Secure Your CBD Holiday Sales

MMJ FinSol
Nov 1 · 5 min read

October brought news of the progress of the SAFE Banking Act through Congress and the expansion of Square’s CBD program. That gave exasperated CBD merchant cause to celebrate. It also brought forth the first draft of guidance from the USDA on the rules for Hemp farmers. After months of struggles, ambiguities, and processing challenges it looked liked things perhaps might now get easier. But in order to make the most of the upcoming holiday season, it’s important to stay vigilant about your bank account and processing solutions.

Preparing for the Holiday Frenzy

Now that we are in November it is a race to the finish now through the start of 2020 the maximize on your products as holiday gifts and relief for stressed out shoppers. This article is designed to make sure your online or retail store stays up and running through the holidays and minimizes the potential risk from merchant processing or banking challenges.

Our company serves cannabis, hemp and CBD companies with financial solutions. We are focused on compliant, transparent and secure solutions for our customers. We partner with banks and processors who accept CBD customers and are willing to deal with the regulatory burdens that are put on them when they elect to bank what is termed “marijuana-related” business.

Square is allowing many more CBD customers onto its platform. They are now, however, quite backed up for onboarding. We are hearing that it is anywhere from 2–6 weeks to be approved after applying. Moreover, they have strict terms and conditions and compliance guidelines. They also have processing target minimums. If a merchant doesn’t get accepted or gets kicked off for any reason they will need to find another solution. If they don’t already have a compliant back-up in place, it could mean they could be down for some time.

Banking Your Money Securely

Finding a bank to accept a CBD business can be challenging. For many CBD startups it is one of the first surprises that they encounter. For any business owner opening a business checking account is a very simple administrative task and often one of the first orders of business after creating and filing all of the necessary corporate documents. However, when walking into a bank and telling them you have a CBD business, they are often confronted with a clear “no, we don’t accept that type of business” or alternatively, an acceptance by a bank manager only to be followed by a denial by underwriting or an eventual bank account closure when others at the bank learn the true nature of the account.

Read any social media forum on the subject and you will see CBD merchants advise each other on how to hide their account. They will say things about not including the words CBD or hemp in your company name or URL. Or they will talk about setting up holding companies that mask the business name and purpose. They will advise to tell the bank that they are in the health and wellness industry or that they sell supplements. Although this advice is well-meaning, it misses the mark in terms of understanding the risk they are putting themselves at by misleading the bank.

According to a representative at Chase, they have over $2 Billion invested in security, authentication, and fraud prevention. They will attest that they do not bank CBD. If they find out they will immediately shut down the account. Even if they never find out here is where CBD customers might be setting themselves up for a holiday shut-down is if they need to switch merchant processing solutions anytime in the next 4 to 8 weeks. That is because most of the new processing solutions are requiring CBD merchants to have a CBD compliant account.

More Processors Now Requiring CBD Compliant Bank Accounts

If a merchant does need to consider other processing options the latest trend we are seeing is that those solutions that are backed by domestic banks are requiring the merchants have compliant bank accounts. Even through we hear many CBD merchants say they were accepted for banking by their branch manager at Bank of America or Wells Fargo, there are not considered compliant accounts. This is the case because corporate has far different talking points when it comes to CBD and it being outside of their risk matrix. As such, underwriting for new credit card solutions will not accept those accounts.

So now in order to get approved for some CBD merchant processing options, where and how you bank now comes into play. If you don’t have a compliant account, now would be a good time to start looking for one. SAFE Banking and the USDA hemp guidance are steps in the right direction but neither of them give immediate relief to banks. Only about 700 banking institutions across the US are willing to address the regulatory compliance to bank cannabis and/or CBD business. These banks typically don’t advertise and like to fly under the radar. The application process and underwriting can also be onerous.

Banks and customers appreciate that we are able to put together turn key applications that are ready for approval through underwriting. Based on our network we are able to recommend the bank that will best suit our clients needs and be a match for the requirements of the bank. We made bank recommendations based on geographic location, volume of business, and initial opening deposit requirements. We also know the lead times to do our best to manage expectations.

Additional Benefits of Securing a Compliant Account

Now having a compliant CBD bank account not only gives a CBD merchant the security that their account won’t be shut down, or worse, their assets seized — but that they can also move to a new processing solution without holding up their application having to get a compliant bank account open at the same time. Even if there are no issues with your current processing solution, it won’t work if it has nowhere to put the money after it has been collected from the customer. Any disruption to banking can therefore also hurt sales, your bottom line, and your business.

Getting a CBD compliant bank account is an important piece of the processing puzzle. We welcome customers seeing what they can do on their own to find a bank willing to accept their business when presented transparently. However, if we can help expedite the process, that is what our company and team are set up to do. Most of our banks offer remote account openings. We take out the guesswork and there is no need to make multiple phone calls, bank visits, or have to travel a great distance to sign the signature card.

To get started opening a compliant CBD bank account please schedule a call with one of us at the MMJ FinSol team.

Kirsten Risko — www.calendly.com/kirsten-mmjfinsol

Philippa Burgess — www.calendly.com/finsol-group

Philippa Burgess is the Co-Founder and COO of MMJ FinSol, a financial solutions company serving the Cannabis, Hemp and CBD industies. She can be reached at philippa@mmjfinsol.com

MMJ FinSol

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MMJ FinSol provides banking, credit card processing, and financing for cannabis, hemp and CBD companies.

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