CBD Payroll | USDA Regulations & Patriot Payroll

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CBD Payroll: Can Businesses With CBD Products Use Payroll Software?


Prior to the Agriculture Improvement Act of 2018 (2018 Farm Bill), hemp, alongside marijuana, was a Schedule I controlled substance. Because hemp was not legal under federal law, businesses that sold hemp or hemp-derived consumer products containing cannabidiol (CBD) could not use financial services (e.g., deposits) at most banks. 

However, the 2018 Farm Bill removed hemp (and qualifying CBD products) as a Schedule I controlled substance under federal law. And under the 2018 Farm Bill, hemp is subject to U.S. Department of Agriculture (USDA) regulation. 

Following the passage of this bill, the Federal Reserve System and FDIC, among other federal agencies, released a joint statement saying that banks no longer need to file suspicious activity reports (SARs) solely because a customer is engaged in the growth or cultivation of hemp. However, banks must do their due diligence to verify businesses meet hemp-production standards under USDA regulations. 

So, what are the USDA’s regulations? The USDA’s final rule on hemp production, effective March 22, 2021, considers products with no more than 0.3% THC (tetrahydrocannabinol) “on a dry weight basis” as hemp, which is now legal under federal law. The USDA considers products with more than 0.3% THC as marijuana, which is illegal under federal law. 

What exactly does all of this mean for businesses with CBD products that want to use payroll software? Qualifying hemp and hemp-derived products are legal under federal law, thanks to the 2018 Farm Bill. So, businesses selling CBD products with THC levels no greater than 0.3% can use financial services under federal law. As a result, businesses that previously could not use direct deposit or a full-service payroll solution may now be eligible. 

Keep in mind that some states still prohibit hemp and hemp-derived products, and thus CBD payroll. If your business is located in one of those states, Patriot will not be able to offer Full Service Payroll or direct deposit to you. 

Need CBD payroll? Here’s how to sign up for Patriot’s Full Service Payroll or direct deposit 

If you sell CBD products with THC levels no greater than 0.3%, you may be eligible for Patriot’s Full Service Payroll and direct deposit. Our banking partner allows us to facilitate CBD payroll services (i.e., Full Service Payroll and direct deposit) for companies selling CBD products, as long as none of the products exceed the allowed 0.3% THC level. 

Before you can use Full Service Payroll or direct deposit, we must conduct a risk assessment to ensure we’ve complied with our bank. 

If you decide to go through the assessment process, you must:

  1. Pay the following risk assessment fee:
    1. $75, +$5 per CBD product over 20 products you sell
  2. Gather the following information:
    1. A signed CBD Addendum 
    2. Certificate of Analysis (COA) for every CBD product you currently sell 
    3. A compiled list of products you sell with names and SKUs
  3. Submit information by:
    1. Emailing it to our Direct Deposit team at directdeposit@patriotsoftware.com 
    2. If you have multiple certificates to send, please upload these in your Patriot account under Settings > Account Settings > View/Upload Files to Support.

If our assessment finds that one or more products do not meet our banking partner’s THC limit, you will not be able to enroll in direct deposit or use Full Service Payroll. However, you’ll still be able to use our Basic Payroll software and pay employees with paper checks. 

If our assessment finds that you do meet our banking partner’s THC limit, you can enjoy Full Service Payroll, direct deposit, or both! Each CBD risk assessment is good for 12 months. After one year, we’ll need to repeat the assessment process.

Interested in using CBD payroll software? Do you sell CBD products with no greater than 0.3% THC? Simply sign up for Patriot’s Full Service Payroll, direct deposit, or both. We’ll contact you to discuss the assessment process and, if you want to proceed, get the ball rolling!

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