Grow your CBD merchant portfolio
InvestiGate automates underwriting for quick Know Your Business (KYB), ensuring compliance and thorough investigations.
Avoid going up in smoke with the right due diligence
Onboarding a merchant selling cannabidiol (CBD) products without proper due diligence puts your business at risk of serious financial and reputational harm. Regulators and card schemes will take aggressive action if laws are violated. Ignorance is not an excuse.
Outsource your risk
Not everyone has the resources for a full risk assessment of every new merchant. That’s where we come in. We offer an in-depth analysis of any merchant offering CBD products.
A safe pair of hands
If needed, we connect you directly with experienced underwriters well-versed in card scheme rules, with deep knowledge of the ins and outs of the CBD regulatory landscape.
Six steps to CBD merchant compliance
1. Product detection
Our tried-and-tested web crawler and expert underwriting team tell you what kind of products the merchant sells on their website, including their THC levels.
2. Shipping compliance
Find out where the merchant is shipping their product to and where their website visitors are coming from. Get detailed information about if CBD is regulated or illegal in these jurisdictions.
3. Deceptive statement detection
We highlight false medicinal claims and other potentially deceptive statements for you.
4. Analyse lab reports
To sell CBD products legally in certain jurisdictions, the merchant needs lab reports from third-party laboratories to determine THC levels. We ensure they are in order.
5. Identify necessary disclaimers
In most jurisdictions, regulatory authorities require that merchants inform consumers about age restrictions, product applicability, possible health concerns, and more. We identify if they do.
6. Expert advice
Get mitigation recommendations for every issue we detect for the merchant’s website.
FAQs
New to the payments industry? We have answers to common questions.
Derived from cannabis and an internationally controlled substance, CBD poses a challenge to payment providers and regulatory agencies alike. In some instances, this also affects CBD-derived products, with little consistency in the regulatory landscape. Laws and regulations may vary depending on jurisdictions and product categories, leading to the need of enhanced merchant due diligence (e.g. CBD gummies versus Epidyolex, a CBD-based medication used to treat epilepsy).
For the card schemes, the legality of the transaction in both the merchant’s and cardholder’s jurisdictions is the key requirement, meaning acquirers and payment providers need to be aware of the areas their merchants operate in and the laws on the ground. Neither Visa nor Mastercard currently has. Otherwise, neither Visa nor Mastercard currently have a special policy that targets CBD.
For acquiring banks or other payment providers, underwriting means investigating a merchant and their websites for signs of fraud, non-compliance with card scheme rules or local regulations, and other risk factors. It traditionally involves reviewing all data provided in the merchant application. Merchant underwriting happens during the merchant onboarding process and culminates in accepting or declining a merchant application.
In the EU, the main legislation regulating CBD products is the Novel Foods Regulation, according to which products that have been classified by the European Commission as novel foods require authorisation prior to being sold on the market. In the USA, The FDA is in charge of federal regulations that relate to CBD products, but in the absence of clear rules, each state has been developing their own legislation.
The legality of CBD represents the main challenge for both merchants and their acquirers. In some jurisdictions, like Sweden and Norway, CBD is regulated as a prescription-only pharmaceutical. In other jurisdictions, such as Belarus, CBD is considered an illegal drug, because it is technically a cannabis derivative. And in yet other jurisdictions, such as Ireland and Latvia, even trace amounts of THC that would be permissible elsewhere make certain CBD products illegal.
As for payment professionals, they must be aware of laws and regulations in both the merchant's and cardholder's jurisdiction to make sure that the transaction involving CBD products is legal.
Before selling a CBD-infused product in the UK, obtaining an authorisation from the Food Standards Agency is necessary. Yet some Scottish merchants were caught repackaging CBD foods and selling them as cosmetics, which is obviously not allowed. In this case, it's the actions of the merchants that are putting consumers at risk. Currently, the FSA is in the process of authorising “novel” CBD products for sale and none have received a full authorisation so far.
Generate safe revenue with CBD merchants
Get expert support whenever you need it or get your team the specialised tools they need to efficiently manage the risks of your CBD merchant portfolio.