How to Sell CBD with Square

In 2019, Square started accepting payments for hemp-derived items, including CBD, after the 2018 Farm Bill was passed. Square CBD payment processing was one of the first options for these companies at a time when CBD’s legality was still a gray area in most states.

Over time, Square expanded its CBD business offerings, including accepting payments through multiple channels and offering a business loan program to improve cash flow. However, it still has certain restrictions, including banning hemp flower and marijuana-derived products. CBD companies are still required to demonstrate legal compliance.

Here’s how to get started with Square’s CBD Program:

1. Verify Eligibility
   • You must offer only hemp-derived CBD products containing no more than 0.3% THC.
   • You cannot ship to countries where CBD is illegal (e.g., China, Hong Kong, India, Singapore, UAE, etc.)
2. Apply for Square’s CBD Program
   • Go to Square’s CBD page and click “Apply now”.
   • Complete the online application to join the Square CBD Program
3. Gather Required Documentation
   • Certificate of Analysis (COA) for each product, confirming THC levels ≤ 0.3%.
   • Detailed product descriptions (ingredients, usage).
   • Business formation documents and banking information.
4. Submit Your Application
   • Upload your COAs, business license, bank statements, and product details.
   • Square will review compliance and may request additional information.
5. Configure Your Square Dashboard
   • Once approved, add your CBD products as items in your Square Item Library.
   • Set pricing and descriptions exactly as reviewed in your application.
6. Integrate & Start Selling
   • In-Person: Use Square Terminal or Square Reader for card-present sales.
   • Online: Enable Square Online Store or embed Square’s payment links/APIs on your website.
7. Understand CBD-Specific Fees
   • Online: 3.8% + $0.30 per transaction
   • In Person: 3.5% + $0.10 per tap/dip/swipe
   • Keyed-In/Card-on-File: 4.4% + $0.15 per transaction
8. Maintain Compliance
   • Keep COAs up to date for any new SKUs.
   • Avoid medical claims (no disease-treatment language).
   • Monitor your Square Dashboard for holds or flags, and respond promptly to any compliance inquiries.

By following these steps, you can leverage Square’s user-friendly POS and e-commerce tools while staying fully compliant with CBD regulations.

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Navigating the complexities of CBD products can be a daunting task for many entrepreneurs. With a myriad of regulations and financial restrictions, finding a reliable payment processor is crucial for success. Enter Square, a robust platform that has expanded its services to include CBD merchants. In this article, we will explore how to effectively sell CBD using Square, focusing on its CBD program and the benefits it offers to businesses.

Understanding Square's CBD Early Access Program

Square's CBD Early Access Program is a significant leap forward for CBD merchants, offering them a streamlined process to accept payments. This initiative was launched to address the unique challenges faced by CBD vendors, who often struggle to find stable payment solutions due to the regulatory landscape.

The Square CBD Pilot Program

The Square CBD Pilot Program was the precursor to the current offering, designed to test and refine the platform's capabilities in handling CBD transactions. This pilot phase allowed Square to gather valuable data and feedback from early adopters, ensuring a robust system for the official launch.

Joining the Square CBD Program

As one of the first merchant account providers to accept CBD payments, Square has developed a robust application process that remains the industry standard. Follow this process to ensure that you can integrate Square payments into your business operations.

Verify Product Compliance: You cannot promote anything that has more than 0.3% THC content. Additionally, you cannot offer marijuana or any illegal drugs. Nothing in your CBD store should claim to aid conditions like chronic pain or promise to cure any other health conditions.

Gather Required Documentation: Each product must have a product description and a Certificate of Analysis (COA) from a third-party laboratory. You will need to provide bank statements, your business license, and links to your online store and social media accounts. They may also request information about your refund policy.

Submit Application on the Square Website: Navigate to the Square Solutions for CBD page and click “get started.” Fill out the application and attach all necessary documentation. You do not have to pay any application fee for this process.

Wait for Approval: Approval can take several business days, but is rarely longer than a week.

Review Terms and Conditions: Square charges a fee for each purchase, but users get the benefit of transparent pricing and a dedicated in-house team for help.

Maintain Compliance: Regularly review your processes to ensure that you maintain both legal and PCI compliance.

Key Features of the Square CBD Program

The Square CBD Program offers several features that make it an attractive choice for CBD merchants. Here are some of the key benefits:

Comprehensive Payment Solutions

Square provides a comprehensive suite of payment solutions tailored to the needs of CBD sellers. This all-in-one dashboard gives a complete view of your business.

