Thrive Market halts sales of CBD products

Dive Brief:

Online natural grocer Thrive Market has stopped selling hemp-based and CBD products and will begin removing them from the e-commerce site today after its payment processor demanded the sales be stopped, according to a company blog post.
Thrive CEO Nick Green said in the post the company is already in talks with other payment providers and expects to have ethical, sustainable CBD items back on the market again in the coming weeks.
The company began selling a full assortment of CBD and hemp products 18 months ago.

Dive Insight:

The demand from Thrive's unnamed payment processor demonstrates the challenges for businesses selling hemp and CBD products. Despite the passage of the 2018 Farm Bill that removed hemp products from the list of controlled substances, many payment processors prohibit the use of their services for sales of CBD as the federal government debates formal guidelines.

Since the Farm Bill, many companies have explored or incorporated CBD products for health and wellness into their inventories. More than 64 million Americans have tried CBD, according to research from Consumer Reports. Among those surveyed, 34% bought CBD products from a retail store and 27% from an online retailer.

The issue for payment processors is that they see CBD and hemp-derived products as a liability and a source of discomfort, according to CNN. Some feel there is a lack of clarity around the substance, and this gray area has made the financial side of legal CBD complicated for both retailers and payment processors.

Most financial services companies steer clear of CBD operations, but there could be a change on the horizon. Square has been piloting an invite-only program for some CBD companies for a new pilot program. PaymentCloud, another processor, is also working with CBD clients on a case-by-case basis, CNN reported. Both companies are closely watching as the FDA provides further regulations on the substance.

Thrive's recent obstacle is a cautionary tale to retailers to work through every angle of adding CBD to their inventory before they roll it out. Kroger and regional grocery chain Dierbergs each announced plans recently to add CBD to grocery store shelves, and CVS, Walgreens and Rite Aid are already selling CBD-infused products. So far, none have been affected by payment processing issues.

Correction: In a previous version of this article, the first name of Thrive Market's CEO was incorrect. Nick Green is the CEO of Thrive Market.