25k in product only to find out that your well built site is not compatible with the banks that are willing to take on new business.

Also, I would like to add if you are still with me, that a processor is simply a bank that processes the payment. They are not, however, the bank that the money after processed goes to, that is a Merchant Account. And unfortunately, big banks such as the Chases and TD Banks of the world will not accept process nor “hold” money for CBD or anything hemp related. For this you would need to find a CBD compliant bank. They are out there but there aren’t too many, most of them are branches offs of larger banks, but hold their own liability and charge for such a service, normally a hundred or so a month. the fee is considered a “compliance fee” which basically means, they watch the regulations and make sure your money does not get frozen or get you kicked out, because if that happens, now your processor that you worked so hard to get, will have no where to put the money they processed. Stick with me, it sounds and is, a bit complex.

How to find a bank.

Simply put, they are not put out in the public and have access usually through brokers and other agents, who will research your business, charge a fee for doing so, usually in the neighborhood of $750 – $1500. Once on board, the compliant bank will most likely charge a monthly fee as well, in the neighborhood of $150.  That is $5 a day, regardless if you are selling anything or not; keep that in mind when budgeting. Also say another $5 per month for the processor, so in total that is $10 daily, 7 days a week that you are paying to accept money. So when buying CBD products also keep in mind, when it comes to negotiating price of product, that every single percentage point matters.

There are other ways around this such as off shore, but at the point it gets even more entangled, the prospect of having a bank and processor off shore is not too advantageous. For several reasons, the strongest reason is being the fact, that legalities can prevent you from bringing the money “home” to your personal checking account. But not to fear, as regulations straighten out, this will be easier. But the point is that I want to drive home, is this is the foundation of your business. Even if you only accept e-checks, same thing applies.

I have seen a lot of companies only accept crypto currency and this helps if you are ok with the limitations the crypto currently holds and the fact that crypto itself may be a risk on its own. But I firmly believe if you go the best path possible by obtaining CBD products that are legitimate and trustworthy and stick to oils (most processors do not like CBD flower), it may take a while but you will get in, just prepare for “fee land” as everyone has their hands out, it’s not like opening the teddy bear store or remotely close. As you can, by now, understand I hope.

Proper banking is your company’s foundation.

Once you have these two crucial keys of this CBD equation, you can breathe a bit easier but remember the fees, do not forget them. The banks surely will not, I can assure you that one. If sales are not coming in yet to cover these fees it’s important to reciprocate this to them, let them know what your game plan is and try to convey (as if they do not know) the game plan. This goes a longer way than one may think, usually the bank account manager on the account has a better understanding of the difficulties of selling CBD product and especially online.

Research online and pay close attention.

It is important to research mostly brokers that are in the business of setting you up to be able to accept money for CBD products. It is also important to know the high interest rate is nowhere near enough at the moment to satisfy processors. The very few that are out there and willing to help and take on your business know that they are in the very few and charge a premium for this, so know this upfront will help you and your decisions now and down the road. Some possessors also will impose what is called a “rolling reserve”, contracts that may be costly to get out of, monthly fees for the software, and higher than average “per transaction charges” (example 6% plus $0.75 per transaction). It all adds up to a lot of money for selling a federally legal, non-intoxicating, dare I say “healthy” commodity, such as CBD oils and anything Cannabidiol related. It’s made much easier for those who invest $10 million into perhaps their own line up of CBD products (CBD oil, CBD pain relief salve, CBD flower, CBD skin beauty, CBD anything).

The price of selling CBD

It certainly is not easy, it certainly is not cheap, and this is part of the reason CBD oils and salves and all the other goodies, are at somewhat premium priced. You see it’s not really so much the CBD that is expensive. It is fair to say it is the banking system and regulations imposed by states. CBD is legal, but there is a grey area being that even though industrial hemp is fully, LEGAL of a Federal level, it is being extracting from the CBD flower, and making it into something else in a way. This is costly as well, but I would the process is very little in comparison to the banking process. You can go months without selling anything, but still keeping the coffers happy. But the consolation is that you in the business before the boom, and the boom it is. And no signs of slowing down, but the future projections are based off what we see now, we never know what is coming; simply put selling CBD products online is daunting, not easy, but if you pull through, it is rewarding like any other high risk gamble.

The Vape Industry: From the Bird’s Eye

Winter was waning in the D.C. adjacent border community of Silver Spring, Maryland on Tuesday, March 5th. While most offices on the East Coast were getting ready to wind down for the day, the office of the Federal Drug Administration had a national spotlight drawn on it. In a press release, FDA Commissioner Scott Gottlieb announced his resignation. A stormy path had been navigated by Gottlieb, often running afoul of both sides of the vaping debate. But his departure left the vapor industry in a state of flux. As Gottlieb exited his position at the FDA, new draft guidance was issued moving the Premarket Tobacco Authorization (PMTA) period for vape up from August 8th, 2022 to 2021 – and more importantly – proposed ending its tolerance of flavored vape juices.

