CBD (Cannabinoid) is a synthetic compound derived from cannabis plant. It has become popular over the past few years due to its high capacity to alleviate symptoms of chronic pain conditions in both humans and animals. Yet, due to the addictive potential of the ingredients, it’s still illegal in many of the US states to sell it. CBD trade though is growing trendier because of the high profit margin and the very high market demand. Some physicians prescribe it pharmaceutically to relieve pain of their patients, increase their compliance to tough treatment regimens like chemo and radiotherapy, and improve their quality of life.
CBD business and trade is considered a high-risk business. Credit card processing and operation in this industry is very difficult. There are strict regulations that make credit card companies avoid dealing with anything cannabis related. People in this industry have been dealing in cash to avoid such a dilemma but that makes the market very narrow and doesn’t achieve expansion. Online payment solutions emerge every now and then and many of them shut down a short while after causing huge business losses. This includes also the risk of not being able to continue the business.
So what is the best way to guarantee successful CBD trade?
First, you have to establish a legal business entity. This is a crucial step that paves the way to all upcoming processes but make sure you don’t use your social security number or sole trader due to the liability included in this. You don’t want to be at risk of losing all your possessions if something went wrong. There’s always a chance of getting an LLC (limited liability company) which is a legal form of companies that render limited liability in front of authorities. A Tax ID or EIN (Employer Identification Number) from Internal Revenue Service IRS This is to prove that your business has been registered in a legitimate way.
Having a high-risk merchant account is still a solution. Although it’s difficult to apply for one that allows CBD trade but it’s still possible. Find one that is compatible with online third party payment gates e.g. shopify and Magento because many of the present gates Square, PayPal, and Stripe don’t permit it and you will be prohibited if you tried to get away somehow. Shopify offers good credit card processing for such businesses and makes both online and retail trade easier.
You will be needing a US bank account with a decent statement in it to begin with. Take into consideration that if this high-risk merchant account happened to get terminated at a given point of time, you will not be able to continue your online business on it. This means losing money and not being able to continue making more. Also applying for a second one after shutting down of the first is extremely difficult.
Build an online store and integrate it with the acceptable third party payment method like the aforementioned shopify. Make sure that your online shop is solid and sells good products of CBD so that your market increases and save your business the trouble. Enhance it with SEO (search engine optimization) techniques to achieve high traffic and attract all potential consumers interested in your product.
You may get support from companies that have experience in high-risk businesses and offer support in starting it and along the way. A lot of businesses get terminated because of details they are not aware of or things they have missed. Having such a support will make you pay attention to the better payment gateways and credit card processing.