Why Hemp and CBD Businesses Are Considered “High-Risk” by Merchant Service Providers
Introduction
If you’re in the hemp or CBD industry, you’ve likely faced higher-than-average payment processing fees—or even had a merchant account shut down. Here’s why acquiring banks and payment processors treat these businesses differently, even when your products are completely legal.
1. Regulatory Compliance and the 0.3% Delta-9 THC Threshold
Legal Limits Define Acceptable Products
Credit card networks like Visa, Mastercard, and Amex only allow the processing of products legally classified as hemp—those containing 0.3% or less Delta-9 THC by dry weight.
Responsibility Falls on the Merchant
If a product exceeds this threshold, it’s considered marijuana under federal standards. Although the merchant bears the legal liability, processors fear brand fines or reputational harm, which makes them hesitant to support these transactions.
Varying Bank Policies
Due to this risk, some banks avoid hemp businesses entirely, while others allow them with strict restrictions and higher fees to offset potential regulatory exposure.
2. Social and Political Stigma Surrounding Cannabis
The Lingering Misconception
Despite CBD’s mainstream popularity and non-psychoactive profile, many banks still associate it with cannabis-related stigma, which colors their risk assessment.
Public Perception vs. Internal Policy
Polls show growing public support for both medicinal and recreational cannabis, yet institutional policies at many banks still reflect outdated or conservative views.
3. Reputational Risk Driven by Shareholder Pressure
The Influence of Shareholders
Large acquiring banks like Chase, Wells Fargo, and US Bank are publicly traded, and their biggest shareholders often influence policy decisions, particularly if they hold ultra-conservative values.
Perception Over Performance
These banks often cite reputational risk as a reason for refusing support, even if the actual business metrics (like chargeback rates) don’t justify the label.
4. The Irony of Reputational Risk
Questionable Justifications
It’s fair to question how large banks with already questionable reputations can claim reputational risk for simply supporting legal hemp businesses.
Inconsistencies in Risk Management
These decisions often feel arbitrary, with banks choosing public image over evidence-based assessments of a business’s actual risk profile.
5. Discrimination in the Merchant Processing Ecosystem
A Microcosm of Broader Societal Bias
Just as society faces discrimination across many human factors, the payments industry discriminates against certain product types, regardless of performance or legality.
Missed Business Opportunities
Ironically, many hemp and CBD businesses are financially strong with low chargeback rates, meaning banks are losing out on profitable partnerships due to outdated biases.
Conclusion
While hemp and CBD businesses are often unfairly categorized as high-risk, the reality is that much of this classification stems from regulatory caution, social stigma, and reputational concerns—not actual transactional risk. Understanding this landscape helps explain why you may be facing higher rates or more limited processing options, even when you’re fully compliant and operating a legitimate, successful business.
