The rapid expansion of cannabis legalization across the United States and internationally has created not just a booming cannabis market but also a parallel surge in cannabis-adjacent products. From CBD skincare lines and hemp-derived supplements to cannabis-themed apparel and accessories, businesses in these spaces are capitalizing on growing consumer interest. However, even though these products may not contain THC or fall under strict federal regulation, they are often treated with the same caution as cannabis itself by banks and payment processors. Securing a high risk merchant account becomes essential for these businesses if they want to accept payments reliably and grow sustainably. Understanding the nuances of merchant processing solutions for this emerging category is critical for navigating the challenges of compliance, risk management, and transaction security.
Why Cannabis-Adjacent Products Are Still Considered High Risk
While products like hemp-based textiles, CBD-infused beauty serums, and cannabis-themed merchandise seem harmless compared to THC products, most traditional banks and payment processors still classify them as high-risk[1]. The association with the broader cannabis industry triggers regulatory red flags and invites enhanced underwriting scrutiny. Even businesses selling items that do not require a dispensary license may find themselves needing high risk merchant services simply because of marketing language, product packaging, or consumer perceptions. Merchant account providers must weigh not only the product itself but also the surrounding legal environment, marketing practices, and public relations risk. This results in cannabis-adjacent businesses facing higher processing fees, more frequent account reviews, and the potential for reserve requirements. Choosing the right merchant processing solutions partner who understands these dynamics is crucial for operational continuity and brand reputation.
Challenges of Payment Processing in Cannabis-Adjacent Markets
Even though cannabis-adjacent businesses avoid directly selling THC products, they face many of the same challenges as full cannabis retailers when it comes to securing payment solutions. Traditional processors like Stripe, PayPal, and Square often prohibit or severely restrict accounts associated with cannabis keywords or imagery. As a result, many businesses must turn to specialized high risk merchant account providers willing to underwrite these perceived risks. Payment flows must be designed carefully to avoid chargeback triggers, such as misleading product claims or unclear refund policies. Fraud detection and mitigation also become more complex, requiring more robust systems than typical eCommerce brands use. This necessity for secure credit card processing adds layers of compliance, especially when expanding internationally where laws vary drastically from country to country. Cannabis-adjacent merchants must plan for more rigorous onboarding, ongoing compliance reporting, and potentially longer funding delays compared to non-high-risk businesses[2].
Industry-Specific Risk Underwriting
A strong merchant account high risk provider should offer underwriting teams familiar with hemp, CBD, cannabis accessories, and related verticals. Experience ensures that nuanced product categories are assessed fairly, reducing the chance of account shutdowns due to misclassification.
Secure Credit Card Processing Protocols
Providers must offer tokenization, end-to-end encryption, and PCI DSS compliance as baseline services. Advanced fraud screening and chargeback protection tools must be available to reduce vulnerability to disputes and payment fraud.
Recurring Billing and Subscription Support
For businesses offering replenishment models—such as CBD skincare or hemp supplements—high risk merchant services must include flexible recurring billing setups, dunning management, and automated retry strategies for failed payments.
Omnichannel Integration Capability
If selling both online and at retail events like cannabis expos or wellness fairs, merchants must have access to mobile POS systems that integrate seamlessly with their primary gateway and merchant account setup.
The Importance of Secure Credit Card Processing
In a high-risk environment like cannabis-adjacent commerce, secure credit card processing is non-negotiable. Data breaches, fraudulent chargebacks, and unauthorized transactions not only damage a brand’s reputation but also threaten the very survival of merchant accounts. Payment processors specializing in high-risk industries often deploy machine learning fraud detection tools, real-time velocity checks, and multi-factor authentication to secure transactions. Unlike mainstream processors, they build customizable fraud profiles based on each merchant’s specific product line, traffic patterns, and customer demographics. This tailored security reduces false positives while catching sophisticated fraud attempts that could otherwise slip through[3]. In a category already prone to skepticism from banks and regulators, every effort to minimize fraud risk strengthens your business’s ability to maintain long-term payment processing relationships.
Common Pitfalls When Setting Up Payment Solutions for Cannabis-Adjacent Products
Many cannabis-adjacent businesses rush to secure payment solutions without properly understanding the compliance requirements of their industry. Some fail to disclose full product lists during underwriting, leading to account closures when processors later discover banned or restricted items being sold. Others rely on generalist merchant account providers who treat all high-risk accounts the same, ignoring the nuances of cannabis-adjacent commerce. Additionally, some merchants mistakenly focus solely on cost and select providers with the lowest fees, only to realize later that low-quality fraud detection and poor customer support leave them vulnerable. There is also a tendency to overlook the importance of detailed refund policies, terms and conditions, and shipping disclosures, all of which can be critical evidence in fighting chargebacks. Careful planning and provider selection are essential to avoid these costly missteps.
Why High-Risk Payment Solutions Offer Long-Term Stability
While high-risk processing fees may be higher upfront, they provide cannabis-adjacent businesses with a level of stability that mainstream providers simply cannot match. Working with specialized merchant processing solutions means that underwriters fully understand the risks associated with hemp-derived or cannabis-themed products and are prepared to manage those risks proactively[4]. These providers are less likely to panic if a product is mischaracterized in media reports or if minor regulatory changes occur. Additionally, high-risk providers offer more robust fraud protection and chargeback dispute support, which are essential for protecting profit margins over time. Businesses investing in strong payment infrastructure early experience fewer account freezes, faster settlement times, and greater customer trust. In an industry where regulatory uncertainty continues to loom, long-term payment processing security is worth the initial investment.
Conclusion
Payment processing for emerging cannabis-adjacent products demands a strategic approach that accounts for elevated risk, regulatory scrutiny, and consumer perceptions[5]. By working with experienced high risk merchant account providers and implementing secure credit card processing systems, businesses can protect their revenue and build sustainable brands. Whether you are selling CBD skincare, hemp supplements, or cannabis lifestyle accessories, success depends on proactive risk management, transparent communication, and smart partner selection. At Payment Nerds, we help cannabis-adjacent merchants design payment solutions built for compliance, growth, and profitability. With the right merchant account and gateway infrastructure, your business can thrive in a competitive and evolving landscape.
Sources
- Federal Trade Commission. “Understanding Hemp and CBD Product Regulation.” Accessed April 2025.
- PCI Security Standards Council. “Best Practices for Secure High-Risk Payment Processing.” Accessed April 2025.
- Electronic Transactions Association. “High-Risk Merchant Account Requirements in 2025.” Accessed April 2025.
- National Cannabis Industry Association. “Navigating Payments in Cannabis-Adjacent Markets.” Accessed April 2025.
- U.S. Small Business Administration. “Managing Risk for Regulated Commerce Businesses.” Accessed April 2025.