Further complicating this news was the appointment of Acting Commissioner Norman Sharpless, whom has publicly expressed support for Gottlieb’s approach to regulating vapor products. The FDA’s approach was thrown yet again into deeper chaos in May when a Federal Judge struck down the FDA’s proposed date of August 8th, 2021 for enforcing PMTA applications and demanded they begin reviewing applications immediately. While the FDA has yet to appeal this ruling, it points to a continuing trend of combative governmental oversight of the vapor industry.

This all comes at a critical juncture for the vapor industry. As challenges to vapor packaging emerge from the Consumer Product Safety Commission (CPSC), external pressure has been pushing on a vape industry trying to quietly continue doing business. Thousands of companies, brands and shops have been struggling to make sense of an increasingly grey visage of the near future. Historically, despite offering compliance deadlines and requirements, the FDA has been loath to stick to any guidance it has issued. Other than letters and incidences of public shaming, the FDA has – seemingly arbitrarily – shift compliance deadlines and failed to enforce any of its proposed policies across the vapor industry. This lackadaisical approach to regulation has left many in the vapor industry frustrated as they sought to comply with the FDA’s exacting standards and expectations for regulatory filings and compliance deadlines.

A natural response to these actions by the vapor industry has seen many vape companies expanding beyond the vapor industry. The passing of the 2019 Farm Bill opened up the opportunity for the sale of cannabidiol (CBD). While this is still very much a legal grey area until outright legalization of hemp and cannabis is codified into Federal law, it has spurred a confidence in vape companies to diversify outside of the vape industry and into CBD. This isn’t possible for every vape company financially, but entrepreneurs in the vape space are in search of stability the vape industry looks increasingly unable to afford. The vape industry however isn’t all doom and gloom however.

Growing Pains

The vapor market has continued to expand among traditional vape businesses, with the American vapor industry pulling in over $13 billion annually. New shops continue to open and the array of products continue to innovate. But that innovation has been disproportionately fueled by the advent of pod systems. The JUUL from JUUL Labs has become a juggernaut in the vaping world. After investment from Altria, JUUL is expected to account for over a 1/5 of the vape market by itself as it is forecasted to hit $3.4 billion in sales. While this performance is impressive, the impact that JUUL has left on the market has been mixed. The modern teen vaping epidemic has been fueled, in no small part, by illegal acquisition of JUUL devices and pods by underage vapers. The rise of the verb “JUULing” has become the most familiar term to consumers outside the vapor industry for vaping. For many, it is the only term they will ever know when it comes to the vapor industry. The public outcry following reporting and studies on the vapor epidemic have done immeasurable harm to the public perception of the vapor industry, with parents and public health groups aggressively conflating the vapor industry as a whole with JUUL’s pod device. It becomes incredibly difficult to see a path forward to reclaiming the public image of vaping as a vanguard for good or a product for smokers looking to transition away from combustible tobacco. This negative public perception may not be the albatross on the neck of the vapor industry it may seem. A central tenet to the vapor industry’s ideology since its inception has always been to appeal to smokers. A public perception of pod systems being a negative force could allow traditional vape companies to focus on converting smokers moving forward.

The nature of vaping looking to convert smokers has long been a successful market strategy. Despite acknowledgements by the FDA regarding the necessity of flavors in vape juices to stop them from returning to smoking, draft guidance was still issued to propose eliminating flavors. While it seems obvious that these fights will be tied up in the courts long past the August 8th, 2021 deadline, there still exists a salient public conversation to be had about traditional vaping and smokers. Those solutions will most likely have to be pursued legislatively and advance action by companies like JUUL doesn’t paint the most optimistic of pictures. Late in 2018, JUUL pulled its flavored pods from retail stores, a proactive action most likely aimed at getting ahead of an expected FDA decision to ban flavors from stores, but likely also a means to tamp down on both governmental and public perception that their selling of flavors in retail stores – particularly convenience and drug stores – was contributing to the perception of JUUL as being a driving force in the teen vaping epidemic. But, even a company as large as JUUL can be bamboozled by the workings of the FDA. Half a year later and no action has been taken by the FDA on the regulation of flavors, nor has the FDA begun to implement any actions on PMTA filings.

The requirements of filings for the PMTA is a testy subject in the vape industry. The reality is that very few vape companies have the expendable capital to explore the process of properly submitting a PMTA. While there is no conclusive literature supporting the material cost of an e-cigarette being accepted by the PMTA process, it is estimated that the process could easily reach into the millions of dollars for all of the requisite lab testing, toxicology reports, registration fees and supporting literature to bring through a successful application for each individual SKU that a company produces. Practically speaking, you could submit a SKU for vapor product for a PMTA for $20,000, but your chances of getting your product accepted are virtually non-existent thanks to the FDA’s ludicrously high standards of the acceptance of what they deem as tobacco products.

