Wed. Jul 8th, 2020

Shopify to Allow CBD Companies on their Platform

Shopify, the popular e-commerce platform of choice for many direct-to-consumer brands, is allowing brands to sell hemp and hemp-derived CBD products on their online platform in an official capacity. This is a big step for the CBD industry because there is finally another giant platform jumping on the CBD bandwagon.

The multi-channel online commerce platform Shopify is also tossing out the latest features to help CBD merchants to sell hemp-derived cannabidiol (CBD) products online and in physical stores wherever it is legally allowed. Retailers in the US can scale their businesses by merchandising hemp-derived CBD products using the Shopify platform, which presently handles more than 800,000 retailers around the world.

As stated by the COO of Shopify, Harley Finkelstein: Shopify has unmatched expertise in emerging industries, along with providing the resources merchants need to be successful in the fast-growing market of hemp-derived CBD products in the United States. The reliable technology and extensive partner network of Shopify can help businesses to ride the wave of demand for CBD products and give consumers more options.

The CBD industry is relentlessly growing despite increasing political scrutiny and regulations, with about 7 percent of Americans admitting they use CBD products. This ever-increasing growth is providing opportunities for various companies involved in digital payments and commerce to extend their services to CBD retailers in a more convenient manner than ever before.

Shopify is indeed striving to help US retailers succeed in the flourishing but regulated hemp-extracted CBD industry. To them, Shopify will offer a range of tools to make the selling process easier, accessible, and more profitable. Merchants can now take advantage of marketing tools, payment and shipping partners, and over 2,500 apps that Shopify offers to help with inventory management, accounting, and much more.

What is Shopify?

Shopify is a Canadian e-commerce platform based in Ottawa, Ontario that provides services to start, grow, and manage an online business. It is a simple way to create a web store that can be personally customized to allow the selling of products in multiple places, including the web, on mobile, through social media, on online marketplaces, at brick-and-mortar stores and even as pop-up stores.

Shopify makes it simple to manage your products, inventory, transaction, and shipping processes to run your business by taking out all the hassle of hosting, which they do themselves. You can also use their own domain name to connect to Shopify from the store’s admin page, and for those who don’t have one, they can buy it through Shopify.

In simple words, Shopify makes everything simple for the people who have no experience of selling online, and even they can get started in very little time. There is no coding and website development needed; it really is plug and play to create a web store with easy steps.

What Does This Mean For CBD Retailers?

Joining the over 800,000 global merchants that Shopify supports globally, US CBD retailers are now finally able to “sell select hemp or hemp-derived cannabidiol (CBD) products” on the platform. Not only will CBD retailers have access to the Shopify platform, but also to the platform’s reliable technology, marketing tools, and additional apps that deal with inventory management and logistics and many more operations they provide. By using Shopify, CBD retailers will be able to accommodate the demand for their CBD products and give their customers more options to explore.

According to Hana Abaza, the director of marketing of Shopify Plus, CBD industry, and demand are moving quickly, and regulations have changed; thus, merchants need something trustworthy and reliable. CBD is an industry that can have a massive impact on brands starting to, or looking to, diversify, and grow. That Direct-to-consumer (DTC) space is still growing, and now CBD brands will have a voice and be able to create a space they want for their customers.

In December 2018, Congress passed legislation legalizing hemp production, even though there are still restrictions in its Farm Bill. They have also removed hemp-derived products from the Schedule I status under the Controlled Substances Act. Because of this, retailers, brands, and platforms like Shopify are now able to sell CBD legally. According to cannabis research firm BDS Analytics, US sales of CBD products are expected to grow from $1.9 billion in 2018 to $20 billion by 2024.

Shopify’s all these capabilities are only available within the 40 U.S. states allowing hemp-derived CBD to be sold, as said by Abaza. And the brands need to affirm they are in compliance with regulations. This includes providing documentation that the hemp or hemp-derived CBD is produced in legal accordance with the Farm Bill, associated federal laws, association state regulations, and by a licensed grower in order to sell them legally online on their platform.

From the beginning, CBD product makers and sellers have faced challenges around the inability to advertise on platforms like Facebook and Google and also faced significant issues with payment processors, which either prevented customers from purchasing altogether or charging high selling fees.

Know the Legitimacy for Shopify CBD Retailers

Per legalities, Shopify made it very clear that selling benefits only applies to selected states in the United States, where the sale of CBD products is permitted. As the US laws surrounding hemp and CBD are rapidly and continuously evolving, Shopify encourages CBD merchants to use their platform to consult with an attorney before selling CBD products on their platform. Shopify also advocates CBD retailers to monitor and review federal, state, and local laws, as well as to follow the updates from the US Food and Drug Administration (FDA) as well.

With this significant announcement by Shopify, US CBD business owners will now have access to a secure and safe e-commerce platform that will continuously allow them to compete in the growing CBD industry, and this furthers the platform’s commitment to retaining innovation.

