July 5, 2019

Cannabis and E-Commerce

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Popular payment options remain elusive for online vendors of CBD and THC products, even those derived entirely from hemp.

It’s ironic, really: One of the hottest categories in retail — CBD and cannabis products — continues to rely on the oldest form of payment: cash. Brick and mortar dispensaries are cash-and-carry essentially by necessity. Even where state regulations are clear, banks and credit cards still turn away billions for fear of running afoul of federal law. The endorsement of the National Association of Attorneys Generalfor the SAFE Banking Act, more commonly called the “Marijuana Banking Bill,” still hasn’t mustered enough momentum to push the legislation out of limbo — despite a third of House members signing on as cosponsors, and a third of senators supporting a similar measure on their side of the Capitol.

The 2018 Farm Bill should have settled the debate for CBD products derived from hemp, yet the industry has mostly experienced the opposite effect in e-commerce. PayPal recently started shutting down sellers on their pervasive payment platform just as rival Square launched an invitation-only alternative to bring credit card processing to companies that still lack basic banking services. US Bank subsidiary Elavon similarly suspended accounts for several CBD storefronts, making their legal products problematic to purchase.

Green Growth Brands has taken an approach informed by decades of traditional and digital retail experience and a keen understanding that customer expectations aren’t static and every industry is constantly evolving. Kathy Milette knows this better than most. As the company’s Director of eCommerce, finding novel solutions to new challenges is just part of the job. We asked her how Green Growth Brands is navigating these challenges and succeeding despite them.

How difficult is it to maintain a consistent e-commerce strategy, despite inconsistent regulation?

Surprisingly, our e-commerce strategy has many similarities across THC and CBD that revolve around exceptional user experiences and scalable enterprise capabilities. It’s just our capabilities roadmap by brand that needs to be a bit more flexible as regulations shift.

Obviously for an e-commerce site, one of the capabilities we want to have is alternative payments, like Apple Pay and PayPal. But we knew that path would be an uphill battle for us in the near future, and that’s why we didn’t launch with them. It’s also interesting that Amazon says they’re not in this business when clearly there are CBD (and CBD-like) products sold on their site through third parties.

Any conversations we enter with vendors, especially technology vendors, as we build out our e-commerce business, start with the same questions. “Will you do business in the CBD and THC space? Will you put it in writing, and will you send it to me immediately?” We have to do it, because our industry has been burned too often.

I recently talked with a representative at PayPal who had allowed “buttoned up” CBD clients to use their service, until just recently when these businesses were cut off in response to the lack of clarity in new industry regulations. On the other end of the spectrum, we saw what happened to those more questionable CBD companies who were working with Elavon just a few months back. It’s one reason why Green Growth Brands is so conscientious about our product certifications and disclaimers. As a very public brand with a lot of business expertise behind us, we want to be in a position where we are protecting both ourselves and our partners.

How are your approaches to e-commerce and digital marketing different from brand to brand?

The sites for our CBD businesses are pretty straight-forward. Granted, we can’t ship to all states or accept every payment method yet, but one brand site, shopseventhsense.com, is live and fairly conventional in terms of e-commerce.

On the cannabis side, we are in the process of creating new web experiences to replace what is there today.

In e-commerce, we approach our business not necessarily brand by brand, but from a level up — from CBD and THC – which allows us to think and act in a scalable fashion. It’s only a matter of time before additional options for our businesses become available. We’ll be patient for now and are ready to move fast when that time comes.

How do these new challenges compare to what you’ve seen in the past?

I’ve been in e-commerce for a long time, mostly traditional. Being in cannabis is never boring. In this evolving space, it’s possible to imagine a scenario where you can create a checkout where part of an order is shipped from a warehouse and the rest is picked up in-store — where we can ship what can be shipped, and what can’t or requires cash is picked up or delivered. It’s uncharted territory every day as these new ideas and challenges are posed.

Given the hurdles, how is e-commerce compatible with cannabis?

We’re often asked, as a cash-only business on the cannabis side, why we are focused on building out our e-commerce presence. No, we can’t take cash payments online — yet. But we have a lot pre-selling that comes through the site, as well as customers who buy online and pickup in-store or do delivery.

We often use the pizza metaphor. Unlike other businesses, cash-only is the norm for us, like pizza delivery used to be. Especially in states where cannabis was previously illegal, it’s always been an under-the-radar cash-only transaction. This audience is already comfortable with cash. Customers don’t expect to pay by credit card, but they’re excited when they can. That option is inevitable, and Green Growth Brands will be ready.

On our CBD side, it’s not cannabis. It’s hemp, and the market is growing so fast, I don’t think the banking industry or credit card processors can continue to turn businesses away. CBD has been being sold online for years; it will continue to grow, and grow fast, and we want to be at the forefront of that boom.

Bloomberg Business

"Cannabis Company Backed by Retail Fortune Eyes East Coast Expansion"

The Province

"Opinion: The future of cannabis retail is simple, integrated, and welcoming"

CBC Business

“Unlike big names in production at centre of cannabis frenzy, company plans to focus on retail side of things”

Tech Startups

"Former Victoria Secret executive raises $85 million for cannabis startup…"

The Growthop

"Green Growth Brands completes upsized raise of $85 million to satisfy investor demand."

Benzinga

"Green Growth Brands announced it has completed a raise of C$85 million ($65.7 million) in a private placement…"

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