Washington has lit a fire under the market for hemp products. A bill signed by the President on December 20th includes provisions that delete hemp from the federal list of Schedule 1 drugs under the Controlled Substances Act of 1970.
Legislation freeing hemp products from the confines of federal drug laws is long overdue. A farm bill passed in 2014 permitted limited state-approved hemp production, but that law expired on September 30. The newly-enacted 2018 Farm Bill reclassifies industrial hemp as an agricultural commodity, just like corn or soybeans. Now farmers are free of federal restrictions on growing hemp, and legal uncertainties surrounding the production and sale of hemp-derived products, like CBD oils, have gone up in smoke.
Finally, businesses selling hemp products can operate like others selling legal consumables and accept credit and debit cards for payment without fear of raising red flags with banks and the card brands.
The opportunities presented are enormous. New Frontier Data, a Washington-based research firm, expects the U.S hemp industry to grow by more than 18% over the next five years thanks in large part to the 2018 Farm Bill lifting federal restrictions on hemp production. Hemp-derived CBD products will be the leading money maker, growing from a $390 million-dollar market this year to a $1.3 billion market by 2022. That works out to a 27.2% combined annual growth rate over a five-year period, according to New Frontier’s projections.
CBD products are manufactured and sold in various forms, including tinctures, lotions, mists, infused drinks and candies, and vape pens. Manufacturers and sellers of hemp products like CBD oils, however, long have suffered from guilt by association, since these products derive from the same plant as marijuana, although they contain little to no TCH, the psycho-active component of the plant. The chemical distinctions, and state legalization measures, have done little to encourage banks and payment processors to work with these businesses, however. Most fear running afoul of federal regulators and card association rules, in effect denying these businesses access to modern banking and payment acceptance services.
Some merchant services providers, like Paybotic, have partnered with forward-thinking merchant banks to provide card-acceptance solutions to dispensaries and other businesses selling hemp and CBD products. With passage of the 2018 Farm Bill we’re optimistic that ever larger numbers of businesses selling hemp products, especially the increasingly popular hemp-derived CBD oils, will enter the financial mainstream and begin accepting credit and debit cards, as well as any new electronic payment methods that may emerge in the marketplace.