Thrive Market, an online natural and organic products marketplace, said it is shelving its catalog of hemp extracts and topicals at the demand of the company that processes its payments.
The ecommerce platform received notice from its merchant processor “demanding that we cease the sale of all hemp and CBD products,” Nick Green, Thrive’s chief executive, wrote in a blog post and email to customers. “We unfortunately have no choice but to comply, and we’ll begin removing our assortment as early as Thursday, June 20.”
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The merchant processor was not named, and Green was unavailable for further comment. Thrive has been selling the products for more than 18 months.
Thrive is not alone. Earlier this month, third-party payment processor Stripe dropped the US Hemp Authority, a nonprofit organization developing a certification program and label for hemp, as a client because it thought it was too much of a liability, CNN Business has learned.
https://wraltechwire.com/2019/06/15/accountability-standards-could-be-coming-to-fast-growing-hemp-industry/
The moves show how businesses remain uncomfortable dealing with hemp — and, specifically, hemp-derived extracts rich in the non-psychoactive cannabis compound cannabidiol (CBD) — even though the plant gained more legal footing late last year.
Legislative measures to allow for cannabis banking have been proposed in the US Congress and remain under consideration.
In April, Senators Mitch McConnell and Ron Wyden wrote to several banking and financial regulatory agencies, urging them to issue clarifying guidance on hemp’s legal status.
“It has to come from the regulators of the banks because the bankers are definitely scared, and I think rightly so,” said Bob Crumley, CEO of Asheboro, NC-based Founder’s Hemp.
It took years — and an 8-inch-thick brick of documentation — for the longtime attorney to land a banking partner for his hemp company, Crumley said. Other hemp firms haven’t been so lucky.
“They’re very afraid, the banks are, of people saying they’re in the hemp industry and instead are pushing marijuana out the back door,” he said.
Regulatory guidance would go a long way in helping the smaller hemp companies, Crumley said.
“Now that CVS, Walgreens (are selling hemp products), the credit card processors are processing hemp every day in America; they may not know it, but they are,” he said. “So, then what’s the reason that they blanch at processing a hemp company?”
Cloudy status
“Very little, thus far, is cut and dried about the hemp industry,” said Garrett O. Graff, a managing attorney at Hoban Law Group, a Denver, Colorado-based firm representing cannabis businesses.
The ability to openly and freely bank has long been a challenge for cannabis companies, including those in hemp and especially those who sell products from marijuana, hemp’s federally illicit cousin.
Both hemp and marijuana are Cannabis sativa plants. Hemp contains no more than 0.3% of the psychoactive tetrahydrocannabinol, or THC.
Some hemp industry members believed they were standing on more solid ground following the December 2018 passage of the US Farm Bill, which legalized regulated hemp cultivation and production. A number of American retailers rushed to cash in on hemp-derived CBD — products heralded for potential wellness benefits.
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However, hemp-derived food and personal care products remain in a regulatory gray area as the Farm Bill deferred to the US Food and Drug Administration on how they should be treated. The FDA on May 31 held a public hearing to gather information and comments about how CBD should be regulated.
Graff, who testified at the FDA hearing, said he anticipates the agency will embrace hemp-derived products and have them treated like a garden-variety nutritional supplement.
But not all in the private and public sectors are on board.
“What we’re now dealing with is perception and how do we change perception, not the law,” Graff said. “The law provides for this.”
Last week, the US Hemp Authority got word that Stripe would no longer work with it. The organization is considered an ancillary business to the hemp industry as it is “non-plant-touching.”
“We’re being told we’re high risk,” said Marielle Weintraub, president of the US Hemp Authority. “We’re actually trying to minimize human risk.”
Officials for San Francisco-based Stripe declined to comment, and referred to its list of restricted businesses, which include cannabis-related companies. In the past, Stripe has noted how some decisions are dependent upon the policies of credit card companies and partner banks.
Thrive Market will comply for now, but won’t give up, its CEO wrote.
“We believe that ethical and sustainable hemp is another cause worth fighting for, so rest assured that we will be working behind the scenes in the coming weeks to get hemp products back on Thrive Market,” he wrote. “In fact, we’re already in conversations with a new processing partner to try to make that happen.”
Some larger payment processors have started testing the waters. Square is starting to accept some hemp CBD clients on an invite-only basis, a move that was first reported by Forbes.
PaymentCloud, a payment processor that takes some higher-risk accounts, has signed on hemp and CBD clients on a case-by-case basis.
Those determinations are made carefully because PaymentCloud needs to work within the bounds set by its partner wholesale payment processors, said Shawn Silver, the company’s CEO.
“We’re not going to push the envelope,” he said.
