PEP Episode 081 — Hemp Ban Shockwave: Why A Quiet Hemp Rule Could Upend Electronic Payments Overnight

Hemp Ban Fallout: How Policy Whiplash Hits Payments, Portfolios, and Merchants.  Hosted by Global Legal Law Firm Managing Partner James Huber and Senior Associate Attorney Bryce Van De Moere

A sudden hemp or cannabinoid ban doesn’t just change SKUs—it detonates risk models, freezes reserves, and scrambles underwriting across entire portfolios. In this episode, we unpack how shifting federal–state rules, card-brand policies, and retailer enforcement create a perfect storm for ISOs, PayFacs, acquirers, and merchants operating anywhere near hemp, CBD, delta-8/10, or “functional” products.

We move past the headlines to the operational reality: MCC assignments that suddenly look “high-risk,” sponsor banks tightening controls, BIN-level pressure driving early enforcement, and offboarding protocols that leave merchants without token access or refund options. If you own portfolio exposure—or sell into these verticals—this conversation gives you a realistic way to protect revenue without inviting regulatory heat.

What’s at stake

Portfolio shock: Rapid policy shifts drive reserve hikes, rolling holds, and frozen payouts that cascade across portfolios.

Regulatory overlap: Farm Bill ambiguity, state AG actions, and network rules collide—leaving merchants compliant in one lane and out of bounds in another.

Processor posture: Heightened KYC/KYB, product-level reviews, and SKU scanning that turn “low-touch” boarding into ongoing surveillance.

Litigation vectors: Deceptive practices claims, labeling variance, age-gating failures, and unfair competition allegations—often leveraged after a payment cutoff.

What we cover (practical and tactical)

Mapping the risk perimeter: Hemp vs CBD vs delta-8/10; how labeling, THC thresholds, and packaging claims change your risk category overnight.

Underwriting changes you’ll actually see: Document asks, site/photo audits, ingredient attestations, SKU-level approvals, and re-verification cadences.

Card-brand rules in practice: What “permitted with restrictions” means for your receipts, disclosures, and refund timelines; when MCC re-codes are necessary.

Offboarding without chaos: Token portability, refund runways, age-verified customer lists, and inventory liquidation strategies that reduce complaints and chargebacks.

Dispute defense in gray zones: Evidence sets that win (COAs, batch IDs, age verification logs, delivery confirmation) and when “refund first” beats “fight first.”

Ops knobs you can turn today: BIN rules, shipping blacklists by state, adult-signature requirements, SKU-specific routing, and refund automation triggers.

Alternative rails, done right: Where ACH/pay-by-bank and wallets help—and where they create new compliance workstreams and reconciliation debt.

Field stories and failure modes

MATCH and mislabeling: How a single mislabeled product can trigger portfolio-wide scrutiny and a five-year hangover if records aren’t corrected fast.

Secret-shopper reality: Entry signage, web product pages, cart disclosures, and line-level receipts—why “register-only” notice is a fine magnet.

Stacked fines and common ownership: How assessments replicate across related entities when documentation and SKU controls are inconsistent.

A usable playbook for payments teams

Re-verify your book: Run a hemp/cannabinoid sweep—SKU lists, labeling, COAs, age gates, shipping lanes, and ad claims.

Board with attestations: Product-category, labeling compliance, age-gating, shipping lanes, and refund policies—signed and renewed on cadence.

Configure the tech: MCC accuracy, BIN-aware debit handling, auto-refund triggers for flagged states/SKUs, and token-migration rights in contracts.

Instrument disputes: Track TC40 and RDR signals by MID/SKU; set SLA-based refund or verification flows pre-fulfillment.

Plan the off-ramp: Document a responsible offboarding protocol—escrow-backed refunds, token portability, customer comms, and evidence archiving.

Who should watch/listen

ISOs, PayFacs, acquirers, risk and compliance leaders, marketplace operators, vertical SaaS in retail and wellness, and merchant operators navigating hemp/CBD/delta-8 exposure—or the collateral damage when policies shift.

*Matters discussed are all opinions and do not constitute legal advice.  All events or likeness to real people and events is a coincidence.*

Transcript

James Huber (00:00):

If I’m in the cannabis of the hemp industry, I am nervous. One. This is a humongous departure from where things were heading. What Bernie, I think said when he was running, I legalize and everything. Governments staying out of it. There is a big thing. I know organizations like Normal are gearing up for, this is a preemption issue because it’s state’s rights, but we’re not seeing a lot of that being, there’s federal troops running all over the place, stepping on state’s toes. So if I’m in that industry at any level, I am nervous about where things are going. Very, very nervous about where things are going and my ability to remain in that business.

Jeremy Stock  (00:49):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode. We’re really excited. In studio today, we are joining us senior associate attorney, Bryce Vander Moore, as well as managing partner of the law firm, James Huber. Gentlemen, we’re talking about the hemp band. Maybe we’ll talk about is it a band? What does it mean for our clientele? Our listeners jump right in.

James Huber (01:21):

Yeah, I mean, for me, this came out of nowhere, but we had somebody on the podcast last week, Jeremy, that was kind of, seemed like he knew this was coming. He must have been reading the tea leaves. Remember that? He’s like, it’s happening.

Jeremy Stock  (01:32):

Yeah.

James Huber (01:32):

Yeah. I was like, this guy’s crazy. But yeah, it happened. So effective in one year. Any hemp that has, I think it’s like 0.0, 0.03 or something. THC is a schedule one drug just like it is marijuana, cannabis, whatever you want to call it. And my understanding is that it’s basically impossible to make hemp that doesn’t have some trace amount of THC. And what it did is basically the farm bill left open a loophole for hemp to be processed because hemp is a wildly lucrative crop to grow. And they’re saying, look, the farm Bill, it never had the intent of leaving this industry, this product completely unregulated. Yeah, it did. That was the whole point. I dunno. People take CBD and says, it does something I’ve never

Bryce Van De Moere (02:44):

Tried. Yeah, its kind of hit or miss on the CBD. I don’t know that I’m

James Huber (02:47):

Like muscle cream. Actually, we had a client whose legs were all bruised and he’s in that industry. It’d be interesting to see what he thinks. And he is rubbed it on. He’s like a professional fighter, and he’s like, look, one day the bruises are gone. So maybe he’s got the good stuff. I don’t know. But anyways, it doesn’t get you high. Right? The C, B, D. So the whole thing is they use hemp for everything. Clothes, clothes and

Bryce Van De Moere (03:13):

Medicine. Wasn’t that the whole deal with hemp in the first visit and it was basically going to wipe out the cotton industry because it’s a more

James Huber (03:20):

The gun

Bryce Van De Moere (03:21):

Industry? No, the

James Huber (03:21):

Cotton. Oh, cotton.

Bryce Van De Moere (03:22):

Yeah,

James Huber (03:24):

Because everyone will be too lazy to stop shooting.

Bryce Van De Moere (03:26):

Well, yeah, it was too high to shoot.

James Huber (03:28):

Yeah, yeah. No, because I remember we had our tennis uniforms in high school, had hemp leaf on him. We were like, this is awesome. This

Bryce Van De Moere  (03:39):

Is awesome.

James Huber (03:40):

Yeah, because it was all made out of hemp and they were great shirts. So anyways, what does this mean for the payment processing industries? One big hemp sellers, they’re just processing payments regularly, just like a regular store selling cotton. So they are scrambling. They don’t know what the fuck to do. We’ve got clients going, this is coming. So number one, we don’t know what’s going to happen. They said, give it a year. Go figure it out. Go make some framework. Now, Bryce said, Texas is completely fucked from this, but Texas I think is a, was it 30 billion? 30 billion industry in hemp. Wow. That might include cannabis too though. I don’t know.

Bryce Van De Moere (04:33):

No. Well, it included the Delta eight and the Delta nine who have below the 0.03. But it’s still,

James Huber (04:40):

But that stuff actually gets you high,

Bryce Van De Moere (04:41):

Right? It does, yeah. My understanding is, well, my understanding is, hey, I do do my research. I do my research. It’s basically marketed, I’ve seen it marketed as, it’s basically weed for people that don’t like to get blasted. Okay. It’s like starter barrels.

James Huber (05:04):

It’s like what? Probably we were smoking in high school. Yeah. I mean, not us.

Jeremy Stock  (05:08):

I was going to say probably weed in the sixties was probably basically we in the sixties that look like the nineties

James Huber (05:13):

In 2000. Anyways, so that one weird. So Texas is screwed because that’s a huge industry. So the crops, which my understanding is you throw a seed in the dirt and it sprinkles up. Now I remember trying that in high school and it didn’t work for me. My

Bryce Van De Moere (05:33):

Understanding is though, that the legislature had already been attacking it, and it’s a huge money maker for this state.

James Huber (05:39):

It’s a huge moneymaker, and there’s got to be something at play. I don’t think that Texas is a big cotton growing or whatever, but I don’t know. So it’s really weird to see wanting to shut down a whole industry that generates a ton of money, particularly one that affects farmers

Bryce Van De Moere (06:03):

Who are already taking a massive hit anyway

James Huber (06:05):

That are already taking a massive hit. And this is something where it’s low maintenance. I don’t know if it’s a ton of water or not, but it’s like what are they going to grow now? Their margins just went way down. You’d grow this and easy peasy. Yeah.

Bryce Van De Moere (06:18):

What’s Northern California going to do?

Jeremy Stock  (06:21):

Well, I think to your point, to make it as clear as possible, hemp is not a drug. Right? That’s the problem. At least I know in my home right now, my wife, she got hemp oil for various things. She uses hemp, even protein in her protein shakes.

James Huber (06:38):

Oh yeah. Right. Yeah. What do you do with that? I remember there’s hemp seeds at the salad bar.

Jeremy Stock  (06:42):

Yeah,

James Huber (06:42):

Exactly. So those are done.

Bryce Van De Moere (06:45):

Yeah. What I am concerned is going to happen because I’ve seen this lately because my angle has always been, or what I’m professing to these people, is that in order to have a match violation, it has to involve payment processing. You can’t have matches for card processing violations, like issues of card. So that basically means you have to have in a transaction. But what I am seeing now sporadically, but I’m afraid it’s going to snowball, is that MasterCard is, if you even have some component of your shop or your store selling something that they don’t like, even if they would only take cash for, even if it doesn’t involve a credit card, they’re going to get matched for a violation of standards. Because basically your store is offering something that they find an objectionable.

James Huber (07:34):

If you’re a health food store and you’ve got a bar of soap that’s hemp infused, arguably they could come kick down the doors and arrest you selling a schedule one drug now.

Bryce Van De Moere (07:45):

But even if you’re not taking a credit card for it, it still skives them out. And so I’m afraid that we’re going to have, it’s going to be the peptides all over again, which is where they just cut everybody off of the knees without any investigation whatsoever. It’s just safer to cut ’em loose and put ’em out of commission for five years than to actually look into it.

James Huber (08:09):

Well, like we said, they’ve got a year, but I could see this starting to happen right now today, where they’re going, Hey, we don’t want to worry about this. We’re going to shut you down. So now what do these people do? So, okay, go look at the guys that are selling cannabis. What are they doing? They’re doing cashless, ATM, which is a transaction that mimics ATM transaction, which I’ve always, people have all this flack about, but I’m like, what’s the difference between the ATM machine sitting in the corner and cashless ATM? And now there’s some issues with how the merchant gets charged or the cardholder gets charged, their network fees and all of that. But they get that same thing going to the ATM. But anyways, there’s issues with that potentially for the cardholder. But if you’re buying marijuana, like Bryce says, these damn kids don’t remember the days of having to sit in some sketchy dude’s house for a half an hour pretending you’re not there just to buy the weed.

Bryce Van De Moere (09:13):

And it shows.

