Let’s get you caught up on recent CBD news…
First Mainstream CBD Sports Drink
Hall of Fame running back, Terrell Davis, was just the latest to attach his name to a CBD brand. He is partnering with a couple other entrepreneurs to launch Defy, a new sports drink that has 20MG of full spectrum hemp-extract in each 16 ounce bottle. The flavors include Lemonade, Orange Mango, and Mixed Berry. At first, Terrell was not a believer in the positive effects of CBD:
“I was a skeptic. I didn’t believe in the stuff at all. I thought it was an excuse for people who, you know, enjoyed cannabis…When I started taking the CBD, I noticed, slowly, things were starting to happen to my body. My energy level was up, my joints weren’t aching as bad. So I got convinced, I really did. There was no question the CBD worked. And that started the path of me thinking hey, for a 46-year-old former player, if this helps me then we need to be at the forefront of making sure this is a product that is available to former athletes, but also to all people who want to feel great.”
This is the same conclusion that most people come to after trying CBD. Usually starts with some skepticism, but then the results generally speak for themselves. We are really excited to see CBD making it’s way into the performance sports drink market. It is really a perfect fit. A couple of decades ago it was just about staying hydrates, now drinks are more specialized and are more geared towards recovery. You can rest assured once these new Defy drinks are available you will be seeing some of them show up in future monthly crates.
CBD Payment Processing Continues Its Wild Ride
At Hemp Crate Co, we always like to provide a peek behind-the-curtain when possible. Something our average customer probably doesn’t know: taking payments for CBD products is extremely difficult (and expensive).
Payment processing is vitally important to protecting customers data, as well as making sure transactions go smoothly and quickly, so it’s important for merchants to make sure they choose a trusted payment processor. The below graphic helps to illustrate what happens behind the scenes when you enter your credit card information to purchase something online. You can see there are multiple levels of protection built in to protect your data.
Lowell and I started Hemp Crate officially on Nov. 21st, 2018. We then spent the next few months laying out vision, testing and procuring products, building the website, and a host of 147 other things. One thing we took for granted was the process of taking payments for CBD online. Without having previous payment processing history it was pretty difficult to get accepted as only a handful of banks accept CBD payments. After several weeks of back and forth, we finally were approved to take payments through Elavon, a subsidiary of U.S Bank, the fifth largest bank in the United States. Elavon conservatively covers 60% of CBD merchants across the U.S.
Fast forward to March 15th, which was our official launch date. After a very successful launch day, I laid down in bed and starting catching up on email. I came across one from our current broker that states “Elavon is exiting the CBD Business. May 15th will be their last day taking payments.” Seriously?!? On our first day of official business? This obviously put a little bit of damper on an otherwise very successful day.
Over the last two months, we have spent an inordinate amount of time talking to brokers, ISOs (Independent Sales Organizations), and banks themselves. Just like in CBD manufacturing, there are snake oil salesmen everywhere in the payment processing world. Literally, more than half of the time spent has been sorting through the fake to find the real. We now have our payment processing applications in underwriting with four reputable banking solutions. The issue being we are currently a small fish in a very large pond. We are in line, but there are others with ‘Fast Passes’… driving Maserati’s. Best dressed and highest volume get the attention first. There are still companies doing millions of dollars annually (not us… but one day!) that are scrambling to get approvals.
So as we approached the May 15th self-imposed Elavon termination date, without a firm approval back from the bank we wondered if we would temporarily not be able to take payments online. At the 11th hour, Elavon announces an extension until the end of May and allows their current merchants to keep processing with them until that point.
We feel good about getting a new solution approved and in place prior to the new Elavon terminate date of May 31st, but honestly you never know in this industry. Just two weeks ago Fortress, a subsidiary of First Albany lost its VISA issuance so now merchants that processed with Fortress can not take that payment type. This is a headache for both merchants and customers.
As with any emerging industry there are always issues with compliance and legislation. There is the usual long tail prior to full acceptance and adoption. Did you also know CBD companies can’t run ads with Facebook, Instagram, Google, and Bing? So to be fully transparent, we don’t know what the future holds in how CBD is treated among banking institutions and marketing platforms. We just know that we are going to continue to provide you all the same level of service and quality products that you’ve come to expect with Hemp Crate Co.