Why Does Stripe Not Allow CBD Sales?

December 25, 2021

A survey claims that one in every seven US adults uses CBD. So you might say that the powerful herb is one of the most utilized neutraceuticals of our time — and you’d be correct. That’s why it was only really a matter of time before CBD and other hemp products took the internet by storm. In fact, more than half of CBD vendors today operate both on and offline, or exclusively online. It’s one thing to sell CBD online and another to set up the facilities to process payments for CBD sales. Of course, you might be thinking there are a lot of great online payment processing service providers out there that could easily streamline digital payments — like Stripe. But would Stripe accept your business in the first place? Find out here.

StripeDoes Stripe Accept Payments for CBD?

The short answer is no, unfortunately, they don’t. According to Stripe’s website, the payment processor doesn’t engage in business with high risk merchants. So this means it’s not just hemp and CBD that they won’t accommodate. It’s all businesses operating in high risk industries. These include:

  • Adult entertainment and products
  • Forex
  • Payday loans
  • Travel businesses
  • Vapes and e-cigarettes
  • Credit services
  • Crowdfunding services
  • Gambling
  • Pharmaceuticals
  • Multi-level marketing
  • Kratom

That said, any business that comes with a higher risk than traditional businesses might not be able to use any of Stripe’s services for their payment processing and collection needs. If you sold other products and services that are not on the restricted businesses list alongside your CBD selection, then Stripe would be unavailable to your business as well.

What is a High Risk Business?

Now you might be wondering, what is a high risk business anyway, and why doesn’t Stripe want to work with them? Simply put, a high risk business is any business that poses a higher change of incurring chargebacks. A chargeback is different from a refund in that the process of chargebacks doesn’t involve the merchant. With a traditional refund, the buyer approaches the seller with their complaint, sends back the product, and if everything checks out, gets their money sent back sans shipping fees. With a chargeback, the buyer files a dispute directly with the bank, which then takes the payment out of the merchant’s account without them knowing, and then disburses the whole amount back into the buyer’s bank account.


high risk business

The process of a chargeback doesn’t require that the buyer send back the product they’re disputing. And even more problematic is that they can lie about the reason for their chargeback. For instance, they could say they didn’t authorize the transaction and that it was a fraud. In this way, the chargeback process is unfairly skewed to the buyer’s advantage. As a customer, the chargeback might seem like a nifty way to get your money back without a lot of opposition. For business, merchant service providers, and payment processors, it’s a different story. All of the entities involved on the merchant’s end incur fees and charges for these disputes. And if Stripe were in the picture, they’d get slapped with their own penalties too. So what’s the best way to avoid that altogether? Of course, the only answer is to refuse to work with high risk businesses. And that’s precisely what Stripe has set out to do.

Why is CBD a High Risk Business?

What is it about CBD that makes it high risk? Well, for starters, it’s not like Aspirin or Ibuprofen that’s gotten the go signal from the FDA. While CBD isn’t illegal as a product itself (when derived from hemp), there’s still a lot that’s not known about the substance. So the FDA has reservations about it and as to how it can be used. That said, the rules and regulations surrounding CBD are ever-changing, which may be a problem for merchants who make a living off of selling CBD. For instance, if a change in CBD legislature were to suddenly take place today, and you just shipped out a bunch of orders that violate those new changes, then buyers would have every right to demand their money back. Another issue is the subjective experience of the buyers. No CBD seller can guarantee for sure what effects their products will deliver. So if a product doesn’t meet expectations, then buyers wanting quick resolution can just file for a chargeback and indicate a different reason, like a fraud.

One other reason why a CBD business is considered high risk is that most of these vendors encourage buyers to sign up for subscriptions to get their orders routinely delivered to their doorstep. This recurring payment structure is considered a major red flag and increases the chance of chargebacks. All together, the volatile CBD industry is unattractive for financial institutions and payment processors that want predictable conditions. That’s why it’s difficult for providers like Stripe to just take the leap when it comes to businesses operating within the CBD industry.

What Happens If You Accept CBD Payments with Stripe?

Just like PayPal, Stripe has a number of tools that help them detect when their platform is being used for a prohibited activity. And if you’re a small enterprise with most of your money flowing through Stripe, and you just happen to use their platform to take payments for CBD, then you might find yourself in some serious trouble down the line. Should you try to use Stripe to process payments for CBD transactions, the platform can freeze your account for up to 180 days for investigation. They’ll take this time to assess the situation and what you’ve been using their platform for. If it’s a first offense and you manage to wiggle your way out of the situation for one or two transactions, then they might reinstate your account after the suspension period.



Keep in mind though that during that suspension period, you’ll also be limited from accepting payments through Stripe. And if they decide to let you continue to use your account, you’ll have to pay a fee first and then declare that you won’t use their platform for prohibited transactions again. However, if the violation was extensive and they determine that you’ve deliberately neglected their terms, then they reserve the right to shut your account down all together. When this happens, they’ll take any money in your account as they close it down, so you won’t be able to get your hands on your funds all together.

Payment Processors for CBD Merchants

So payment processors like PayPal and Stripe are obviously out of the question. So what’s left for CBD merchants? Fortunately, there are a number of payment processors out there that will willingly accommodate your business and provide payment processing services for your CBD account, including:

  1. Viva Wallet – Most small-scale CBD businesses will vouch by Viva Wallet, calling it a suitable alternative to Stripe and PayPal. A lot of their features are similar, and they integrate easily with well-known shopping carts for easy set-up and payment collection within minutes of registering. They’re ideal for micro and small CBD businesses.
  2. Evergreen Payments Northwest – These guys specialize in CBD and hemp payment processing services. They’ve got impressive security features that make them particularly ideal for protecting businesses against fraud and chargebacks. Despite being a relatively small venture, Evergreen Payments Northwest has been known for its polished, professional services that work closely with clients for a truly comfortable experience.
  3. Easy Pay Direct – If you were looking for holistic, all-in-one solutions, then Easy Pay Direct might be it. These guys offer merchant account services and payment processing for a complete package. They’re great for larger businesses that process high volumes of transactions over a period of time, and they offer lots of convenient tools for monitoring and record keeping.
  4. Payment Cloud – Often considered one of the most reliable choices for any high risk business, Payment Cloud is a well-established name that offers excellent customer support. Their dedicated support agent for first-time clients makes it especially easy to work your way around the nuances and figure out what their features and solutions are for. Payment Cloud might be a little more expensive than other providers, but they’re definitely top-notch.
  5. Soar Payments – Although they’re not quite as prominent as Payment Cloud or Easy Pay Direct, Soar Payments offers excellent services including fraud detection and chargeback protection. They’re ideal for businesses hoping to get all the basics minus the complicated integration.

The Bottom Line

It can be tough to run a CBD business because of all the red tape that surrounds the industry. Even honest, well-meaning CBD ventures find themselves stuck because of the ever-changing regulations surrounding the miracle substance. So it really comes as no surprise that so many financial service providers reject applications from CBD merchants. Stripe is no different. On the other hand, you can’t really blame them for keeping the safety of their operations a top priority. Fortunately, there are lots of other providers that can process payments for your CBD business in the meantime. Hopefully, as the CBD industry continues to stabilize, Stripe will soon open its doors to CBD merchants.

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