How To Choose A Legal CBD Merchant Processor In The USA

CBD sales are legal in all 50 states. However, it doesn’t mean that all merchants have an easy time cashing in on these sales. Not all merchant processing companies will allow you to ring up CBD sales. That’s because they are afraid of potentially illegal phytocannabinoids being rung up on their terminals. Here’s how to get cannabis-friendly merchant processing software so that you don’t break any American federal laws.


Why Are CBD Sales Prohibited on Some Terminals?

CBD is just 1 of 113 known compounds found in cannabis plants known as phytocannabinoids. THC is one of those phytocannabinoids.

It’s the compound responsible for the high you experience when you light up your glass bowl. THC is also the reason why hemp products have been outlawed in some states until December 2018.

Hemp naturally contains 0.3% THC or less. This low concentration is precisely why hemp doesn’t cause a psychoactive effect.

It’s also why hemp has been declassified as a controlled substance, and CBD is now legal in all 50 states. Marijuana, which is cannabis with concentrations of 0.3% THC or more, is still federally illegal. Plus, it’s illegal in some states.

While CBD is legal, it’s not highly regulated. Many common CBD products are wrong about their phytocannabinoid claims. While the issues tend to be lower CBD content than advertised, this inconsistency raises a red flag for merchant processors.

Merchant processors don’t have the ability to confirm the phytocannabinoid content of CBD products. They run the risk of marijuana sales being made under the guise of CBD oil items. There are also concerns that unverified phytocannabinoid content can accidentally lead to unintentional marijuana sales.

Merchant processing companies don’t want to risk the liability of federally illegal sales happening on their systems. That’s why you can only partner with specific POS systems that specialize in legal cannabis sales.


Who Are The Best Merchant Processors for CBD?

A reliable merchant processing system is essential for any successful business. Cannabis companies want to ensure they are using one that is up-to-date with the latest compliances.

CBD is considered a high-risk business for merchant processors. So, shopping around is going to be challenging. Here are some of the best terminal systems for your CBD business.



Square is an industry standard when it comes to contactless and credit card merchant processing. As a result, they have become the most reputable POS for CBD companies.

Many companies will hide their transaction fees until you are deep in the process. Square is very upfront about its costs, which breaks down to:

  • 6% + 10¢ fee for contactless payments, swiped or inserted chip cards, and swiped magstripe cards.
  • 5% + 15¢ fee for payments manually keyed-in or processed using a card on file.
  • 9% + 30¢ for invoices.
    • 5% + 15¢ id invoices are processed using a card on file.

With Square, you are not locked into a contract, and there are no hidden fees. You only pay as you use their services.

Being a larger operation, their customer service isn’t the best. There might be long downtimes when there are outages. Their scope might not be powerful enough for larger CBD operations.


This California-based company specializes in high-risk accounts. They provide a quote-based system that depends on your business’ needs, revenue, business model, and more. So it might feel like they’re vetting you rather than vice versa.

You get a dedicated account specialist when you sign up. This type of familiarity is great for busy entrepreneurs who need quick answers. It’s also ideal for novices who require a bit of hand-holding through the CBD process.

While PaymentCloud is an excellent service, they are limited. You can only sell external CBD products, like topicals. Ingestible ideas might require an offshore account, which would bring on another set of tax issues.

Easy Pay Direct

Larger CBD businesses might benefit from partnering with Easy Pay Direct. They only accept established brands and well-funded startups.

This system is a great organizational tool for brands that have multiple shops or portfolios with a variety of umbrella companies. Easy Pay Direct offers a load balancing option to their members.

This unique feature allows merchants to allocate funds to various vendors within your group. It greatly benefits high-risk companies that tend to exceed the volume limits upheld by the underwriting processor.

Most of their rates are volume-based and are hidden with quotes. However, intro rates begin at 2.50% + $0.25 per transaction.

Easy Pay Direct requires a $29.99/month account fee that locks you into a three-year contract. The contract will auto-renew into a monthly deal until you terminate the arrangement.


How to Find A Merchant Processor for CBD

When shopping for a merchant processor, keep a few things in mind. Think about the immediate needs of your business.

Defining your brand and knowing your short-term goals are essential for choosing the right CBD merchant processor.

Don’t worry about the future just yet. You can make those transitions when you are ready. There is no need to incur unnecessary processing fees in the meantime.

Also, know the products you are selling. For instance, if you’re a beauty line that wants to carry CBD products, PaymentCloud might be the right option for you, rather than Square.

Weigh the pros and cons for the actual items you are selling to help narrow down your merchant processor choices. It could save you money.

Top 200 Cannabis Lawyers

We Support

Cannabis Law Journal – Contributing Authors

Editor – Sean Hocking

Author Bios

Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Elvin Rodríguez Fabilena


Julie Godard
Carl L Rowley -Thompson Coburn LLP

Jerry Chesler – Chesler Consulting

Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

William Bogot – Fox Rothschild

Valerio Romano, Attorney – VGR Law Firm, PC

Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild