After the company observed a change in public policy related to the cannabis industry, credit card processing company Square is positioning itself to create new opportunities for clients. The company has quietly, by invite-only, started beta-testing payment processing for companies that sell products containing hemp-derived CBD.
Door Open, Door Closed
Although hemp-derived CBD is now considered legal through the passage of the 2018 Farm Bill, banks and other financial institutions have been leery of dealing with any cannabis-related businesses. For example, at the same time Square started evaluating a possible peripheral role in the cannabis industry, Elavon, a subsidiary of US Bank, closed the accounts of any businesses selling products containing CBD.
It’s been difficult for companies in the cannabis industry to obtain bank accounts and find credit card processors, and people are becoming more vocal about facing multiple barriers to doing business, and that’s not the only one. Sometimes just making a purchase is banned. In recent weeks, Google Play Store updated its content policy and banned cannabis apps — like Weedmaps and Eaze — that connect people with pot. The new policy effectively prohibits in-app purchases, and Google has noted that it is working with affected app developers to make the changes to the apps without disrupting customers.
Despite Google’s assistance, their policy change effectively ends (or makes more difficult) a revenue-generating service.
Critics claim that the lack of basic business services makes the illegal side of the industry more robust. There’s been a recent push for the federal government to step in and allow cannabis-related businesses to operate as legitimate, transparent enterprises.
Banking on Hemp
Sometimes business services (like banking and credit card processing) are scared away by the lack of consistent regulatory parameters. Hemp was deemed legal with 2018’s Farm Bill. But in a House Financial Services Committee hearing last month, Rep. Andy Barr (R-KY) said, “I’ve had constituent businesses tell me that their access to financial products, specifically card services, have actually deteriorated since we descheduled industrial hemp in the Farm Bill,” he said. “This obviously conflicts with congressional intent.”
In the same hearing, Barr also asked financial regulators to update their policies so CBD-related businesses understand they’re working with a legal product and, as a result, have access to financial services.
In related matters, Michelle Boman, at her Federal Reserve Board confirmation hearing for a renewed term on June 5, said that the department would clarify to banks that hemp is a legal crop and that they are allowed to provide hemp businesses with financial services without violating the law.