Shopify Benefits For CBD Retailers

As a merchant that sells CBD products, one can take advantage of Shopify’s powerful retail operating system, commerce tools to start, manage, and grow their business from a single backend providing and a variety of other benefits that include the following:

  • Online Store Design Functionality: In as little as an hour, create a remarkable online store using Shopify’s store builder, or you can also add hemp-derived CBD products to an existing Shopify store.
  • Reliable Payment and Shipping Providers: Shopify has partnered with several payment and shipping providers so merchants can sell hemp-derived CBD products online and in-person. And ship to customers using reliable and secure payment and shipping options.
  • Smart Marketing Services: Merchants can build smarter campaigns using tools available in the Shopify’s marketing section. CBD retailers can create marketing campaigns to help buyers discover their store and hemp-derived CBD products.
  • Customized Shipping Profiles: Retailers can create shipping rules based on their customer’s location and the type of product they are buying. It also gives businesses control and shoppers visibility into the most accurate shipping prices before checkout. This is extremely important due to the legal side of selling CBD products.
  • Fully-Integrated Apps: Retailers can use more than 2,500 apps, from marketing to accounting to inventory management, to optimize their store with custom features and functionality right within the Shopify platform.
  • Exceptional Support From the Shopify Team: Shopify is known for its award-winning support team, which is available to US retailers to help them set up and operate their online store with complete reliance on the platform.

How to Begin on Shopify

For many, it may not seem like a big deal that Shopify has opened up its platform to a few states for selling CBD products via their platform, but this is a huge step in the right direction. With big companies like Shopify beginning to move towards hemp and hemp-extracted CBD product selling facilities, it means more will follow and hopefully soon. As more and more companies start entering this space, it is important that customers have access to reliable platforms and merchant services.

So, landing up to the most crucial query of how to get signed up with Shopify? Even though their website provides all the instructions but in brief, therefore you first must have an account with them, after creating and logging into your existing account you must fill out a form called: “Attestation for the Sale of Hemp and Hemp-Derived Products.”

This form proves that you live in the United States, and they allow the sale and that your CBD products follow their standards so that you are allowed to sell on their digital platform. This form consists of all the requirements that you must fulfill in order to use Shopify for your CBD online store.

How to Build a CBD eStore on Shopify

Let’s have a look at the process of how to create a CBD online store on Shopify platform:

Step 1: Login your Shopify store

To begin, the first thing you need to do is to sign up on Shopify by email and password.

Step 2: Create a store

Click on www.shopify.com/sell/cbd to sign up for your online CBD store, and you can also make use of the trial period to explore the platform before finalizing the website layout and design.

Step 3: Form Submission

This step is of great importance since prior to starting your CBD e-business, you need to assure that you completely understand and get the attestation form submitted as required. You3 have to review carefully and submit the Attestation for the Sale of Hemp and Hemp-Derived Product. Whenever you complete this form, you will be required to sign in to your own account in Shopify, and in case you are not a store owner or the address of your store is not of the United States, the link will be redirected to the Shopify admin.

Step 4: Choose Payment Gateway

Shopify is partnered with several third-party payment gateways to help particular hemp or hemp-derived CBD products. You need to remember that it can vary when it comes to the requirement of approval.

Payment Gateway Options

The most significant change that Shopify implemented with the big announcement is the new partnership with three third-party payment providers companies such as eMerchant Broker, DigiPay, and Limelight for CBD transactions. Now that you finally know the steps to create an online CBD store, let’s find out about a few Shopify Payment Processor that supports CBD payment:

1. DigiPay

For people who are wondering why CBD payment in Shopify is limited, first in the line comes the DigiPay CBD solutions. Till now, DigiPay is integrated with Shopify support to get the CBD payment process flowing. DigiPay also enables you to do business to business (B2B) thanks to its approval of fast track and full credit card suite. Additionally, DigiPay also offers the customers with stores and wellness centers that offer various products with hemp-derived CBD and are able to choose among CBD body care topicals, which includes body lotions, lip balms, creams, drops, and transdermal applications. Concerning hair issues, the gateway also allows hemp-derived CBD infused conditioners, shampoos, and hair styling products. Besides all these, vape oil, supplements or CBD infused edibles based on CBD products are also allowed for selling online and transacting.

What makes DigiPay a wise choice is its authoritative function. DigiPay helps save retailers’ time and money by stopping chargebacks and fraud. It can also do more than processing the payment since DigiPay’s developers get the digital identities confirmed with one of the largest global repositories. Moreover, customers will be informed about the next level by providing retailers with purchase analytics and reports. At the same time, it offers more than one payment option, and avail offers such as, including currency conversion, ACH check processing, cash discount, gift cards, digital wallets or loyal programs to boost sales and attract customers to your web store.

DigiPay is also a good option for small CBD businesses, especially for those who are planning to have a more niche CBD company with only a selected number of product categories. DigiPay offers fast-track approval, a full credit card suite by product offering, and 3-7 days underwriting.

