Being a small business owner has always been hard. Trying to come up ahead of giant corporations is no easy task, but it’s even harder for those who wish to sell cannabis and CBD products or even just accessories and gear. One main issue that small businesses are now facing is the legal battle against payment processors. Most processors, like Pura Payments, will withdraw their services from smaller businesses, while major corporations are able to elude this tricky process.
The Outline recently released a comprehensive article detailing the issues faced by small business owners. At first, for these start-up companies, everything seems to be going smoothly. Most choose payment methods like Stripe, thanks to its easy setup and pay-as-you-go fee structure, which deducts 2.7 to 2.9 percent plus 30 cents per credit card transaction. This was the case for Maya Shaw, who opened her accessory store Shaw last April, selling handmade pipes and other items from women and PoC artisans.
https://www.instagram.com/p/Bym_23OB6Pm/?igshid=17qmudpc77si9
As reported by The Outline, Ms. Shaw used Stripe for the first nine months, until the company suddenly withdrew its support because her business was “cannabis-affiliated,” and gave her an ultimatum: she had 15 days to find a new payment processor. This event would be bittersweet in itself, but it is even worse considering that major retailing companies like Sephora, Rite Aid, CVS and many more are able to sell CBD products and are evading these payment restrictions.
Put simply, credit card companies are withdrawing support from any small owned cannabis affiliated business. “Credit-card processing [is] perhaps the biggest Achilles heel for CBD companies,” Lex Pelger, the Director of Education for CBD producer CV Sciences, told The Outline. “Overly cautious credit-card processors are hamstringing the industry over their own cowardice.”
What is hypocritical about processors like Stripe is that the company still provides its payment methods and support for huge corporations like Amazon and Target, both of which sell CBD and hemp products but will shy away from smaller businesses. Payment processors appear to have no qualms about rejecting small, independent businesses, while major chains that have started to get into CBD products, like DSW or Neiman Marcus, have been able to elude such policies.
“Realizing how the regulations are being selectively enforced based on who the brand is and what the size is, is really disheartening to see,” von Pfetten told The Outline.
The Outline reports that Stripe’s Terms of Service list “cannabis dispensaries and related businesses” as “restricted businesses,” with no special exception for hemp-derived CBD. The payment processor Square also emphasizes federal law when explaining that it does not serve marijuana-product retailers because such substances are “not currently legal at the federal level.” The problem, however, is that these restrictions are only selectively applied to the smaller business owners, because presumably they wouldn’t bring in as much profit.
These small business owners seem to be facing an insurmountable wall: the regulations are different for small businesses than they are for huge corporations. How, then, will these smaller enterprises try to grow?
Comments