The CBD market is growing rapidly, with global sales expected to reach $3,860m by 2025. However, despite the increasing popularity of products made with cannabidiol, misinformation and a lack of understanding continues to plague the industry. Read on to learn more about the main issues those operating in this sector need to be aware of.
For companies legally operating in the CBD sector, the lack of understanding can be a disheartening problem. Companies trading in the sector face a multitude of issues, a major one being a shortage of suitable payment providers. Organisations find themselves unable to market products effectively and struggle to build strong relationships with the reliable, robust payment providers they need to grow their businesses.
In this article, we’re going to take a closer look at what CBD is, and consider the main obstacles that the industry faces, paying particular attention to issues surrounding online payments.
CBD: A brief introduction
CBD stands for Cannabidiol, which is one of 113 phytocannabinoids discovered to date. CBD is extracted from the Cannabis plant, of which there are two main strains: Cannabis sativa, widely known as Hemp, and Cannabis Indica.
The main difference between Cannabis Sativa and Cannabis Indica is the level of tetrahydrocannabinol contained within the components. Tetrahydrocannabinol is the famous psychoactive constituent of cannabis, and the cannabinoid responsible for the psychological effects of the drug. In Cannabis Sativa, or hemp, THC levels are low, and CBD levels are high. By contrast, Cannabis Indica is typically higher in THC and lower in CBD.
It’s this difference in the THC level that led the World Health Organisation (WHO) to release a report in 2017 stating that “to date, there is no evidence of recreational use of CBD or any public health-related problems associated with the use of pure CBD.”
The statement resulted in a change in attitudes towards CBD, and an upsurge in popular interest in some of its perceived advantages. This shift in public discourse and increased appetite for CBD products quickly led to the UK becoming one of the biggest CBD markets, alongside the United States.
The rules and regulations
Despite the WHO’s 2017 statement, CBD is still heavily restricted in terms of marketing and advertising. This has made it difficult for CBD companies to run successful search engine and social media campaigns.
Two of the main regulatory bodies involved in the regulation of CBD in the UK are the Medical and Healthcare products Regulatory Agency (MHRA) and the Foods Standard Authority (FSA).
In October 2016 the MHRA released a statement on the regulatory status of products containing CBD. The UK agency stated, “we have come to the opinion that products containing cannabidiol (CBD) used for medical purposes are a medicine. Medicinal products must have a product licence (marketing authorisation) before they can be legally sold, supplied or advertised in the UK, unless exempt… medicinal products must have a product licence (marketing authorisation) before they can be legally sold, supplied or advertised in the UK, unless exempt.”
This statement did give some clarity on the matter, with manufacturers and retailers widely interpreting it as an instruction that CBD products could be legally sold in the UK, as long as no medical or health claims were being made.
For businesses selling CBD there are many other things to be considered, however. UK Cannabis laws must be taken into consideration when selling such products, so businesses need to be aware of the regulations surrounding labelling, ingredient lists, certificates of analysis from manufacturers, EU directives, novel food regulations and levels of THC.
The payment issue
Companies trading in the CBD sector must be careful to operate within the boundaries of a multitude of rules and regulations, but organisations that do so have proved hugely successful in recent years. New companies are entering this growing market regularly, and we’re seeing an upsurge in applications from new brands looking for a flexible, powerful payment gateway that works for their business.
Zion Payments partnered with its first CBD business in October 2017, and quickly became one of the top payment gateways in the space. This is a sector that our team are hugely excited to be a part of, and as such we always strive to keep abreast of changes relating to the industry. Being one step ahead enables us to better represent the sector to our acquiring partners, and deliver quality service to our customers.
We’re often notified of unfortunate incidents relating to CBD merchants and unscrupulous payment gateway providers. Recently we’ve heard of merchants having money frozen, being charged exorbitant fees, or being accepted, only to be told – days or weeks down the line – that their payment services have been suspended or cancelled entirely.
Since entering the space, we have made it our goal to understand the industry, and provide a clear solution to the common issues facing CBD merchants today. That’s why we provide stable merchant accounts, along with a personable, yet professional service.
We strongly believe in the potential of the CBD industry, and are passionate about increasing the standards of payment services in the sector. If you’d like to find out more about partnering with Zion Payments, get in touch today on either [email protected] or 0800 054 6567.