In the time since the 2018 Farm Bill legalized hemp at the federal level, states everywhere have been scrambling to keep up with demand for new laws to address difficulties new businesses have faced in the young market for hemp.
One of the most salient obstacles to the exploding hemp market’s success is its relationship with the banking industry. Multiple avenues have created gap-stop measures for businesses operating within the sometimes murky new market for hemp and CBD products and facing discerning banking institutions that tend to flippantly deny the innovation of the new markets for the sake of regulatory uncertainty.
Recent comments Federal Reserve officials gave to Congress show promise that the banking industry across America will soon receive the green light to interact with the budding industry free of concern over negative repercussions.
Back in February, members of Congress asked members of the Federal Reserve Board for more clarity on the topic of hemp and CBD businesses.
Federal Reserve Chairman Jerome Powell at the time said he would like to have further clarity on the topic from federal regulators like the FDA, who have since begun the long journey towards a consolidated policy on CBD in food and drink products. [1]
More recently, however, Federal Reserve Board Member Michelle Bowman spoke at the Senate Banking, Housing and Urban Affairs Committee where she gave industry leaders and legislators added hope for reforms to the banking system’s approach to CBD and hemp businesses.
According to Marijuana Moment, Bowman told Sen. Jon Tester (D-MT) during her confirmation hearing to renew her term at the Fed that she would try to change the Fed’s policy on how the banking industry should treat hemp farmers and retailers. [3]
Tester pressed the exchange during the hearing because of the unfair barriers farmers in his state have had to face even though this spring constituted the first legal planting season for the hemp crop in the U.S.
Farmers especially rely on bank loans to cover their planting, allowing them to cover costly overhead in the months before they reap their harvest and profits.
“Senator, this is an important issue that when I meet with bankers from across the country, many states have engaged heavily in this crop for growth,” Bowman told Tester at the hearing. [3]
He wasn’t satisfied. He pressed her on the question of whether banks should be denying services to people farming legal products.
“I would agree with you. We would not discourage banks from banking these types of customers,” Bowman said. “We’ll try to clarify that. Hemp is not an illegal crop.”
More information remains to come down the line, and there are surely more difficulties that need to be ameliorated for the young hemp trade in America. Still, Bowman’s comments this month are positive moves toward freedom and prosperity for farmers and consumers alike.
Sources