CBD businesses have been experiencing difficulties with payment processors and high street banks accepting their companies for compliance reasons. The main reason for this is due to the regulatory uncertainty surrounding the CBD industry and the risk of legal and financial repercussions for banks and payment processors that work with these businesses.
The U.S. for example, despite the legalization of hemp and hemp-derived products under the 2018 Farm Bill, the Food and Drug Administration (FDA) has not issued formal regulation on the sale and use of CBD products. Moreover, the DEA still lists CBD as a Schedule 1 controlled substance. This lack of clear federal guidance has resulted in a patchwork of state regulations, making it difficult for banks and payment processors to understand the legal landscape and assess the risks associated with working with CBD businesses.
Additionally, high street banks and payment processors are required to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations, which have become stricter in recent years. This has made it difficult for some CBD businesses to meet the necessary compliance requirements due to the lack of clear regulations surrounding the industry.
Furthermore, many banks and payment processors are also concerned about the potential reputational risks associated with working with CBD businesses, due to the association with cannabis, which is still illegal at the federal level in many countries.
CBD businesses also face challenges in Europe, despite the EU Novel Food Catalogue including hemp-derived CBD products, it's still a relatively new market, and financial institutions and payment processors might be hesitant to work with the industry due to regulatory uncertainty and the lack of a clear legal framework.
In conclusion, CBD businesses have been experiencing difficulties with payment processors and high street banks accepting their companies due to the regulatory uncertainty surrounding the CBD industry, which makes it difficult for these institutions to understand the legal landscape and assess the