2. eMerchants Brokers

eMerchants Brokers also integrated with Shopify to increase sales and stimulate the CBD payment process. Retailers choose eMerchants Brokers to help with their CBD payment as it decreases their processing costs by accepting credit cards and letting customers join the lowest rates in the credit card purchase. Moreover, eMerchants Brokers has also done a great job in completely controlling transactions. In case of any help, they provide instant assistance from their supporting team via call center email and live chat services. eMerchants Brokers also offers a great chance to maximize the revenue thanks to their ACH check process, affiliate program, or free shopping carts. For smaller CBD businesses, eMerchant Broker also could be a good option with their processing time of as little as 24 hours, and they also claim a 95% approval rating as well.

3. Limelight

When it comes to the CBD payment gateways, it might be a mistake, not to mention Limelight in the top list. Limelight is known as one of the best tools for CBD transactions as it enables consumers to increase the approval rate of credit card enabled purchases, track their order status, and as well as to control product return issues. Limelight is the perfect choice for predicting promising earnings as well.

B2B Benefits

With the accessibility of Shopify, B2B businesses can now buy bulk and wholesale CBD products online such as CBD tinctures, oils, gummies, soft gels, patches, as well as products for skincare, personal care, pet health, and many others, simply using their credit cards for the transaction. This will also allow businesses to order CBD products more quickly and in a hassle-free manner, improving the delivery turnaround times. The platform will also enable firms to purchase CBD samples instantly; have access to third-party certificates of lab tests, material safety, and datasheets, and can access data on what the top-selling CBD products are in the market.

Downside to Note

It can be challenging to find merchant processors and banks that support the sale of CBD online. Even though payment processors like eMerchant Broker, DigiPay, and Authorize.net offer solutions for CBD retailers, however, they are known as what is called the “high-risk processors.” Since the banking rules and regulations are not being set for CBD businesses, CBD businesses have to use these high-risk processors for the CBD transactions. But what is probably good to note is that with High-Risk Merchant Processors, they will likely have to pay about 6-8% or more process charges per transaction.

Advantages For CBD Businesses on Shopify

  • Shopify is really quick to launch, and you won’t need a coder or web developer to help create your website online. They include web hosting, offer a range of store themes, and it is easy to integrate features like coupons codes, SSL certification, SEO, and inventory tracking.
  • All Shopify plans are customizable. So, as you grow, they will scale and provide accordingly with you from start-up to enterprise-level online business solutions.
  • Since Shopify is a Canada-based company, therefore they are not subjected to US federal law. The Canadian government even uses it for online cannabis sales. Shopify is the E-commerce platform used by the Canadian government in British Columbia, Newfoundland and Labrador, Ontario, and Prince Edward Island.

Disadvantages For CBD Businesses on Shopify

Shopify is CBD-friendly, but many of the payment gateway options that it offers are not, including Stripe and PayPal. It is because cannabis-related transactions are labeled as ‘high risk’ in the States, where most of the CBD is associated with marijuana, which is illegal in most of the US states. The weak spots of Shopify for CBD include:

  • Shopify takes high transaction fees, which is up to 2.9% of each sale and $0.30 per credit card transaction. So, for the people who are selling hemp-related CBD products, there’s no way to get rid of these fees as Shopify Payments, which is basically powered by Stripe, is not available to CBD businesses over the platform.
  • It provides lower conversion rates, as you sell CBD products, you will have to create redirects at checkout to a CBD-friendly third-party payment processor to complete the transaction.
  • It can also complicate the customization process to get around the transaction processing issues, and one may have to incorporate a custom gateway, which will require specialist development for the web store.
  • As many Shopify CBD sellers have experienced it, you will not get complete control of your own site. The company can close down your CBD online store at any time and often without giving any warnings. You are also subject to their results and regulations related to products and payment gateways, which can change without any notice; you can be locked-in to their subscription-based pricing.

Opportunity It Brings

With the active growth of the CBD industry, many people are looking for ways to start their own online CBD shop. Everyone ranging from celebrities like Morgan Freeman and Seth Rogan to professional athletes like Nate Diaz and Rob Gronkowski is investing in and endorsing CBD and CBD-related products. Ottawa-based e-commerce giant Shopify is allowing US merchants to sell hemp and hemp-derived CBD products online and in brick-and-mortar locations. The feature is open in areas where selling CBD products is legal and will enable people to expand their CBD businesses.

According to Forbes predictions, the CBD market in the US could pull in as much as $16 billion by 2025. This is, in part, due to the market’s global projected compound growth rate of 55 percent, and also because 60 percent of all CBD sales are made online. Of course, these numbers will highly fluctuate depending on the progression of federal, state, and local laws and regulations. But if we look at the past few years, it is safe to say that this number will increase, and the opportunity to invest in this emerging industry will be wise. On top of that number, it is interesting to take into account that 1 in 7 American adults use CBD or CBD-related products. All these pointers make it a perfect time to get started with your CBD business, in any way you like it, physical or digital.

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