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Making Sense of the 2018 Farm Bill From the Perspective of a Merchant Processor



The passage of the Agriculture Improvement Act of 2018 also known as the ‘Farm Bill’ was a major win for business owners who sell CBD products.  While the bill itself is mostly applicable to farmers, who grow hemp, there are big implications for retail owners.  

The first thing to understand is what “hemp” is defined as by the law.  The 2018 Farm Bill redefines the term “hemp” so that the dividing line between hemp and marijuana is the THC content.Section 297A states:  “The term 'hemp' means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

Why is it important that we have a definition for “hemp?” Marijuana is still a controlled substance and is illegal to sell federally, but now that we have a separate definition for hemp, the lawmakers can remove hemp as a controlled substance.

Later in the act under Section 12619 it revises the Controlled Substances Act to specifically exclude “hemp as defined in section 297A of the Agricultural Marketing Act” from being a Controlled Substance.Thus, a cannabis sativa plant that is less than 0.3% THC and all of its associated parts (including all cannabinoids and extracts) are excluded from the Controlled Substances Act as hemp.

Now that hemp and hemp derived products are legal to sell, it significantly reduces the risk for financial institutions and allows merchant processors to process payments for hemp and hemp derived products such as CBD.

If you are a business that sells CBD or other hemp derived products, it is important that you have the appropriate licenses, test your products for its THC content, and document the results of the testing in order to give yourself protection. Other considerations: there is still some gray area around vape products so it is recommended that you discontinue the sale of CBD vape products for the purposes of getting an approval/reducing rates on merchant processing.  Additionally, the sale of items such as water bongs will increase the riskiness of your business -- so it is recommended that you do not carry such items.

Payscape has a large suite of Fintech products that help you collect payments from your customers, track inventory, and give you advanced reporting to help you stay organized. Click here to read more about how Payscape can help you!


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