On January 1, 2019, the 2018 Farm Bill removed restrictions on selling CBD as long as it is derived from hemp plants.
CBD, or cannabidiol, sales are expected to reach nearly $80 billion by 2030. With that much money on the table, it’s no wonder CBD stores are popping up everywhere as everyone tries to get their share.
For the small business owner, branching into CBD-related sales in their Shopify store (or launching a new one from scratch) seems like a natural choice--but there are a few things you should know first.
Fill Out the Shopify Paperwork
It should come as no surprise with a substance like CBD, but Shopify has to cover themselves on the legal side. The first thing you’ll need to do is fill out the “Attestation for the Sale of Hemp and Hemp-Derived Products.”
This form basically says that as a seller of CBD products, you will abide by all Federal, state, and local laws as they pertain to these sales. It also indemnifies Shopify, which is a fancy way of saying that if you run afoul of the law, you can’t turn around and blame Shopify for it.
It also means that it’s your responsibility to keep track of the laws relevant to your target sales areas. For example, two states currently forbid the sale of CBD: Idaho and South Dakota. Idaho is currently drafting legislation that will legalize hemp-derived CBD, but South Dakota has chosen to keep it illegal.
If Idaho changes its laws you’ll be able to sell there, but for now it’s a definite no-go. It is also possible that other states could backtrack and repeal the existing state laws, further reducing your potential market size.
Currently, Shopify supports selling CBD products in the following 41 states:
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- South Carolina
- Rhode Island
- West Virginia
Shopify expressly states that they are not responsible for informing owners of CBD related shops if there are any changes in the law. That responsibility lies with you.
CBD that contains less than 0.3% THC is now federally legal. What this means is that the Drug Enforcement Agency (DEA) no longer controls the sale of these products. Instead, the handling has passed to the Food and Drug Administration.
The FDA has not approved CBD as a medicine (except for a single prescription drug, Epidiolex), or as a food additive or a dietary supplement. As a result, you’re technically not supposed to market it by making any health claims or add it to food or drink. That remains illegal at the Federal level.
But on the state level, you can sell them as such, as long as you don’t ship them to another state. That interstate commerce makes it a Federal concern.
The laws surrounding CBD can be extremely confusing. Many sellers choose to retain a law firm that specializes in “cannabusiness” to keep themselves abreast of all of the laws and how they pertain to them.
The last major component of selling CBD products on Shopify is how you accept payments. With cannabis-related products, several banking laws have strange effects on who can take payments and who can’t.
Federal law forbids banks from taking money involved in the marijuana industry. That law makes credit card issuers uneasy when it comes to handling funds as well. You can’t use Shopify’s in-house payment processing, Shopify Payments, either. (And in case you’re wondering, no, PayPal put the kibosh on CBD payment processing as well.)
Finding a payment solution that will deal with CBD revenue can be challenging, but not impossible. You just have to go through an outside vendor that integrates with Shopify.
Shopify currently recommends two: DigiPay and eMerchant Brokers.
But getting approval from these third party merchants isn’t as easy as signing up. For DigiPay, you must provide test results from an independent lab that demonstrate your products don’t contain more than the 0.3% THC concentration as allowed by Federal Law. You’ll also need to submit photos of your product and inventory.
For our CBD merchants (and all merchants really!), we love to refer them to a third option: Sezzle, a convenient and CBD-supported payment solution. This innovative approach to sales growth allows customers to split up their total purchase into four interest-free payments--lowering the objection to purchasing. Click here to see how Sezzle can help you close more sales.
Best of all, for Tako readers only, Sezzle is currently offering a FREE 30-day trial. Just enter code SZORNYO during sign up.
Is All the Hassle Worth It?
Many ardent CBD proponents claim that it can prevent, diagnose, or even treat cancer, diabetes, Alzheimer’s, and even psychiatric disorders.
Officially, the FDA prohibits CBD sellers from making any claims about efficacy in treatment. Additionally, because CBD is now in an FDA-approved medication (Epidiolex, used to treat Lennox-Gastaut syndrome and Dravet syndrome), it can't be used as a food additive.
However, the fact that CBD has been approved as medication shows that it does have some definite and clinically proven effects.
In 2012, a research team published a study in the Journal of Experimental Medicine that showed cannabinoids are highly effective in treating neuropathic pain and inflammation.
It also notes that marijuana has been used to treat neuropathic pain for centuries, but the psychoactive components of THC make it a problematic solution for many. However, because CBD has low amounts of THC, it avoids those side effects.
Currently there is a boatload of studies examining the efficacy of CBD, particularly for insomnia and anxiety. One oft-cited study concluded that CBD was effective in treating anxiety and insomnia in a ten-year-old girl suffering from PTSD connected to a sexual assault. Earlier attempts with standard pharmacotherapy were only partially successful, while CBD was a fully effective treatment.
There is no doubt that CBD has many great benefits. However, because this is such new ground for regulatory agencies, knowing what you can and can’t legally say in marketing is tricky.
Congress is currently pushing the FDA to make changes in CBD regulations, in part because of public demand. The next few years should be interesting, as the Federal government takes a more firm position on the legal and marketing status of CBD as a supplement and food additive.
All The Toppings
As more states change their laws regarding the sale of marijuana-derived CBD products, the landscape for selling will continue to change as well. With several states (such as Pennsylvania) on the cusp of legalizing recreational marijuana, expect to see even more potential markets open up. As the banking industry catches on to the potential windfall that CBD-related money represents, their desire to stay on the sidelines will fade as well.
The biggest challenge for you as a merchant is staying abreast of these changes.
Setting up your Shopify store and developing a marketing strategy that’ll separate your products from the ocean of other CBD-related goods can be an equally daunting challenge.
Contact us to see how we can help you get up and running faster.
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