Payment Provider Plans to Enforce Novel Foods Rules for CBD Companies

30th March 2021

One of the industry’s leading third-party payment providers has announced that it would no longer service non-compliant CBD companies following the Novel Foods application deadline on 31 March. The move may imply that more third-party enforcement of Novel Foods compliance is imminent.

Worldnet Payments, which reportedly provides services to over 100 CBD companies in the UK is the first payment firm to announce plans to enforce the regulation. CBD clients of the firm will – from 1 April – have to provide proof that they have submitted an application for Novel Foods approval to the Food Standards Agency.

In a letter to its customers, Worldnet Payments stated:

“As a financial institution we must ensure that businesses comply with the FSA requirement and your CBD products can be sold legally.

“Therefore can you please provide us with the FSA acknowledgement letter confirming the receipt of the application and stating the products and the application number.

“This letter is issued by the FSA to the party (supplier/manufacturer/merchant) submitting the application.

“If for some reason this cannot be obtained, alternatively we can accept a letter (on company letter-headed paper) from the party that made the submission confirming the products and the application number.”

All CBD companies that were trading in the UK before 13 February 2020, have the opportunity to apply to the FSA for Novel Foods approval by 31 March 2021. By this deadline, all qualifying CBD products must be connected to a pending application, or risk being removed from the UK market.

A list of companies that have received validation for their Novel Foods applications, and subsequently gained certification, will be published on the FSA website in April and kept updated in the coming weeks.

While the move by Worldnet Payments has been applauded by some industry observers, others suggest that it should be delayed.

The Cannabis Trades Association (CTA) has requested a delay in the action after it recently emerged that the FSA’s original deadline of 31 March has been rolled back by at least seven weeks. This is because the FSA announced that Novel Foods applications can now be validated following the 31 March deadline.

According to a report by BusinessCann, Sian Phillips, MD of the CTA said:

“Worldnet are only one of the many providers who have opened their doors and welcomed the industry following the popularity of cannabis based food products in the UK and other countries over the past few years.

“If Worldnet takes a hard stance, they may lose customers who are in the FSA’s Regulated Foods Authorisation queue, as well as future business clients who will be given no choice but to seek payment provision elsewhere.

“Worldnet’s solution might be to extend their deadline by a few months and follow the rationale of the regulatory bodies instead of this seemingly unrealistic path of closing down on their current clients.”

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