Why won't banks back CBD shops that are now operating legally in Texas?

CBD business owners have limited options

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SAN ANTONIO – If you are shopping at CBD shops, be prepared to pay with cash.

Most credit card vendors aren't working with stores that sell cannabidiol, or CBD, products because they consider the CBD business as "high risk" because of the few regulations set on them.

Anxiety, depression and pain are ailments that users of CBD products claim the oil improves. And now, Texans can legally use CBD products that have 0.3% or less of tetrahydrocannabinol, or THC, in them after Gov. Greg Abbott signed House Bill 1325 into law this month.

THC is the compound in cannabis that makes users experience a high. The low concentration in CBD products means that users cannot get high. 

Even though these types of products are now legal, CBD businesses continue dealing with a financial hurdle.

“It's not really regulations on the cannabis side. It's really more banking regulations that's really partly the No. 1 issue that we have to deal with on a day-to-day basis," said Charles Rodkey, owner of Rodkeys CBD shop in north San Antonio.

Rodkey said if you go to any CBD shop across the country, you'll most likely need cash. His store takes credit cards and cash, but he brought an ATM machine into the building because he never knows when the credit card companies will decide to drop them.

Rodkey said banks will also deny opening accounts or deny loans to CBD businesses. 

Currently, the U.S. Food and Drug Administration does not regulate CBD products. In Texas, the Department of Health recently became in charge of regulations with the enactment of HB 1325.

Rodkeys opened up just a month ago, but the owners have been in the business for five years. They have a license with the Texas Department of Health because they also manufacture many of their products in San Antonio.

Before the bill passed, licenses weren't required for retail CBD businesses, only CBD manufacturers.

Rodkey hopes once the regulations come into place, the banks and credit card companies will jump on board with them financially.

“I think having the Texas Department of Health will be taking over a lot of the CBD retail sales and regulating that, it's going to make a big difference as far as legitimacy," Rodkey said.

When that will happen, Rodkey says, is still all up in the air.

“We will see. It's going to be a little bit of the Wild West here, still,” he said. “I think it's still years out that we find out.”

A recent Forbes article says the CBD market could become a $20 billion industry by 2024.

HB 1325 also legalized hemp farming in Texas. However, the steps farmers would need to take to become legal hemp farmers still have not been put in place.

Rodkey said once hemp farming takes off in Texas, he believes it will catapult the CBD industry further.

About the Authors:

Sarah Acosta is a weekend Good Morning San Antonio anchor and a general assignments reporter at KSAT12. She joined the news team in April 2018 as a morning reporter for GMSA and is a native South Texan.

Before starting at KSAT in August 2011, Ken was a news photographer at KENS. Before that he was a news photographer at KVDA TV in San Antonio. Ken graduated from San Antonio College with an associate's degree in Radio, TV and Film. Ken has won a Sun Coast Emmy and four Lone Star Emmys. Ken has been in the TV industry since 1994.