As the CBD/Hemp industry continues to grow at unprecedented rates, touching virtually every industry – from cosmetics to pharmaceuticals, to food and drink, and beyond – there is an incredible opportunity for operators to dramatically increase their revenue.
Market research experts project that the collective market for CBD sales in the U.S. will surpass $20 billion by 2024. Unsurprisingly, this is a projected increase from the recent forecast made by New York-based investment bank Cowen & Co, which estimated that the market could pull in $15 billion by 2025.
With so much opportunity, we were thrilled to have the chance to meet with both established and startup companies in the CBD/Hemp space at MJBizCon to learn more about how they’re taking advantage of this market, and what challenges they are facing along the way – so we can then get to work solving them.
Through live surveys and hundreds of conversations, we’ve noticed four key ideas that are front-of-mind in the CBD/Hemp industry right now:
Honesty and Transparency
Owners and operators in the CBD/Hemp space are frustrated with their experience trying to find a payment processor who is honest and transparent about their rates and policies. It was evident that many merchant services providers claim to be supportive of the challenging regulatory needs of CBD/Hemp businesses, but then become totally unresponsive once the contract has been signed or go silent when a regulatory issue is detected. CBD/Hemp payment processing requires an active, hands-on relationship that only begins at onboarding, and grows more robust over time, including instances where concerns arise regarding compliance needs. And that leads us to…
Compliance and Regulatory Support
Many merchants are interested in staying ahead of the rapidly-changing compliance and regulatory curve in CBD/Hemp sales. It is not enough to work with a merchant services provider who will tolerate CBD/Hemp; in today’s landscape, they must take an active role and genuine interest in predicting and managing compliance hurdles. It is tough to find a payment processor that works collaboratively with its merchants to prevent their CBD/Hemp merchant account from getting shut down.
Dealing With Bank Sentiment Toward CBD
While the CBD/Hemp space might be the next great frontier, as far as risk-averse banks are concerned, anything related to cannabis is still the Wild West. So, as CBD/Hemp operators working to rapidly scale your business, you might find yourself regularly set back by banks who are skittish about the industry and remove your processing ability without warning. Finding a reliable banking relationship with an institution that will not jump every time they encounter regulatory conflict is critical to your business’s growth.
Brick-and-Mortar is Still King
You might be surprised to learn that in the CBD/Hemp space, in-person retail sales are rapidly outpacing online growth by a significant margin. As a result, smaller CBD companies increased their share of overall sales to 71% in the second quarter of 2022, up from 67% in the first. This makes sense when you consider that customers appear to be returning to in-person shopping with enthusiasm following the pandemic and that eCommerce demands additional regulations from operators on top of what is required for brick-and-mortar stores. Don’t underestimate the power of effective in-person customer service to earn new customers in this emerging market, especially for those trying cannabinoid products for the first time – or it will cost you!
So, What’s Next?
At Valmar Merchant Services, we will continue to make significant investments in our team’s ongoing education in order to offer the very best customer service and experience. Our experts have certifications in industry-specific verticals such as CBD and hemp, as well as risk and compliance, and in the overall payment space – and we’re constantly sharpening our skills. We’re working hard to keep the pulse of the CBD/Hemp industry – from compliance to marketplace trends – and our customers will continue to reap the benefits.