James Huber (09:14):

And if I’m willing to go spend 30 minutes to an hour watching some guy like a blow gun, he was blowing darts into things. And I’m like, and he’s got this dog with this purple tongue. And I’m like, yeah, this is really fun hanging out. I’m willing to go into a weed shop now, sunny boy and pay an extra six bucks. Because think of what you just saved. You’re not getting threatened by blow darts and some big dog named Kita.

Jeremy Stock  (09:44):

I think we knew the same guy, James.

Bryce Van De Moere (09:46):

And I love that meme that you mentioned off. I had to smoke out of a Coke can so that you could vape and target. Yeah, exactly.

Jeremy Stock  (09:57):

So James, what’s your message for, like you said, for our audience, for ISOs, what are you telling our

James Huber (10:02):

Clients? If I’m in the cannabis of the hemp industry, I am nervous. One, this is a humongous departure from where things were heading. What Bernie, I think said when he was running, I legalized and everything. Governments staying out of it. There is a big thing. I know organizations like Normal are gearing up for, this is a preemption issue because it’s state’s rights, but we’re not seeing a lot of that being, there’s federal troops running all over the place, stepping on state’s toes. So if I’m in that industry at any level, I am nervous about where things are going.

James Huber  (10:45):

Very,

James Huber (10:46):

Very nervous about where things are going and my ability to remain in that business. And I think that it will be a big fight. I don’t think it’s going away, really. I mean, well, but it seemed like you can just make it all. It goes back to you’re going to have to go back to that sketchy dude’s house.

Bryce Van De Moere (11:04):

Yeah, exactly. It seemed like, look him up, James.

Jeremy Stock  (11:07):

See if he’s still around.

Bryce Van De Moere (11:08):

Yeah. Mad dog. Yeah. It seems like we were actually maybe moving to maybe possibly the federal government finally allowing, because it’s still illegal federally, so the credit cards will not touch it. I was hopeful that we might be getting to a point of maturity where the credit cards could become an option. The federal government would just lighten up. But it’s seemingly now we’re going backwards.

James Huber (11:33):

Well, it could go back to medical and it could go back for hemp, people use hemp for all. You said all these creams and sleeplessness and seizures and everything like that. It could go back to, yeah, you need a prescription to get your protein, your hemp protein.

Jeremy Stock  (11:54):

Yeah. Crazy.

James Huber (11:55):

And it could go with that way with marijuana too, because that is one area where the preemption issue is. That’s been pretty clear. State’s rights, they get to decide medical. That’s how it happened first everywhere. And they’re going, that’s going to be a tough one. But again, right now we’re seeing a humongous erosion of state’s rights. States rights. So I would not be hanging my hat on that as far as where we’re at with that going on. So what I would be doing if I’m in this space is I would be thinking about continuity programs to have multiple ways to take payments. Because we know we do a lot of match work where people get shut down. If you can’t take payments, you’re out of business. That guy whose house I went to, he was cash only. But nowadays, I don’t think a dispensary, I think they could be cash only, but they’re going to have an ATM and that thing better have a whole bunch of money. And if it breaks, you’re out of business.

Bryce Van De Moere (12:58):

Absolutely.

James Huber (12:59):

So I would be hiring some professionals who know a lot of people in this space. I know one of those professionals that would be our law firm and talking about, Hey, what are my options here? If you have anything less than three right now, I’d be real nervous. And this would be huge companies, CBD companies. These are humongous, massive, massive companies shipping all over the world and all of that. And all of a sudden they’re being told that they’re drug dealers.

Bryce Van De Moere (13:35):

Well, I think that also it would behoove the merchants to be a little proactive and just call their, call the iso,

James Huber (13:42):

Call your iso.

Bryce Van De Moere (13:44):

So what’s your stand here? What is your understanding of what I should be doing? What changes I should be making? Because ultimately, a large portion of our match cases are born as a result of the fact that the merchant just made a move that they thought was correct, but they didn’t run it by their processor. They didn’t run it by their bank, and they hate that. And so it’s basically if you had just asked the question before you took the action, you would not be in the situation. And I think so. I think everybody has a right to reach out to their processors and be like, Hey, am I okay? Do we need to reevaluate my business model? I would rather shut down voluntarily or remove something from my stock voluntarily than lose payment processing for five years, and then I’m losing my house.

