Akerna Partners With Priority Technology Holdings, Inc. To Offer Hemp-CBD Industry Payment Processing - Grow Life 420

Akerna Partners With Priority Technology Holdings, Inc. To Offer Hemp-CBD Industry Payment Processing

September 22, 2020

#KahliBuds #MMJ #CBD #THC

The CBD market is one of the fastest growing industries in the United States. In 2017, U.S. CBD sales topped out at around $190 million. Three years later, the U.S. CBD market is a billion-dollar industry that is poised to reach $16 billion in annual sales by 2025. Enabling this rapid market expansion was the 2018 Farm Bill, which federally legalized the production, sale, and distribution of hemp and its derivatives (CBD chief among them).

Yet while the Farm Bill paved the way for this billion-dollar industry, CBD brands themselves are still struggling to access even the most basic of financial services, such as credit card payment processing. Although CBD is technically legal, it is still a substance that remains unregulated by the Food and Drug Administration.

CBD’s unregulated status creates a host of issues for brands and the ancillary companies that service them. On June 29, 2020, the U.S. Financial Crimes Enforcement Network (FinCen) issued comprehensive guidance to financial institutions working with hemp-related businesses.

Among other provisions, the memo removed the requirement that financial institutions automatically file a Suspicious Activity Report (SAR) on all hemp-related customers, making it easier for banks to service the industry.

Noticeably absent from the memo is any word regarding CBD-related businesses, due in large part to the substance’s unregulated status. Consequently, mainstream payment processors have been reluctant to embrace the CBD industry.

The only companies thus far that have been willing to service the industry are those offering high-risk merchant accounts.

A high-risk merchant account is essentially a processing account for businesses that banks would consider “high-risk.” Typically, the types of companies that open these accounts are from industries such as adult entertainment, gambling, alcohol, etc.

While a typical merchant account will charge companies around 1%-2% per transaction, high-risk merchant accounts will often charge between 3%-9% per transaction. Most notably, the payment processor Square charges CBD brands 3.9% plus $0.10 per transaction for in-person transactions, and 4.2% plus $0.30 per transaction for online purchases.

Such steep fees can make it difficult for CBD brands to prosper, especially when it comes to those that depend on online sales.

A recent report by Brightfield Group found that approximately 45% of consumers are purchasing CBD solely from the internet due to concerns from the COVID-19 outbreak. Unsurprisingly, online CBD purchasing increased by 61% from Q1 to Q2 of 2020.

The banking issue is a particularly frustrating problem for the CBD industry because, unlike the cannabis industry, CBD is legal at the federal level. For many in the industry, the assumption was that once the Farm Bill legalized hemp and CBD, that it would become easier to conduct business, but little has changed.

Recognizing the frustrations felt by those in the CBD industry, cannabis-focused compliance companies like Akerna (Nasdaq: KERN) have started to build out their platforms to support CBD brands as well. Akerna is a Denver-based compliance technology company best known for their seed-to-sale software MJ Platform.

Most recently, the company announced that they signed an agreement with Priority Technology Holdings, Inc. (Nasdaq: PRTH), to provide the hemp-CBD industry with payment processing solutions. Offering ACH, card-not-present, recurring payments, and automatic credit card information updates; Akerna aims to offer a seamless all-in-one service to both current and future CBD clients.

Looking forward, the company also hopes to leverage this agreement to help position the company as a national payment processor for the cannabis industry as well.

“With this solution, we are making it easier for our CBD and hemp clients to process payments,” said Akerna CEO, Jessica Billingsley, in a statement. “We are also well positioned to activate payment solutions through Priority for traditional cannabis sales pending legislative action at the federal level.”

Given the limited number of payment processing solutions, much less those designed specifically for the CBD industry, Akerna currently enjoys the first-mover advantage. Inevitably competitors will arise, but for now it is lonely, and profitable, at the top.

 

The post Akerna Partners With Priority Technology Holdings, Inc. To Offer Hemp-CBD Industry Payment Processing appeared first on Green Market Report.



420GrowLife

via www.KahliBuds.com

Staff, KahliBuds, 420GrowLife

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