On August 7, 2026, Marijuana Moment published an email Square sent to sellers with the subject line “[Action required] Important update about your Square account and CBD products.”

The instruction was simple and the timeline was short:

Square’s account remains open for sellers with non-hemp catalogs. But the hemp side of the business is over. A Square spokesperson confirmed the change, citing “a new federal law taking effect later this year.” A page on Square’s own site that once pitched merchants on how to “sell CBD online and in-store to reach every customer” has been taken down.

We’ve spent more than twenty years underwriting merchants that other processors won’t touch, and we want to be direct about what this moment is and isn’t. This is not a processor deciding it doesn’t like your vertical. This is a statutory change that converts a large share of a legal product category back into federally controlled substances, and the payments industry is reacting to it months in advance, because it has to.

Here is what changed, when, and what a business operator or their advisors should be doing right now.

What the 2018 Farm Bill actually did

The Agriculture Improvement Act of 2018 (P.L. 115-334) defined “hemp” as Cannabis sativa L. and any part of the plant with a delta-9 THC concentration of not more than 0.3 percent on a dry weight basis, and excluded hemp and its derivatives from the Controlled Substances Act’s definition of marijuana.

Two things followed from that definition, and both matter now.

First, the standard measured only delta-9 THC, and only as a percentage of dry weight. It said nothing about THCA, delta-8, HHC, or any other cannabinoid, and it said nothing about total milligrams in a finished product. A ten-milligram gummy in a heavy package can sit comfortably under 0.3% by weight. That is the arithmetic that built the intoxicating-hemp market.

Second, exclusion from the CSA (Controlled Substance Act) is not the same as approval from the FDA. Throughout this period the FDA maintained that CBD could not lawfully be marketed in foods or dietary supplements under the drug preclusion provisions of the FD&C Act. Operators have been living in that gap for seven years, legal under one statute, unresolved under another.

What Section 781 changes

On November 12, 2025, the President signed H.R. 5371, the Continuing Appropriations and Extensions Act, 2026 (P.L. 119-37). Buried in it is Section 781, which rewrites the federal definition of hemp with a one-year delay. It takes effect November 12, 2026.

Three mechanics do the work:

1. Total THC replaces delta-9 THC. The measurement now captures delta-9, THCA, and “any other cannabinoids that have similar effects (or are marketed to have similar effects)” as designated by the Secretary of HHS. The THCA workaround disappears by definition.
2. A hard per-container cap of 0.4 mg total THC. Any final hemp product intended for human or animal use by ingestion, inhalation, or topical application must contain no more than 0.4 milligrams of total THC per container – with “container” defined as the innermost wrapping in direct contact with the product. Intermediate products are capped at 0.3% total THC on a dry-weight basis after decarboxylation.

This is the provision that catches operators by surprise. It is a milligram limit, not a percentage. You cannot dilute your way under it, and you cannot solve it with a bigger bottle. Full-spectrum CBD, a category most people would not describe as intoxicating, is swept in alongside delta-8 and hemp-derived delta-9. The U.S. Hemp Roundtable estimates that over 90% of CBD products currently on the market exceed the 0.4 mg threshold, and that the change reaches roughly 95% of a $28 billion market employing more than 300,000 people. Broad-spectrum and isolate formulations that test at or below the cap can survive.

3. Synthesized cannabinoids are out entirely. Any cannabinoid not naturally produced by the plant, or synthesized outside of it, is excluded from the hemp definition and regulated as a controlled substance.

Why this is a banking problem, not just a retail one

Here is the part that operators consistently underestimate, and the part their CPAs and bankers should be reading closely.

Products that fall outside the new hemp definition don’t become “unregulated.” They revert to the CSA definition of marijuana. And because the DEA’s April 28, 2026 final order rescheduled only FDA-approved marijuana drug products and marijuana subject to a qualifying state medical marijuana license to Schedule III, everything else, including a hemp-derived gummy sold at a smoke shop in a state with no medical license attached to it, remains Schedule I.

That distinction drives everything downstream:

For acquirers and sponsor banks, processing for a Schedule I merchant is not a risk-appetite question. It is a federal exposure question, and most sponsor banks resolve it by exiting the category well before the statutory date.
For depository institutions, FinCEN’s 2020 guidance relieved banks of the obligation to file SARs solely because a customer was a lawfully operating hemp business. If the customer’s products are no longer “hemp,” that relief no longer applies to them, and the analysis reverts to a marijuana-related-business framework. Banks that carry hemp merchants should be re-papering those relationships now, not in November.
For CPAs, this is a going-concern and disclosure question for clients whose revenue is concentrated in affected SKUs, and a real inventory-obsolescence question for anyone holding finished goods that cannot be lawfully sold after the effective date.

Arnold & Porter, in its December 2025 advisory on the CR, put it plainly: the change has implications “not only for businesses selling hemp-derived CBD products, but also investors, banks, and other entities that do business with hemp business.”

Why processors are moving before Congress finishes

This is the genuinely confusing part of the current moment, and it deserves an honest explanation rather than a scare.

