Cigars POS Blog

Delta-8 Payment Processing: The What, Why, and How

Written by Spence | Mar 7, 2024 1:00:00 PM

If something is labeled high-risk, are you likely to jump in?

Probably not. You’ll likely do thorough research, weigh the pros and cons, and make an informed decision. Unfortunately, as a smoke shop owner, you’re labeled as a high-risk merchant.

Many payment processors and banks won’t work with merchants who operate in a legal gray area. But your customers want to buy delta-8, kratom, and other cannabinoids. So, what can you do?

This article covers the what, why, and how of delta-8 payment processing. We’ll also discuss how to choose a high-risk payment processor, and highlight why a smoke shop point of sale (POS) provider could be the better solution.

Delta-8 Payment Processing: A Hot Topic

Delta-8 continues to grow in popularity. Generating $2 billion dollars in revenue in the last year, there are no signs it’s slowing down. It’s so popular because it has therapeutic effects without the intense high of traditional THC.

And it will probably fly off your shelves, too. But before you dive in, are you set up for delta-8 payment processing?

If not, the first step is to understand everything there is to know about selling delta-8, and then find a high-risk payment processor (or POS provider) to help you get set up.

 

What Is Delta-8 Payment Processing?

Delta-8 payment processing lets smoke shops accept secure payments for products containing delta-8 THC. This includes traditional payment methods like credit cards, debit cards, mobile wallets, and bank transfers.

On the surface, it’s the same as processing other retail items. But because of the complex legal status of delta-8, there’s more to consider. The 2018 Farm Bill legalized hemp and its derivatives like delta-8, as long as the final products contain less than 0.3 percent delta-9 THC. You’re safe, right? It depends.

Regulation still varies from state to state. While there’s this gray area, not all payment processors are comfortable facilitating transactions for cannabis-related businesses.

Note: Here is a list of where delta-8 is legal.

 

Challenges in Delta-8 Payment Processing

You’re going to hit a few speed bumps when you’re setting up payment solutions for your smoke shop:

  • It’s legally ambiguous: While delta-8 is federally lawful, states have taken varying stances in either banning, restricting, or allowing its sale. This creates uncertainty for processors and banks.
  • It’s risky: There could be repercussions for merchants if they unknowingly violate local laws. Even if it’s legal now, this could be overturned if the government decides to intervene due to public health concerns.
  • There’s potential for fraud: There’s a higher risk of chargebacks and fraud with delta-8 purchases. Many customers new to THC don’t fully grasp what they’re buying. When they notice an odd charge, they often file a complaint.

There are ways to mitigate fraud and chargebacks. The right payment processing partner makes accepting delta-8 payments easy, legal, and profitable.

Related Read: CBD Payment Processing: 3 Considerations Before Selling CBD

The Importance of Delta-8 Payment Processing for Smoke Shops

Selling emerging products helps keep your smoke or vape shop competitive, but only if you work with a high-risk payment processor who can handle the challenges above. 

A Better Customer Experience

You want to remove friction from the checkout process as much as possible. When customers can conveniently pay how they please, they’ll be satisfied, and you’ll build trust. Imagine if they try to pay, but their transaction is denied.

Frustrated, they walk out empty-handed. They might also tell their friends about their bad experience. Instead, you want to make it easy.

For the easiest checkout experience, work with a point of sale provider with high-risk payment processing baked in. That way, you have all the perks of a POS system and you don’t need to worry about payment processing.

Staying on the Right Side of the Law

With delta-8 THC treading a fine line in the regulatory landscape, it's like playing in a game where the rules keep changing.

Compliant payment solutions help you legally sell delta-8 according to state laws. Again, this helps build trust. You don’t want to process unlawful transactions accidentally. The right payment processing solution helps you navigate changing laws and ensures you’re compliant.

Future-Proofing Your Business

With a high-risk payment processing partner, you can think ahead.

You might want to expand your offerings to sell other emerging products, like CBD and kratom — and you can do so confidently without the risk of processing limitations. High-risk payment processors also specialize in data security — forward-thinking companies need enhanced encryption and real-time monitoring tools to protect their customers’ information.

Related Read: Kratom Payment Processing: 3 Things You Need To Know

Combining customer satisfaction, compliance, and forward thinking, investing in the right delta-8 payment processing solution isn't just smart — it's essential for any smoke shop looking to thrive in today’s market and beyond.

How To Set Up Delta-8 Payment Processing for Your Smoke Shop

You know what delta-8 payment processing is and why it’s so important. So, how do you set it up for your shop? Follow this process.


Choose the Right Payment Processor

Time to narrow down the long list of payment processors you could choose from. Remember, the payment processor you choose will be responsible for the safe and legal processing of your transactions.

Prioritize processors who use top-tier security protocols to protect customer data. For smoke shop owners, your best bet is a high-risk processor who specializes in the tobacco and vape industry.

Pro tip: Tobacco and vape-specific POS providers offer integrated payment processing or will have recommendations to help you find a high-risk payment solution.

Next, look for reviews, especially around customer support. With a lot riding on payments, you need a partner who’s there to answer your questions and concerns and troubleshoot issues. 

Dig into their fee structure. Are there any hidden costs? How do they manage chargebacks, high-volume sales, and processing fees? It’s best practice to contact multiple vendors and get pricing quotes. Make sure to schedule demos to see their software in action.

Related Read: How Third-Party Credit Card Processors Are Overcharging You

 

Understand and Meet Legal Requirements

The buck stops with you. As a smoke or vape shop owner, you need to stay up to date with state and federal laws regarding delta-8 sales. Regulatory landscapes shift — update yourself on any changes to avoid being caught off-guard.

If in doubt, consult legal experts and ask your payment processor to keep you informed. The best payment processors provide education to ensure you don’t complete illegal transactions.

Related Read: How To Obtain a Tobacco Retail License: 5 Steps

Set Up Your System

Integrating a new payment processing system into your shop's operations might feel daunting. Having the basics in place will make it easier: 

  • Compatibility Check: Make sure the processing system works with your existing sales and inventory management software.
  • Trial Runs: Perform test transactions before going live to iron out any kinks.
  • Backup Plans: Prepare contingency plans, like alternative payment options, to keep sales flowing.

Again, working with a point of sale provider can make this process easier.

Educate Your Team and Customers

The final piece of the puzzle is ensuring everyone's on board with the new system. Your staff should be comfortable operating the new system and prepared to answer questions customers may have.

You also want your customers to feel comfortable and confident that their transactions and data are safe. Highlight their various payment options and encourage customers to ask questions if they have concerns.

Delta-8 Payment Processing: Explained

We’ve covered what delta-8 payment processing is, why you should care, and how to set it up for your store. The right payment processing solution improves customer relationships, covers you legally, and provides a way to move your business forward.

But with complex regulations and the potential for legal changes, you might still be hesitant to invest in a payment processor. Instead, you could partner with a high-risk POS provider. At Cigars POS, we help smoke, vape, and cigar shops manage everything from payment processing to inventory to customer loyalty.

Payment processing is integrated with our system. Your POS and payment processing work in tandem, and our team is available 24/7 to provide support.

Discover why hemp retailers trust Cigars POS by scheduling a demo with our industry experts today.