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Ecommerce Platforms Support CBD, but Merchants Want More – Adweek

Ever since the Agriculture Improvement Act of 2018 passed in late December, merchants have been counting down the days until ecommerce platforms and payment providers made it easier to sell, fulfill and operate a CBD business.

Over the past few months, BigCommerce, Shopify and Square started rolling out capabilities, both on their platforms and in payment processing, to make it easier for their merchants to freely sell cannabidiol (CBD) across their platforms. Now, with some of those biggest hurdles removed—such as unstandardized rules in running an online store or merchants being able to use only high-risk processors to help with payments—CBD merchants are starting to operate as normal businesses.

While some of these brands want extra help from ecommerce platforms and in using marketing tools available on Facebook and Google, it’s a critical time for them. Now that CBD is a bit more democratized, it’s an opportune time for anyone to get in, grow and scale a business while there’s no clear industry leader in the space.

“The deregulation and acceptance across ecommerce platforms and merchant providers is going to speed up the market considerably,” said Brady Donnelly, CMO at Cannuka, whose CBD business runs on Shopify’s platform.

Donnelly said it took ecommerce platforms eight months to act because they needed “reliable merchant services” around fulfillment, payment processing and more before making it fully possible to own and operate a store on these venues. Jordan Gal, CEO of third-party checkout platform CartHook, said many CBD merchants are expressing “relief” and can now focus on other parts of their businesses.

A timeline of updates from August 2019 to October 2019

With payments, Gal said businesses no longer need to devote a significant amount of energy to processing invoices for every transaction. Additionally, other companies in the health and wellness space wanted to expand into CBD but weren’t willing to unless the ecommerce platform and payment processing support was in place, he explained.

“The demand was there from consumers,” Gal said. “It makes sense that someone like Square understood that the perceived risk of a CBD merchant was a much higher risk than a regular merchant [and it] left [an] opportunity for a payment processor to come in.”

Gabe Kennedy and Hudson Gaines-Ross, co-founders of CBD brand Plant People, used to be CBD merchants that relied on “sketchy brokers” to handle payment processing, said Gaines-Ross. At events where they sold products, they didn’t have anything in place to handle credit card processing, so they primarily handled sales in cash. Now, Plant People, which was part of the Square beta program that tested payment processing, said it’s now easier for its company and industry to carry an extra layer of “legitimacy.”

Square and Shopify declined to comment for this story.

“It goes a long way to build consumer confidence and ultimately allow us to have a fruitful business and hopefully a fruitful industry,” Kennedy said.

With some of these barriers gone, Meghan Stabler, vp, global product marketing and management at BigCommerce, explained that the company is focused on creating as many educational resources as possible for CBD merchants and giving them “customer choice” around third-party service providers.

“Our differentiator is going to be time to launch, freedom of use, uptime, reliability, having a strong partner ecosystem,” Stabler said. “We’re not going to be a thought leader for CBD, but we want to be a thought leader for platform on CBD.”

Unlike Shopify, which announced plans to compete with Amazon on fulfillment with its Shopify Fulfillment Network, or Square, which owns Weebly and now allows CBD payment processing, BigCommerce has no plans to enter into either of those spaces, Stabler said. BigCommerce is instead looking toward international waters next to expand CBD beyond the U.S.

Donnelly, Gaines-Ross and Kennedy all said they’re looking for ecommerce platforms to help make it easier to market and advertise on platforms like Facebook, Google and Instagram. Gaines-Ross also expressed concern that a large company may come along, work with Facebook to change the rules and then “pummel the smaller companies because they have so much capital to throw at online marketing.”

“If [Facebook or Instagram] don’t do it and then Snapchat does it, then it’s a gold rush for Snapchat,” Gaines-Ross said. “It’s not about if; it’s about when.”

With CBD-infused products expected to reach $20 billion in sales by 2024, according to a report from Arcview Market Research, Gaines-Ross believes that more processes and partners will continue to make it easier to start a CBD business.

“CBD has this whole gold rush that’s happening now,” he said. “At the end of the day, CBD is going to turn into any other product. Everyone’s going to be selling it in one form.”

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