Esquire Bank has officially left the CBD oil merchant services credit market. Until recently, Esquire had been the last major US banking institution that facilitated US credit transactions to businesses affiliated with online, legal CBD products. The fallout from Esquire’s exit is going to affect nearly every CBD oil company in the country who uses an online platform to sell their product (which means basically everyone), as businesses will be forced to either adapt their methods of payment, or deal with an overseas banking institution. As one might expect, this will present a whole new series of hurdles to an industry that has already navigated more than their fare share. For instance, how will transaction fees be affected? What are chargebacks and how will they directly affect your business? What is keeping these banks from working with a legal product like CBD oil? To help us figure out these complex answers, we reached out to Robert Torres, High Risk Merchant Accounts Manager for AVP Solutions, who more than broke down the current state of credit issues and their impact on the industry.
What happened with Esquire?
Like every other big banks in America, Esquire has finally left the online cannabis industry. The last remaining tie they kept was to the CBD oil market. However, within the last year, an initiative from the Department of Justice, called Operation Choke Point, has cracked down on the relationships in the US between banks and their credit processors/lenders. This initiative has led to banks being audited more than ever before, because of cannabis affiliation, and has slowly forced bank after bank to exit the industry. Banks see CBD in the same light as cannabis because it is derived from the plant. That being said, the only way a CBD oil company can deploy a functioning credit system is to take their banking oversees, which brings its own risks.
Unfortunately for CBD producers, they are being lumped in with the cannabis plant as a whole.
“When it comes to cannabis, most banks don’t know any better. They still see the industry as the ‘Cheech and Chong’ stoner character. They see the market as a 17-year-old kid who is likely to be irresponsible or unethical. I’m seeing business professionals turned away all the time because of these mistaken assumptions. Unfortunately for CBD producers, they are being lumped in with the cannabis plant as a whole.” – Robert Torres – High Risk Merchant Accounts Manager for AVP Solutions
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