“We’ve built out a solution to make sure that we can actually enable them to do business on the Shopify platform. Because as you can imagine, these merchants have encountered lots of business challenges as this environment has been changing at such a fast pace,” said Hana Abaza, director of marketing at Shopify Plus.
When CBD merchants come to Shopify, they must fill out an “attestation form” that essentially confirms they’re operating in a state where such sales are legal. Shopify does not assume responsibility or liability if merchants don’t do their due diligence.
For those who do, the platform offers a variety of tools, including help with designing an online store, signing on with one of Shopify’s shipping and payment partners and customizing shipping profiles, as well as a suite of more than 2,500 apps ranging from marketing to accounting to inventory management. The company also offers a support team, to help budding merchants and established sellers navigate the complicated labyrinth of CBD retail.
“There are going to be merchants that are coming in and wanting to create brands around the use of hemp-derived CBD,” Abaza explained. “But there are also a lot of brands in the beauty space that already have preexisting businesses and that are using this as a way to diversify by starting to incorporate CBD into their product line. It really does sit at the intersection of a lot of different types of industries.”
But for merchants like Josie Maran, Nature’s Ultra and Cannuka — which revolve around hemp-based product — the Shopify announcement makes for a major shift in their core businesses.
“We were one of the 1,200 that got taken off of the credit card processing a few months back,” said Cannuka’s Michael Bumgarner, referring to a major pivot by payment processor Elavon in March. A subsidiary of U.S. Bancorp, Elavon was the largest CBD payment processing company in the U.S. before it cut off its CBD and hemp-related business.
“What’s great is now that Shopify is involved…[it’s] such a massive, global business, they’ve actually developed strategic partnerships with new credit card processors,” he added. “We’re paying extremely high fees. Now that Shopify has led this, kind of fixing the back end, we’re able to work with these new providers and better negotiate rates.”
The move also marks a notable change for Shopify. As recently as last month, coverage of the escalating challenges for CBD retailers often lumped the commerce platform in with Mastercard, American Express, Visa, Square, PayPal and Stripe for refusing to process payments for this category.
And yet, as an emerging field, the CBD and hemp business has been rocketing skyward. Piper Jaffray believes that the market, as driven by beauty commerce, could reach $50 billion to $100 billion. Drilling in even further, Future Market Insights estimated that the CBD skin-care market will top more than $645 million this year alone.
The scenario has start-ups rushing in and Silicon Valley investors keen to cash in on them. Established players, too, are falling for their charms, with retailers like Sephora, Barneys New York and Neiman Marcus lining their shelves with CBD beauty products.
To shed light on its latest decision, Shopify pointed to figures from cannabis market research firm BDS Analytics, which forecasts a boom in U.S. sales of CBD products from $1.9 billion in 2018 to $20 billion by 2024.
For CBD skin-care line Cannuka, which became Ulta Beauty’s first CBD brand in March, the support from Shopify may be just the beginning.
“Shopify coming out for it is so big, and that is going to push the conversation even faster, in my opinion, where Facebook, Instagram and Google are really going to think about when they’re going to pull the trigger and be in support. [Then] we can ultimately compete on a level playing field,” said Bumgarner. “That’s really all we want to do, is have the same ability as the other amazing clean beauty brands out there.
“We currently don’t,” he said. “But it’s getting closer.”