The Problematic Legal Standing of CBD

The problematic legal standing of CBD in the processing industry
Taylor Stika
October 08, 2022

Let’s talk about the problematic legal standing of CBD. Cannabidiol (CBD) is one of the main components of cannabis, constituting as much as 40% of its extract. While it does not have the psychoactive properties of tetrahydrocannabinol (THC)—the other main component of cannabis—CBD does have a variety of uses related to human health. Research on new potential uses is ongoing and cannabis-related industries are growing.

Of course, if you have started a CBD-related business or are planning to do so, you probably have a good idea of the problematic legal standing of CBD. Your business faces certain challenges and obstacles that most businesses do not. One of those challenges is finding a payment processor.

Most traditional banks and popular payment processors are reluctant to work with any business that is particularly susceptible to risks that could cost a financial institution a lot of money. For a number of reasons, CBD-related businesses are considered to be “ high-risk businesses ,” which makes it difficult, and often impossible, to get a traditional bank to provide a merchant account. At the root of much of this is the current problematic legal standing of CBD from state to state.

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Contradiction, Conflict, and Confusion of the Legal Standing of CBD

Laws and regulations related to CBD and other cannabis-related substances differ—sometimes significantly—between countries. Within the United States, there is inconsistency, contradiction, and conflict between the laws and regulations of local municipalities in the same state, between individual municipalities and the state, between the states themselves, and between states and the federal government.

That leads to quite a bit of confusion, and that confusion creates a higher risk that even a person or business with the best of intentions will get caught up in a legal entanglement. It is extremely important that you gain a clear understanding of the laws related to CBD in the area where your business is located, as well as where your customers are located.

You will still need to monitor the situation since changes are frequent in many regions, but if you get a good handle on it prior to starting your business, or at least as early as possible if you have already started the business, that foundation will make it much easier to handle changes in the future.

Follow the Winding Road of Science For Legal Cannabis

One cause of the contradiction, conflict, and confusion in legal aspects is the scarcity of objective and reliable research and the lack of consensus in the medical and other scientific fields. It has become quite difficult to untangle research from political and ideological agendas, so the findings and conclusions tend to reflect the views and interests of the party that commissioned the study.

The intention here is not to advocate a particular side in the debate, of course, but merely to point out that there are many underlying factors that affect the laws and regulations that your CBD business will have to follow. The issue of legal and illegal drug use, and even the issue of whether governments have a legitimate right to make decisions for the nation’s people regarding drug use, are emotional issues for many people, further exacerbating the problem.

Legalization vs. Decriminalization

Further confusion is created by a lack of understanding that “legalization” and “criminalization” are not the same thing. Generally speaking, the respective meanings are as follows.

The Problematic Legalization of CBD

The act or process of changing the status of an action that is prohibited by law to no longer be prohibited by law

Legal acts are not subject to civil or criminal penalties or sanctions.

Example: If the possession and use of CBD are legal for any purpose that is not otherwise illegal, you won’t get in trouble if the police catch you with it.

Decriminalization of CBD

The act or process of removing criminal penalties from the legally stipulated punishments for committing an illegal act

An illegal act that is decriminalized is still illegal. The difference is that the punishment no longer includes a jail sentence. Instead, the individual is subject to a fine or other such civil penalty, and the violation does not become part of his or her criminal record.

Example: If the possession and use of CBD are illegal but decriminalized for any purpose that is not otherwise illegal, you’ll get in trouble if the police catch you with it, but you won’t go to jail.

Many people have faced legal problems unnecessarily due to thinking that the decriminalization of a substance meant that they could use it any time they wanted to. Read the relevant legislation carefully, and consult with a qualified attorney if necessary. That time, effort, and expense will be worth it if it keeps you out of inadvertent trouble.

Long-term Vision and Patience of the Legal Standing of CBD

The list of legal industries and uses related to cannabis continues to grow, both through the legalization of previously illegal acts and through the discovery and development of new uses. In some cases, it’s the rediscovery of old use. Negative public opinion, misconceptions about the nature of the various types of cannabis and its extract, and history of illegality and association with the crime world will likely continue to be challenges for CBD businesses to a certain extent in the short term, but the situation is changing.

Although there is still plenty of propaganda, misinformation, and disinformation being pushed by the various parties involved, the general public is gradually becoming more educated on the issue, such as the crucial differences between the medically useful CBD and the psychoactive THC. These developments are still fairly recent, and many are ongoing.

In addition, there is still a high degree of organized crime and gang involvement in all things related to cannabis in some regions. It should decrease as decriminalization and legalization continue, but for now, that influence means that you will need to give extra attention to protecting your business from credit card fraud .

While changes in the problematic legal standing of CBD and other related products are anticipated, it is likely that traditional banks and payment processors will continue to view the industry as high risk and categorize your company as a high-risk business for the foreseeable future. Having a knowledgeable and reliable high-risk payment processor can be a great help in ensuring that things run smoothly and that you are able to adapt to new and revised laws and regulations.

The many changes and developments of the cannabis-related industries and the technological, scientific, and economic prospects they bring can be exciting and motivating, but it is likely to be a long process, so you might want to just mellow out and patiently take the long-term view.

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Taylor Stika is the CEO and Founder of Zen Payments. With a background in the payment processing industry starting in 2015, Taylor has extensive experience in managing and optimizing payment systems. Under his leadership, Zen Payments has grown and developed into a reputable provider of high and low-risk payment.

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