Banking in the CBD industry

A Guide to Banking in the UK CBD Industry

It seems odd that one of the fastest-growing industries in the world struggles with financing. Yet, that is just the case for many entrepreneurs seeking to capitalize on the flourishing CBD industry.

Banking in the CBD oil industry is heavily regulated, and startups face a field of bureaucratic red tape. However, if you know how to navigate the regulations to land sufficient financing, you could fare well in the industry.

Why Is It Tough to Get Financing in the CBD Oil Industry?

To understand why CBD oil products face so many restrictions, it helps to discuss the industry’s background and challenges. It’s easier to obtain financing when you can address potential roadblocks.

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What Is CBD Oil?

Cannabidiol (CBD) is a chemical compound extracted from the Cannabis sativa plant. CBD has calming properties that can help people relax without a psychoactive component.

Products made with CBD oil can aid in pain management and help curb some anxiety symptoms. However, you’re not likely to find a CBD oil product that is licensed as a medicine.

It’s Tough to Market a Non-Medicinal Treatment

Did you figure out the first issue facing the CBD industry? It acts as a medicine but technically doesn’t qualify as one. Marketing CBD is a challenge when your product intends to treat conditions like pain and anxiety but can’t be called medicine.

At this point, companies marketing CBD oil products can’t make any claims about the medical effectiveness of their products. All marketing materials must avoid all references to health benefits. That’s tough when it’s the purpose of your product!

CBD vs. THC

Six letters form two compounds that come from one plant. The Cannabis sativa plant creates Cannabidiol (CBD) and Tetrahydrocannabinol (THC), but the two compounds have very different effects on the human body. CBD is perfectly legal in most places, but THC fares differently.

Tetrahydrocannabinol, or THC, is the chemical responsible for the psychological effects of marijuana. It has the calming, relaxing properties of CBD, but with a psychoactive component. Consequently, THC is illegal in many parts of the world and heavily regulated.

Many countries, including the UK, restrict the amount of THC that can be present in a CBD product. Since the amount of THC permitted is minuscule, it can be difficult to abide by the standards. Some investors refuse to take the risk and refuse to work with any CBD oil businesses.

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The Struggle of a Faulty Infrastructure

CBD oil banking is problematic because of the UK’s faulty system. Though it’s not as tricky to navigate as other countries, like the US, the UK system relies heavily on perceived risks versus rewards.

Given the above challenges facing the CBD industry, CBD startups look like massive risks for many banks. Even though many CBD products are legal in the UK, many High Street banks stick to their conservative ways and refuse to approve accounts for companies dealing in cannabidiol.

To further complicate the situation, few payment processors and point of sale systems agree to work with companies selling CBD products with reviews for all of the above reasons. Even modern banking companies struggle under the weight of restrictions and questionable legal issues under the UK’s financial system.

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Financing Options for CBD Businesses

CBD oil banking options may be limited because of the restrictions around the product, but that doesn’t mean it’s impossible. If you believe in your product and understand how to navigate the industry, there’s no reason you can’t secure the funding you need.

  • Secure private investors to bypass the traditional banking system.
  • Start small and scale slowly to work within your means.
  • Save up before starting up. It may take a while but funding your business without a bank helps your long-term goals.

How to Accept Payments from Customers and Get Paid

Even if you have plenty of capital for your company, you won’t do much business if your customers can’t purchase your product. Thankfully, some payment gateways willingly work with companies selling CBD products.

Trust Payments

One of the first companies to embrace the CBD oil industry, Trust Payments, loves creative solutions. They deliver trustworthy customer service and encourage the growth of CBD companies.

Trust Payments accepts several payment methods, is easy to set up, and reliable. They tailor fees based on a company’s use and offer stellar 24/7 tech support.

Worldnet

This payment gateway happily works with businesses selling CBD products. They allow for secure, reliable online payments, and work with WooCommerce, WP Ecommerce, Magento, OpenCart, and Joomla.

They offer online payment options for your customers, and they provide tracking options, refunds, and low fees. Businesses also receive money faster with Worldnet than some other options.

Paytriot Payments

Another UK-based company that offers CBD oil banking is Paytriot Payments. They accept payments online, by phone, or via subscription so that you can expand your customer base.

Paytriot already works with more than 300 CBD companies, so they are well-versed in the industry. The company is also FCA registered with competitive fee structures.

Nochex

Nochex is well-established and one of the first to accept CBD oil banking. They require you to provide lab reports for all products you sell to ensure compliance. However, they are easy to work with and even have a dedicated UK-based account manager.

You don’t have to belong to the CBD trade association or present a Legal Opinion Letter to work with them. Many businesses gain approval within 24 to 48 hours of applying.

WeTranxact LTD

This company isn’t afraid to work with higher risk companies because of their massive, worldwide network of card processors. WeTranxact LTD has an excellent reputation with a large contingent of clients based in the UK.

Hundreds of CBD businesses work with WeTranxact LTD to obtain credit card services. There is a £195 startup fee, but they don’t charge monthly fees for WooCommerce, and have low card processing fees.

Axcess Merchant Services

If you’re looking for a larger choice in banking partners, Axcess Merchant Services may be the choice for you. They also offer dual banking so that you can work with two banks at the same time.

You may need to provide a Legal Opinion Letter, and they only accept businesses processing less than £50,000 per month. They do have a dedicated account manager in the UK and work with various European currencies.

A Word About PayPal and Viva Wallet

Both companies accept payment for goods and remain popular methods for transactions. Some top-ranking CBD companies use one or the other despite both companies stating they do not accept businesses selling CBD oil products.

There are ways to circumvent the system, like using more than one account on either service to funnel money around, but it’s risky. PayPal and Viva Wallet could shut down your accounts at any time if they choose.

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The Future of CBD Oil Banking Looks Bright

Though it’s difficult to navigate now, the trends for CBD oil banking should change. As government regulations shift to allow more sales of CBD products, the banking industry is sure to follow suit. Like most industries, it pays to get in at the front end of a new product, though you may have to be patient for financing to catch up.

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