James Huber (14:35):

It’s like me with my wife. I’m doing fine as long as she tells me I’m fine every 15 minutes.

Jeremy Stock  (14:43):

James, one thing you’ve always commented on about the payments industry in general, it’s all these entrepreneurs, people who are their head is on a swivel, is how you put it. I think these are the types of issues. I can just imagine the industry right now, all those guys out there, they’re doing exactly that. They’re seeing, okay, which way do we have to swivel?

James Huber (14:59):

Which way we have to go? And there’s people out there that are going to be able to figure out ways to have a long lasting merchant program. Marijuana, when it first came live, people are just putting it in. And this is still the case. Anybody who goes into a dispensary and sells on that, oh, I can actually really legally process using credit cards, they’re wrong. They’re just miscoding You saying that you sell various stuff and hoping somebody doesn’t find out,

Bryce Van De Moere (15:29):

But then they send a secret shopper in your

James Huber (15:30):

Day, they send a secret shopper in, or it is not that hard to figure out. You look at the address and then you go on Google Maps. So that will happen probably for a little while, but there are people out there that figure out ways to do it in a compliant way. And by compliant, I mean one that lasts.

Jeremy Stock  (15:53):

Yeah, good point, James. And we know a lot of those people. So as you said, people listening to this right now who have questions, reach out.

James Huber (16:01):

We had someone on the, that’s who it was. It was that guy on the podcast last week, Noah Fitzgerald. They have this great company that is compliance front to back. I mean, that’s why he was so excited, because his company is, I’m checking everything out because probably what will happen is they’ll also, maybe they’ll figure out a way to make it zero. Totally zero.

Jeremy Stock  (16:21):

They’re going to

James Huber (16:21):

Have to THC. They don’t have to.

Jeremy Stock  (16:23):

Yeah. Yeah. Interesting. Yeah, you’re right. Credible. That was credible.

James Huber (16:26):

Credible. Yeah. That company’s full compliance. I mean, he’s probably jumping for joy right now because you need that guy at a minimum, and he’s the one who’s going to know who the players are that are going to be able to survive the storm.

Jeremy Stock  (16:40):

Yeah. Noah, you’re welcome for that. Shout out. Yeah, absolutely. Free advertising. Alright, gentlemen, last word.

James Huber (16:49):

We said this earlier. If I’m in the marijuana industry, I would be paranoid right now.

Bryce Van De Moere (16:55):

Yeah. I mean I know that it is fresh. This happened like Tuesday night, but I’ll be the canary in the coal mine here. I just have a real bad feeling about, I just worry that there’s going to be a lot of just rushes to judgment as to who can process and who can’t. And then our whole line of work is they’re not even going to tell you why they shut you down.

James Huber (17:20):

Yep. Yeah. No, I’m thinking about the grocery store that I go to almost every day. It’s full of hemp products on their shelves, lotions, soaps in the salad bar, they’d get put on match. It’s crazy. And how do you keep it out? You’re going to have to look at, you, really look at all your products. How do, maybe they snuck a little hemp in that whatever.

Jeremy Stock  (17:42):

In that cold cereal. There’s some hemp seeds in there. Yeah. Or the oil. Or the oil. We’re going to, yeah. Did you cook with that? Yeah.

Bryce Van De Moere (17:49):

Yeah. I mean, so,

Jeremy Stock  (17:50):

Yep. We’ll see. Excellent. Alright, well thank you so much gentlemen. And thank you for listening this long to the Payments Experts podcast, a podcast of global legal law firm. Thank you for listening to this episode of the Payments Experts podcast, a podcast of global legal law firm. Visit us online today at global legal law firm.com. Matters discussed are all opinions and do not constitute legal advice. All events or likeness to real people and events is a coincidence.