Fundraising regulatory uncertainty leaves CBD brand high and dry
Hempen Organic, the brand specialising in hemp food, cosmetics, and CBD products, initially gained acceptance on Crowdfunder, but were later rejected due to payment processor Stripe’s terms and conditions, which exclude CBD-related businesses.
Speaking to NutraIngredients, co-founder of Hempen Organic Patrick Gillett explains that many platforms, including popular ones like Crowdfunder, do not allow CBD businesses to feature their projects due to payment processing limitations.
This issue arises because these platforms often rely on payment processors like Stripe and PayPal, both based in the US, which have policies against servicing CBD companies.
Crowdfunder explained to Hempen: “Unfortunately, our payment provider Stripe has very specific terms and conditions and one is related to CBD amongst other items.”
Similar companies, like Kickstarter, also prohibit projects which involve products that are “heavily regulated”.
As Gillett notes, the issue is not solely surrounding legality, but the unknown of a changing regulatory landscape.
He states: “It's not because these companies aren't legal. CBD and hemp companies are legal both in the UK and as far as I know in the US as well, but they determine them as risky and that would be to do with various legal complexities in different jurisdictions.”
Limiting exposure
The Hemp brand focuses on “nutrient-rich products free from chemicals”, aiming to support UK-grown hemp for a greener economy by working with eco-conscious farmers, as part of their not-for-profit social enterprise framework.
Gillett states that these restrictions in crowdfunding limit their exposure significantly.
Instead of leveraging well-known crowdfunding platforms with a broad audience, they have been pushed to host their campaign on their website, which wasn't originally designed for such purposes.
Gillett explains that this situation led to technical challenges, including website crashes due to high traffic, making it difficult to reach potential backers efficiently.
He also suggests that it is a way for larger companies to maintain a monopoly on the industry, stating: “We are a small not-for-profit, but we’re one of the longest running in the business in the UK at least, and we're providing a premium product that's organic and highly respected within the industry.
“However, we can't get ourselves in front of as many customers because of the resources required to be spent on online marketing, and we're at a major disadvantage to companies with deeper pockets.”
Their crowdfunding campaign aims to raise £55,000 for marketing costs, as they state: “We are struggling to get our voices heard over the noise from companies churning out poor-quality CBD isolate products without a second thought for the land their products come from, the farmers and makers or their communities.”
A call for inclusivity
Gillett explains that the challenges faced by Hempen and other hemp businesses underscore the need for greater inclusivity and fairness in both the crowdfunding and digital advertising realms.
He notes that as the CBD and hemp industry continues to grow, it becomes increasingly important to address these regulatory and accessibility issues to ensure a level playing field for all businesses, regardless of their size or product offerings.