• In-Person Sales: If you have a brick-and-mortar CBD shop, you can use the convenient terminal to take payments.
• eCommerce: Sell products online for in-store pickup or delivery.
• Invoicing: Provide itemized invoicing for wholesale distribution.
• Recurring Payments: Users can set up subscriptions for auto-delivery if they have a particular product they buy on a monthly or quarterly basis.

Fraud Prevention and Security

The CBD space is classified as a high-risk business, which is why it is crucial to choose a processor with robust fraud prevention measures. Square’s security measures are some of the best in the industry, which helps merchants remain compliant.

• Real-Time Fraud Detection: The platform screens every order in real time to identify suspicious patterns.
• Machine Learning: By leveraging large language models, the application identifies potential fraud clusters.
• Custom Risk Management Rules: Merchants can set rules that will automatically deny certain transactions.
• 3D Secure Technology: This two-step verification process protects users and places the burden of fraud detection on the card issuer.
• Chargeback Mitigation: By requiring multifactor authentication, 3D Secure prevents fraud and makes it easier to dispute chargebacks.

All of these elements improve PCI compliance and help your company stay legal.

Seamless Integration

With the Square API, businesses can customize their checkouts and manage compliance. You can benefit from streamlined fulfillment, more accurate inventory management, and robust analytics tools to optimize operations.

Integrations supported by the platform include online store builders like Shopify, Wix, WooCommerce, BigCommerce, Spreecommerce, and Shift4Shop. You can use Acuity Scheduling, Shippo for shipping, and If This, Then That (IFTTT) for automations.

Steps to Getting Started with Square for CBD Sales

For businesses looking to join the Square CBD Program, the process involves several key steps. Here is a detailed guide to help you get started:

Step 1: Application Process

To start, you will need to get an account, then go to your dashboard. Open the Optional Programs tab and click on the CBD program. The required documentation includes bank statements, product descriptions, online store and social media accounts, and COA results for each product.

Vague product descriptions or missing documentation can lead to delays, so ensure that you fill out everything as thoroughly as possible.

Step 2: Verification and Approval

The review process generally takes 3-7 business days. During the review process, the company will check your business’s adherence to legal requirements, the status of your products, and label compliance. Always double-check COAs and packaging before submission.

Step 3: Set Up Your Account

Once you’ve been approved, you can add product SKUs, link a bank account, and set up your point-of-sale and eCommerce options.

To ease the process, you can enable email receipts and inventory alerts, which will help you keep track of products and improve the customer experience.

Step 4: Optimize Your Sales Strategy

Square Analytics helps you explore customer behavior and sales trends, which can help you refine your sales strategy. For example, you can offer popular product bundles, like blends for sleep or relaxation, or provide recommendations for additional products.

Email marketing tools are a powerful way to build a loyal consumer base and stay fresh in their minds. You can build customized email campaigns to re-engage old subscribers, offer promotions, or share insights about new offerings.

Search Engine Optimization (SEO) is also a key way to gain more business. Consider starting a blog with keyword-optimized customer education articles that will establish your authority and build trust.

Benefits of Using Square for CBD Transactions

This platform has many benefits for merchants, especially as it is a well-established company that is unlikely to disappear any time soon. Benefits include:

• Simplifies processing across sales channels
• Reduces financial friction through multiple payment processing options
• Ensures peace of mind through advanced fraud detection
• Builds credibility with consumers
• Offers real-time sales tracking and analytics
• Provides access to trusted and compliant infrastructure

Challenges and Considerations in Selling CBD with Square

While the Square CBD Program offers numerous advantages, there are still challenges that businesses must navigate. Understanding these challenges is crucial for long-term success.

Regulatory Compliance

With the 2018 Farm Bill, CBD products were legalized at the federal level. However, state laws vary, making it essential that you consider where you can ship items. The FDA also has strict regulations about health claims. You cannot use medical language on packaging or descriptions, and you must accurately label THC content with third-party laboratory testing.

Product Quality and Transparency

All your products should be laboratory tested with batch-level COAs. QR codes can make it easy for consumers to review product sourcing, ingredient amounts, and lab results. Tamper-evident packaging also improves credibility and ensures consumers know they’re getting a safe product.

Market Competition

Consumers have grown more comfortable with CBD products in the last decade, and state regulations have allowed more access. This has drawn in new competitors, making it harder to stand out. However, Square provides a variety of tools to help you build a loyal following. Consider integrating these into your marketing strategy.

Loyalty Tools: Offer discounts on bundling products and coupons for repeat customers. This drives repeat sales and helps users feel valued.

