Prior to Square and Shopify working these type of businesses, CBD brands like Plant People had to contend with many hurdles. For example, Plant People had to work with “high-risk” credit processors who could dictate the fees and payment because of the dearth of options, said Hudson Gaines-Ross, co-founder of Plant People. Additionally, customers had trouble purchasing products as their own banks or credit cards would decline transactions. Dealing with these issues would account for nearly 40% of Gaines-Ross’s time, he said. Now, the brand can focus on growing its team and e-commerce business. However, Plant People is still not able to engage in digital advertising through Facebook, Google and Instagram, or run radio and magazine ads, and Gaines-Ross has to jump through hoops to find office space and business insurance, he said.
When a business applies to sell its CBD products through Square, it is required to confirm during the on-boarding process that it is abiding by current regulations set forth by the 2018 Farm Bill. A Square employee is required to fact-check that through the brand’s website. Square is still not able to perform CBD transactions in Idaho or South Dakota, due to states’ regulations, and is not available in international markets such as Canada, Japan, Australia, and the United Kingdom, said Whitely.
While this decision by Square, which is a publicly traded company and works with thousands of businesses, can lend legitimacy to the CBD industry, it could also have some negative impacts on existing CBD brands, said Gaines-Ross. The barrier to entry will be lower for new brands, as more red tape is removed. However, he added that he prefers operating in a more legitimate industry with room to grow, rather than being a “leading brand and not grow.”