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Friday, August 23, 2019

Frontline launches CBD merchant program

Bozeman, Mont.-based Frontline Processing Corp. launched the CBD Merchant Account Pilot Program, designed to support merchants in the rapidly growing U.S. cannabinoids sector. The market is on track reach $20 billion by 2020, providing the card processing industry with abundant opportunities, Frontline representatives stated.

The company has been active in the space, joining trade groups, meeting with government officials and keeping informed on best practices. On Aug. 21, 2019, the company disclosed it had joined forces with an acquiring sponsor bank to pilot test a CBD merchant program. The program was beta tested and hit capacity while in test mode, according to sources familiar with the project.

“We anticipate that we will begin boarding new CBD merchant accounts very soon based on the feedback we are getting,” Frontline said in a statement. Merchant level salespeople (MLSs) in good standing with card brands can enroll online. Enrolled agents will be trained in the application submission process and can submit and manage their merchant accounts on a secure online portal, company representatives noted.

To qualify, applicants must pass a background check, have previous bankcard sales experience and a diverse mix of merchant types to avoid having a heavy concentration of CBD accounts, company representatives said. While Frontline’s sponsor bank will determine when to start onboarding CBD merchant accounts, company representatives remain optimistic, stating they “are under the impression that it could happen anytime.” The company invites interested MLSs to email apps@frontlineprocessing.com and request an enrollment package.

Growing, global CBD market

A 2019 white paper by BDS Analytics, titled The Global Cannabinoids Market: Will CBD Overtake THC? attributes growing use and popularity of CBD oils to cannabis legalization across the United States and the recent passage of the 2018 Farm Bill, which legalized farming hemp, or cannabis with less than 0.3 percent THC by weight.

“As a result, many more farmers have turned to hemp farming, and the domestic supply of the plant has expanded rapidly,” report authors wrote. Researchers identified the five most popular CBD product categories in 2018 as:

  1. Ingestibles: $883.5 million

  2. Topicals: $491.2 million

  3. Inhalables: $395.4 million

  4. Pet products: $63.8 million

  5. Pharmaceuticals: $16 million

“The steady march of cannabis legalization across the country has played a key role in the rise of CBD,” BDS analysts wrote. “Prior to Colorado’s launch of legal adult-use cannabis sales in 2014, access to CBD was extremely limited. As cannabis became increasingly legal in states across the U.S., and even more importantly as hemp gained legal status nationwide, companies began exploring the chemical complexities of the plant with more focus.”

A report published by Arcview Market Research and BDS Analytics titled The State of Cannabis Markets, 7th Edition indicated the CBD market’s ultimate success and sustainability will depend on how the FDA regulates food and beverage categories. Researchers suggested that CBD dispensaries are useful models for what to expect in general retail sales, and product development in new CBD categories will lead to new forms of consumption. end of article

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