If Cowen & Co. stats are anything to go by, the CBD market could hit $16 billion in revenue by 2025. There’s no denying that this industry is set to bloom in the coming years, thanks to the passing of the 2018 Farm Bill and the legalization of medical and recreational cannabis in some states. With this in mind, it is hard to imagine that CBD and hemp vendors still face huge challenges with regards to payment processing.

For one, banking institutions have given them a deaf ear terming cannabis a high-risk affair. It is extremely difficult to get a merchant account as a CBD vendor all across America (unless of course, you don’t declare the nature of your business). A few years back, CBD companies relied on PayPal to carry out transactions but it wasn’t long before the rug was swept out right under their feet when their accounts were abruptly closed.

Now, most CBD and hemp merchants such as the golden monk are left with the option of using cash transactions, risky financial providers, expensive offshore accounts, or cryptocurrency.

In this post, we decipher this whole banking issue debacle with the cannabis industry. We explain in detail why banks are reluctant to offer their services to CBD and hemp merchants, the challenges with cash transactions, and why a majority of them have gravitated towards crypto.

Why banks don’t want to take on CBD and hemp businesses

Hemp and CBD may be legal across the United States but marijuana is still federally illegal in most states. So far 33 states have made medical marijuana legal with only 10 and Washington D.C. legalizing it for recreational purposes. The Federal Reserve has regulations for how state-chartered banks carry out their transactions. For this reason, banks, including card brands such as Visa, MasterCard, Discover, and AmEx, would rather stay away from this risky business lest they get into some kind of trouble with the authorities.  To them, cannabis still maintains its position as a Schedule 1 drug along with ecstasy, heroin, peyote, and LSD.

The challenge of using cash for cannabis transactions

The reluctance of banks to offer merchant accounts for CBD traders has forced CBD stakeholders to make sales and pay bills using cash. Expectedly, this method is risky and cumbersome. The very act of storing cash in a physical store poses a high-level security risk since it can get lost or stolen. If you’ve been keen on cannabis news over the last few months, you might have read the report claiming 7 CBD shops in Colorado were broken into within 11 days of hemp legalization. In a desperate bid to keep their bucks safe, some merchants have had to bury them. Some have come up with clandestine warehouses for storing their stashes away from prying eyes.

Cryptocurrency: The best solution for CBD and hemp processing

CBD and crypto have one thing in common: they have experienced an image revolution. A few years back, cryptocurrency was shunned by corporate leaders. It was thought of as a fringe payment for drug leaders and cypherpunks. Now it is one of the leading payment processors across the planet. Like crypto, CBD has struggled with regulators and authorities when trying to penetrate the market. Since the elimination of CBD from the Controlled Substances Act, Bitcoin, and other Cryptocurrencies can market CBD tokens without necessarily stepping into dangerous waters.

The main reason crypto stakeholders are interested in the cannabis market is somewhat linked to the health and wellness industry. Health care is an evergreen industry albeit with its constant evolution. CBD is the new kid on the block that promises to improve existing health care systems, particularly stress and anxiety. For example, crypto entrepreneurs have been a victim of stress and anxiety and are thus open to a natural and effective solution for them. CBD does exactly this. The availability of CBD and hemp is another reason crypto is in on the cannabis action.

CBD and hemp wholesale and retail distributions, on the other hand, have made the switch to Blockchain because of the explosion in the crypto industry. Now, cannabis-focused cryptos such as HempCoin are already in business and doing pretty well.

Benefits of cryptocurrency for CBD payment processing

Blockchain is basically an automated record-keeping technology where data is stored in encrypted blocks. Transactions are performed via consensus mechanisms where the value of a tangible product is agreed upon by two parties. After a complete transaction, the block, through an encryption algorithm is converted to a chain as a permanent database. It is more complex than this but generally, it provides a ton of benefits for CBD businesses. These include the following:

  • Accessibility: While banks and other financial institutions have the keys to your account, crypto freely hands you access to your funds round the clock. Some crypto platforms can hold your coin and release if need be. With cryptocurrency, you don’t have to worry about getting access to your money whenever.
  • Efficient Payments: Compared to cash or bank transactions, crypto is by far the most efficient payment system in the world. You can make quick payments from any location in the world. This eliminates the challenges of location-based payment as is the case with other processors.
  • Zero tax: If you sell CBD online, you can comfortably conduct business across geographical areas and regions without tax implication.
  • Transparency: The last and most important reason CBD merchants are migrating to cryptocurrency is that it promotes transparency. Blockchain is essentially a ledger that can be easily transferred to various computers. This allows for swift verification of processes and ultimately promotes openness. CBD investors take transparency seriously. Their ability to log into Blockchain wallets and quickly verify transactions makes crypto worth the while.

Other Payment Options

It is not uncommon for CBD businesses to try and convince a financial institution such as Bank of America (BOA) to open an account for them. However, like other banks, BOA is not technically an expert in dealing with high-risk accounts; therefore, things might go south quite fast.

Another option would be a high-risk processor willing to accept online payments for CBD products. There are a plethora of such processors who are well aware of the cannabis industry and who can adapt to changes. You just need to choose one with the right of financial services and who can take you under their wing.

TI processors have also been helping high-risk businesses process payments since 2012. They perform process weekly transactions and offer other financial services such as same-day accounts, card processing, and an underwriting process for all kinds of e-commerce businesses.

Money Order Fraud

Money order fraud is a common term that refers to the forgery or alteration of money orders and checks, often drawn from an offshore bank and issued to unsuspecting parties. Examples of include work-at-home scams where victims are promised cash by clearing checks, online classifieds and actions, debt collection, and pleas of help. It takes more than seven days to uncover a money order fraud which is often a little too late for the victim.

There are several approaches to preventing money order fraud, the best one is using cryptocurrency. Blockchain technology doesn’t use checks or orders of any kind. You can also easily verify your transactions before doing any transaction. If you detect any form of fraud, you can log into your account and stop the transaction.

Benefits of echeck processors

Electronic checks (or echecks) offer an effortless way of accepting online payments. Typically, you turn a paper check from your client into an electronic check, which allows the placement of funds in your account. This transfer is swift—takes up to a maximum of 48 hours. Having an echeck processing makes for an excellent safety net for a high-risk merchant. It is also an invaluable solution to CBD credit card processing. If you want to go green, have fewer errors, enjoy low processing costs, or want a recurrent billing system, using echecks is the way to go.


CBD and hemp may have been legalized for medical and recreational uses but it is yet to be universally accepted by a majority of financial service providers. Thankfully, crypto is a ripe market for cannabis vendors across the globe. It offers more benefits than bank and cash transactions.