One of the biggest problems faced by the CBD industry involves compliance. A relevant example is the way companies market their products. It is illegal to say that any CBD product can cure, treat, or otherwise prevent any medical condition. A significant number of organizations have breached these rules. The FTC recently issued warning letters to several such businesses.
The FDA also says that companies can’t add CBD to any food or beverage. This is proving a little trickier to enforce. Not only do websites sell CBD edibles, but there are also various cafés and restaurants offering CBD-infused recipes.
As far as CBD banking is concerned, there are many hurdles to overcome before you can sell what you claim is the best CBD cream around. One of the biggest is the lack of CBD friendly banks you can use. Yes, there are some out there, but finding them isn’t easy. We outline a few potentially useful institutions for CBD banking in this article. We also help you understand their benefits.
Why Should I Look for a CBD Friendly Bank?
At present, there are relatively few options. However, it is worth persevering. Otherwise, you face a stark choice. You could keep a substantial sum of cash on your premises and hope you don’t get robbed. Alternatively, you could lie to a bank about your CBD business. However, as soon as they find out, they will terminate your account.
You may find a CBD friendly bank in your locality. However, such institutions have a limited reach and are likely only available to customers in specific regions. Some banks operate on a ‘don’t ask, don’t tell’ basis. They will open your account, but if it comes under scrutiny, trouble awaits.
As for banks that welcome CBD businesses, they enable you to sell to customers out of state. However, don’t expect these organizations to advertise their services openly. It takes a little research on your part, but you should find them relatively easily.
With a reputable CBD friendly bank on your side, you can operate like a ‘normal’ business. Customers can use credit and debit cards, and your money is secure. Such entities charge higher fees than traditional banks, but it is worth it to save the hassle.
High Fees Can Put You out of Business
The charges issued by established CBD friendly banks are nowhere near what you would face otherwise. Remember, most banks will back away from your business. Elavon, a subsidiary of U.S. Bank, caused havoc when it suddenly halted its merchant services to CBD companies.
Businesses impacted by this decision fled into the arms of processors that charged exorbitant fees. Some asked for 10% of monthly transaction fees plus $10,000! Many small regional companies lost over $1,000 a week once Elavon removed its credit card processing services.
One California-based business said it was charged a $2,000 per month compliance fee. It also had to keep a minimum balance of $60,000 and paid fees of 3% on that balance, a total of at least $1,800 per annum.
It is standard for some CBD banking providers to charge $200 per month in fees, 7% interest, and an additional $0.30 per transaction. It is a straightforward way of taking advantage of an industry where many companies struggle. The Elavon decision affected at least 40,000 CBD businesses.
Reputable CBD Friendly Banks Are an Antidote
The best companies for CBD banking include North Bay Credit Union and Silicon Valley Bank (SVB). The latter offers accounts for a vast array of industries. Even though CBD isn’t considered a pharmaceutical business, SVB classifies it as a life science and healthcare industry. With this in mind, you will likely pay significantly lower fees than you would with other providers.
You have the option to look for other providers, but the chances are, you won’t find many better than North Bay and SVB. With either option, you significantly lower your monthly transaction fees. You can look for monthly and annual contracts that are easy to terminate. What you don’t want is to be tied down to a long-term contract on unfavorable terms.
With CBD friendly banks, you also benefit from customer support you don’t get from certain other processors. Above all else, you no longer have to store massive amounts of cash in a safe on your property. Your customers also benefit from the convenience of paying with a debit or credit card.
CBD banking is arguably the most significant challenge faced by the industry right now. One might note that the market can’t reach its full potential until traditional banking institutions accept CBD companies as clients. Interested in learning more about more CBD industry-related news? Check out WayofLeaf for brand reviews, legislative updates, and much more.