The Future of the Vapor Industry

All of this leaves an obvious picture of the future if the FDA sticks to its guns. As vaping companies shut down or transition away from vape into other industries, pod systems supported by the major tobacco manufacturers – colloquially referred to as Big Tobacco – will slowly become the vaping industry in America. The irony of this situation should be lost on no one as the aggressive efforts to regulate the vapor industry to address products that may be unsafe or a potential threat to the public well-being vis-à-vis the teenage vaping epidemic, would ultimately result in the very devices at the center of these controversies becoming the only thing available on the market.

It should come as no surprise to anyone that only multi-billion dollar juggernauts like Altria and JUUL Labs will end up being able to get their products through the expensive and time-consuming PMTA process. As they pare down their product offerings in preparation for future industry changes, they will be able to easily convert their products into FDA approved devices as the country complains about teens “JUULing” well into the 2020s, 2030s and beyond. While this may look grim in the United States, it doesn’t present a fatal outlook of the technology itself. Losing America as a market is a brutal hit for any industry, but the vapor industry remains strong abroad in Europe, Japan and China with markets rapidly growing in countries like Australia, South Africa and South Korea.

As vaping is explored scientifically into the future, additional large markets are primed and ready to open for legal sales in the Middle East (UAE) and Africa (Western Africa and Kenya). Vaping is not on a downswing by any measure globally. Investment in globally focused brands will keep companies founded in America operating internationally for many years to come. But it is hard not to lament the overly aggressive regulatory strategy, that seems almost market-tailored for Big Tobacco’s dominance to enter into the vape space. Vape was founded as a way to migrate society away from combustible tobacco. It was a cultural force for years before being hijacked and branded by the teen vaping epidemic. It seems profoundly sad that an industry born and developed in America could see itself become snuffed out by people rushing to judgements based off of one crisis while simultaneously doing everything but addressing the underlying issues with the crisis itself. But this isn’t to cast a shadow of gloom over the vapor industry. As has been said before, we’ll see the vapor industry continue to thrive for many years to come through legal challenges and protracted court battles from the traditional vaping industry’s largest juggernauts.
The future of vaping remains uncertain, but the genie is already outside of the lamp and vaping will forever remain a globally dominant market-force.

5 Vaping Trends to Try in 2019

It’s strange to think that just a few years ago, vaping was pretty uncommon. Now, it’s hard to get away from e-cigarettes. And the people who vape are passionate about it! Vapers are always looking for vape juices and gadgets to improve their experience. If you’re one of those people, you’ll be pleased to know about the exciting vaping innovations that are happening in 2019. Here are some of the hottest vaping trends right now!

Nicotine-Free Vape Juice

Vaping is a great option if you want to stop smoking. But if you’re using e-juice that contains nicotine, you’re just furthering your nicotine dependence. It’s no wonder that nicotine-free vape juices are on the rise in 2019. If you use e-juice without nicotine, you still experience a sensation that is similar to smoking but without the negative long-term effects of nicotine. This year, expect to see more vape juices with zero nicotine.

Accessible Vaping Mods

Vape mods are nothing new, but in 2019 expect to see more vape pens that are compatible with modifications. This year mods will become more widely available to the average consumer. Some of these mods include ways to change your vape’s temperature and ways to make vaping even safer. Check out Moon Mountain’s store for some cool vape mods to take your vaping experience to the next level!

Vaping On-the-Go

As vaping becomes more common, people are more open to vaping in public around others. Because of this, the demand for smaller vaping pens that are easy to use on-the-go has increased. In 2019, expect to keep seeing smaller vaping pens that lend themselves portability.

More Vegetable Glycerin

One of the major reasons people love vaping so much is the great-tasting flavors. Vegetable glycerin (VG) is one vape juice ingredient you can expect to see more of in 2019. The substance is non-toxic and produces more vapor. It’s usually made from soybean, coconut, or palm oils. VG is a common ingredient in sweeteners. When it’s in your vape juice, you can expect to taste a little extra sweetness. In addition, vegetable glycerin is thick, which makes it more soothing on your throat than most PG vape juices.

Better Vape Designs

The longer that any product is the around, the more time there is to work out any kinks in its design. The same is true of vaping! As more and more people try and enjoy vaping, not only is the quantity of vaping devices going up but so is the quality of vaping products. The standard for what makes a good vape pen continues to rise. People want more out of their vape pens. They want vape pens that last longer and are more efficient. In 2019, vape manufacturers are delivering in full force!

You can get the latest vaping innovations from The Eliquid Boutique vape shop! We are always looking to the latest vaping trends and trying to find the ones that our customers will love the most. Start browsing our wide array of products to find your new favorite vape juice and vape mod today!