Email Marketing: Re-engage customers who haven’t purchased in a while and offer special email discounts.

Consumer Education: Teach readers about what your products do, how they differ from others in your field. Talk about what lab testing does and how to analyze a COA report.

Social Media Influencing: While many platforms bar paid advertising, you can work with influencers to demonstrate how your products have improved their lives.

Bundling: Product bundling enhances the customer experience while also selling more units. Allow customers to bundle on their own or offer curated packages tied to different needs, like sleep, relaxation, or focus.

Customer Experience: Create a highly functional and aesthetic website that caters to different market segments, whether that’s casual users who are trying CBD for the first time or hardcore enthusiasts who want to know the specifics of what they are buying.

Common Mistakes to Avoid When Applying for Square’s CBD Program (new section)

Avoiding common missteps is crucial to a smooth application process. Be mindful of these issues.

Not Uploading Complete Documentation: Ensure that your COAs, product descriptions, bank statements, and business licenses are all accurate and up-to-date.

Listing Prohibited Items: You cannot sell anything with marijuana or hemp flower, only hemp-derived products.

Using Medical Claims: Never suggest that your products are intended to cure, treat, or diagnose any disease. This includes more vague conditions like chronic pain, headaches, or insomnia. Instead, focus on lifestyle benefits like relaxation, which aren’t directly tied to a specific medical condition.

Submitting Inaccurate COAs: Each batch must be accompanied by a complete, accurate lab test from an accredited third-party laboratory. Check the lab’s accreditation and compliance before using it as a vendor.

Tips to Maximize Sales with Square as a CBD Merchant

There are many ways that you can improve your profit margins while offering even more value to your loyal users. Consider these possibilities.

Product Bundling: Casual users may not know what products complement one another. By offering a curated selection of popular combinations, you can sell more units.

Email Marketing: Regular contact with previous customers can improve brand loyalty and revenue. A good email frequency is once a week to avoid annoying subscribers.

Upselling at Checkout: Amazon, the world’s largest retailer, has a dedicated “Need anything else?” landing page that suggests additional purchases before checkout. Mimicking this allows users to add more to their cart at the click of a button, which can encourage impulse buys.

Real-Time Inventory Syncing: Alerts like “Only five left in stock - buy soon” can trigger urgency in users, making them more likely to purchase. It also offers a sense of transparency.

Multiple Sales Channels: Brick-and-mortar stores sometimes ignore the value of online channels, which can reduce their profit margins. Offering both channels significantly increases your sales opportunities.

Alternatives to Square for CBD Payments

While Square may have been the first to recognize the value of this industry, others have now begun catering to CBD merchants. If you’re not satisfied what what Square has to offer, try one of these alternative processors.

PaymentCloud: This processor is known for its personalized approach to payment solutions and for a streamlined application process. However, it doesn’t disclose its payment structure, meaning you may be in for sticker shock.

Easy Pay Direct: Advanced underwriting means you’re less likely to have an unexpected shutdown. You’ll also enjoy dedicated support and industry-compliant payment gateways. On the other hand, there is a 3-year contract requirement, which means it’s difficult to change processors.

Conclusion

Square's CBD Early Access Program provides a valuable opportunity for CBD merchants to streamline their payment processing and enhance their business operations. By participating in this program, businesses can overcome many of the challenges associated with selling CBD products and focus on growth and customer satisfaction.

To succeed in the CBD industry, it is essential to leverage the tools and resources available through Square, stay informed about regulatory changes, and prioritize product quality and customer experience. With the right strategy and support, CBD merchants can thrive in this burgeoning market.

FAQs about Selling CBD with Square

What types of CBD products are allowed under Square’s CBD Program?

You can sell items with under 0.3% THC. This includes oils, tinctures, creams, edibles and drinkables, capsules, and pet products.

Can I sell CBD with Square if I operate outside the United States?

No. You can only sell if you operate entirely in the United States and your products are compliant with federal and state law.

How long does Square take to review and approve CBD merchant applications?

In general, it takes 3-7 business days to review and approve your application. There may be delays if you did not provide complete and accurate information on your application.

Are there any monthly account fees in addition to Square’s CBD transaction rates?

For the standard plan, you only pay purchase fees. However, Plus and Premium plans come with additional features like advanced POS systems and better rates. These do require monthly fees.

What happens if my business violates Square’s CBD compliance rules?

If you break compliance rules, you may have your account suspended, payments frozen, or funds withheld until the problem is solved. Ensure that you always comply with the terms of service to avoid these issues.