The ABA has written to heads of U.S. financial regulatory agencies calling for greater clarification on if and how banks in the country can now work with hemp farmers and processors.
While industrial hemp and CBD were made legal with the passing of the 2018 Farm Bill, there is still a lot of confusion among financial institutions as to whether they can work with businesses in the hemp sector.
The American Bankers Association, which says it is the united voice of America’s small, regional and large banks, states regulators have not issued a clear directive on distinguishing legal hemp from illegal marijuana (even though the Farm Bill makes that pretty clear). The ABA says banks are also uncertain on the compliance and reporting requirements that any relationships with hemp businesses would require.
The letter asks for guidance on a number of points, including confirmation:
- hemp is no longer a controlled substance, effective as of the enactment of the 2018 Farm Bill.
- whether a license issued by a state department of agriculture or the U.S. Department of Agriculture (USDA) represents a hemp producer is operating in compliance with state and federal law.
- banks can immediately begin to serve hemp cultivators and processors operating under state pilot programs under the previous 2014 Farm Bill.
- banks will be able to serve hemp cultivators and processors operating under state approved plans or direct federal licenses once the USDA finalise its regulations.
The ABA is also requesting guidance on retail products containing hemp or hemp-derived CBD.
The full text of the letter, which expands on the above points can be viewed here.
That banks are skittish of dealing with hemp businesses in the absence of financial regulatory agency blessing is understandable as the federal penalties for inappropriate handling of proceeds from the sale of controlled substance constitutes money laundering.
Similar challenges have faced the legal marijuana/medical cannabis sectors generally, although Marijuana Moment reported yesterday there were 438 banks and 113 credit unions actively servicing cannabis businesses as at the end of the last quarter in 2018.
While banks may be skittish, they seem keen to get on board. A recent survey revealed 82% of the executives surveyed at 453 unique banks in the USA want to do business with marijuana enterprises.
On a related noted, the Secure and Fair Enforcement (SAFE) Banking Act, a bipartisan bill that addresses banking issues in the cannabis industry, is increasingly looking like it has legs. As at last week, 20 state governors had signed a letter supporting the SAFE Banking Act and calling on Congress to pass it.