WooCommerce, the open-source eCommerce platform developed and supported by Automattic, announced a partnership with Square payment solutions yesterday. The partnership expands services for merchants who are selling CBD products online. While it is a small step toward making it easier to sell CBD products, there are still many restrictions and pitfalls that merchants must overcome.
Cannabidiol, known as CBD, was removed from the U.S. federal list of controlled substances in December 2018. It is one of 100s of identified cannabinoids in cannabis plants and does not have the psychoactive effects of THC. The Farm Bill (Agriculture Improvement Act of 2018) removed some restrictions and provided a regulated path for farmers and merchants to sell CBD-based products.
CBD exists in a legal gray area in some jurisdictions in the U.S. State and local laws may still ban selling CBD and other substances (for example, I live in Alabama where we have some “dry” counties where selling alcohol is illegal). Therefore, merchants need to be aware that there are legal issues to consider, despite it being legal at the federal level. They should always check their local laws.
Other hurdles include finding a payment processor, web host, shipping company, and bank that don’t have internal policies that forbid CBD products or at least working within any guidelines they do have. WooCommerce’s partnership with Square may help U.S. merchants at least tackle the payment processor part of the equation.
“WooCommerce is proud to offer CBD merchants secure, efficient services that enable business owners to focus on improving consumers’ lives,” says Paul Maiorana, General Manager of WooCommerce.
By using Square, U.S. merchants can also use other Automattic services such as Jetpack for backups and malware scanning, WooCommerce Shipping for printing labels, and WooCommerce Tax for automatically calculating sales tax at checkout.
“Because it’s still a highly-regulated substance, CBD products sold online require adherence to a special set of rules,” wrote Lynn Jatania in a how-to post for WooCommerce merchants. In the post, she describes steps sellers must follow and issues they may encounter.
Restrictions on Automattic-Hosted or Connected Stores
The version of the WooCommerce software available through WordPress.com or WooCommerce.com forbids the sale of CBD products because it is hosted by Automattic. Merchants must use the WooCommerce plugin from WordPress.org and run their stores on a third-party host that allows selling CBD products.
The WordPress.com store guidelines state:
For example, you may not sell (or facilitate the sale of) any of the following in (or through) your store:…Controlled and highly-regulated substances (including alcohol, marijuana, cannabidiol or CBD, and other cannabis-derived products)
Self-hosted WooCommerce stores also have restrictions if they wish to connect their stores to any of Automattic’s services. This became a source of confusion in June 2019, when a self-hosted WooCommerce merchant was informed they could not connect to WordPress.com via Jetpack while selling CBD products. The WooCommerce team updated its guidelines to better clarify what is allowed when using Automattic’s services.
The policy is nearly the same today. However, the partnership with Square loosens the rules to a degree. Currently, only U.S. stores are allowed to sell CBD products while connected to WordPress.com. They are also required to use Square for payment processing.
From the WooCommerce Guidelines for CBD and Other Hemp-Derived Products:
Square has a vetting process for stores selling CBD and other hemp-derived products, so we currently require Square as the payment provider if you’d like to connect your store to Jetpack, WooCommerce Tax, and WooCommerce Shipping. We may approve additional payment providers in the future.
Using Square is not as simple as signing up. To sell CBD products, merchants must go through an application process to make sure they are selling CBD products with approval. The industry is heavily regulated, so this process may take some time.