The November 12 date is not settled. On August 8, 2026, the Senate passed a continuing resolution by a vote of 90–6 that includes a provision extending the hemp restrictions from November 12 to December 11, 2026. An amendment from Sen. Ted Budd (R-NC) to strip that delay and hold the original date was tabled 61–32. That bill still has to clear the House. Separately, H.R. 6209 — introduced by Rep. Nancy Mace (R-SC) with bipartisan co-sponsors — would repeal Section 781 outright, and several members are circulating regulatory alternatives to prohibition. The White House Office of Management and Budget has signaled it welcomes working with Congress to at minimum update the statutory definition.

So why is Square shutting the door on October 15, weeks before any version of the deadline?

Because payment platforms don’t underwrite to the law as it might be amended. They underwrite to the risk on their books, and they build in lead time. Catalog remediation, merchant notification, portfolio review, and sponsor bank sign-off all take longer than a legislative calendar does. A thirty-day statutory delay does not change an acquirer’s decision to exit a category; it just changes which month the reserve gets released. Asked whether Square would revisit its policy if the ban is delayed or reversed, its spokesperson said only that the company doesn’t “have anything specific to share at this time.”

The practical consequence for operators: your payments deadline is earlier than your legal deadline, and it is set by your processor, not by Congress.

Timeline

Date	What happened / happens
Dec 20, 2018	2018 Farm Bill defines hemp at ≤0.3% delta-9 THC, dry weight
Jan 26, 2023	FDA concludes existing frameworks are not appropriate for CBD; asks Congress to act
Nov 12, 2025	H.R. 5371 signed; Section 781 enacted with a one-year delay
Nov 20, 2025	H.R. 6209 introduced to repeal Section 781
Apr 28, 2026	DEA final order moves only FDA-approved and state-licensed medical marijuana to Schedule III
Aug 7, 2026	Square notifies sellers it will no longer permit CBD/hemp products
Aug 8, 2026	Senate passes CR 90–6 including a delay of the hemp restrictions to Dec 11; goes to the House
Oct 15, 2026	Square’s deadline for sellers to remove all hemp/CBD items from their catalog
Nov 12, 2026	Section 781 takes effect as currently enacted
Dec 11, 2026	Revised effective date, if the House passes and the President signs the Senate CR

What operators should do in the next 60 days

Read your processor’s notice, not a summary of it. The Square emails are not identical across merchants. Sellers with mixed catalogs are being told to strip hemp SKUs and keep the account; there are reports of hemp-dominant sellers receiving account closure notices with earlier dates. Know which one you got.
Inventory your SKUs against 0.4 mg total THC per container. Not percentage. Not delta-9 alone. Total THC, per innermost package. Pull current COAs and identify which products survive the cap, which can be reformulated, and which cannot.
Assume your merchant account is a single point of failure and fix that first. Any operator running one MID with one acquirer is one policy memo away from zero digital revenue. Redundancy is not a luxury in this category.
Get your compliance file assembled before you apply anywhere. Current COAs from an accredited lab, product labels and packaging photos, your website and checkout flow, age-verification controls, marketing claims review, chargeback history, and processing statements for the last 6–12 months. Underwriting for this category is documentation-driven, and incomplete files are the number one cause of delay.
Model the cash-flow gap. If you’re being offboarded, ask now: when does settlement stop, what reserve is held, and on what release schedule? That answer belongs in your forecast before it becomes a surprise.
Talk to your CPA and your banker before November, not after. Inventory write-downs, revenue concentration disclosure, and deposit-relationship reviews all take lead time. Your banker would rather hear your plan than discover the issue in a monitoring alert.
Watch the House, but don’t plan around it. Track H.R. 6209 and the CR. Plan operationally for November 12.

Where we come at this from

We built our high-risk practice on a distinction we take seriously: there’s a difference between unbankable and unethical. A licensed operator selling tested, labeled, age-gated products to adults in their community is not a bad actor because a definition changed in an appropriations bill. They are a legitimate business facing a compliance deadline, and they deserve underwriting that engages with the facts rather than a category exclusion applied by email.

What that looks like in practice is unglamorous: a boutique approach, a network of community bank relationships rather than one aggregator’s risk policy, and honest answers about what can and cannot be supported as the statute currently reads. We won’t tell any operator that the November deadline doesn’t apply to them, because it may well. What we will do is help them understand which of their products survive it, what documentation an underwriter will need, and how to keep the compliant portion of their business processing without an interruption.

If you’re an operator, a CPA with clients in this space, or a banker reviewing a hemp portfolio, we’re happy to talk through the specifics. The worst version of the next ninety days is the one where nobody found out their processor’s date until it passed.

Evolve Payment is a merchant services provider based in St. Paul, Minnesota. This article is for informational purposes and is not legal, tax, or accounting advice. Section 781’s effective date is subject to pending legislation; operators should consult qualified counsel about their specific products and jurisdictions.

Square Is Cutting Off Hemp and CBD Merchants. Here’s What Actually Changed, and What Operators Should Do Before October 15.