Square Begins Working With Vermont CBD Businesses
Customers shopping for CBD products in Vermont now have another option for paying for hemp-derived goods. The payment service provider Square is now working with Vermont brands to process payments with credit and debit cards.
Payment for products is just one of several problems faced by an booming hemp industry. While hemp was legalized in the 2018 Farm Bill, companies that sell cannabis products containing CBD derived from hemp continue to lack basic financial resources These products fall into an online banking and e-comm category called “high-risk.” Hemp shares this category with tobacco, online gambling, pornography, multi-level-marketing schemes, and other businesses.
Colin Nohl, co-owner of Waterbury-based Vermont Farmacy, a brand selling CBD tinctures and balms, said the company he runs with his wife Erin has experienced this problem firsthand. In their two years in business, they’ve had to switch payment processors five times.
“It’s been nothing short of a nightmare,” he said.
In March of this year, Elavon, a subsidiary of US Bank and one of the largest online, non high-risk payment processors, announced they would stop working with any company using e-comm to sell CBD or hemp-derived products. All their CBD merchant accounts were shuttered and the industry was sent scrambling for a solution while dozens of other less-than-reliable payment processors popped up.
“We’re all figuring it out as we go along, and that’s true for Square.”
In May, news broke that payment processor Square had been operating an invite-only beta program for some CBD products. An ensuing rush of of applications to participate in the program led to Square shutting it down.
While working with an e-check processor, Nohl said payments with Mastercards were often flagged as foreign transactions, resulting in payment declinations between 30 and 40 percent. When Elavon decided to withdraw from hemp, they were without a payment processor between May and July.
“What we thought would be a quick fix went on a couple months,” he said.
A Vermont web development company played a role in connecting Square with brands.
“We have a beautiful product that is safe and secure and is managed by a staff of professionals. There’s nothing that could tarnish the functionality that Square offers.”
Shortly after Square cancelled their CBD program, CannaPlanners owner and founder Will Read approached Square about creating a partnership.
“We’ve been doing this for a few years and we only work in the cannabis industry so we have this innate understanding of how this industry works and how to avoid some of the things they were worried about,” Read said. “We have a beautiful product that is safe and secure and is managed by a staff of professionals. There’s nothing that could tarnish the functionality that Square offers.”
Read said he also offered to help vet clients that would be using the Square platform.
“We would be able to say these guys are on the up and up and running a good business,” he said. “Despite [Square] being in San Francisco, in a legal state, these are all new waters for them. We’re all figuring it out as we go along, and that’s true for Square.”
“It’s peace of mind for our customers.”
Read said that within 24 to 48 hours of agreeing to work together, all CannaPlanners clients in need of merchant services were brought onboard using Square.
The exclusivity of the deal was a surprise for a small business with less than ten employees.
“We were the only partner agency in the world for the past two and a half months to have this relationship with Square,” he said. “We were the only way in.”
More Vermont brands have been signing on to Square. Last week, Elmore Mountain Theraputics, makers of CBD-infused tinctures and balms announced they were starting to process payments through their website via Square.
For Vermont Farmacy, integrating Square into their website has been a welcome relief.
“It’s peace of mind for our customers,” Colin Nohl said. “They can order a product from our site and have their payment managed the same way as any other item they can buy online. It’s nice that Square is coming around to the hemp industry.”