Recent updates to federal agency regulations mean banks can lift another layer of estrangement from companies in cannabis and hemp production.
Although industrial hemp cultivation was legalized at the end of 2018, the U.S. Treasury Department has been required to collect “suspicious activity” reports each time a bank interacted with a hemp or cannabis company.
Under new Treasury Department guidelines, cannabis and hemp companies will not automatically qualify as participating in suspicious activity and will not automatically trigger the reporting requirement. [1] [2]
Financial services like loans, building mortgages and even simple bank accounts can be difficult to navigate from within the cannabis industry.
Problems with banking emerged as medical and recreational marijuana laws trickled into the country state by state, but have slowly eased with the legalization of hemp and CBD, the Wall Street Journal reports. [1]
The retraction of reporting requirements introduced Tuesday means the banks that service cannabis companies will no longer have to lump the enterprises in with money launderers and other suspicious setups. [2]
Previously in the year, officials at the Federal Reserve Board made clear that banks should work with cannabis businesses without the fear many organizations had expressed toward the businesses. [3]
Likewise, the Department of Agriculture told banks that loans to hemp farmers should be considered and granted like any other form of business seeking the bank’s help, but without the agreement of the Treasury this move didn’t do enough to convince federally-regulated banking operations, the New York Times reports. [2]
“We appreciate the steps regulators have taken today to clarify regulatory expectations for banks, and we look forward to working with them as they develop additional guidance,” American Banking Association Rob Nichols told the Times. [2]
More clarity will also come if the U.S. Senate follows the House of Representative’s initiative in passing a version of the SAFE Banking Act, which would further ease credit concerns over cannabis business and hemp production. [2] [3]
The banking situation for some hemp and CBD farmers and companies has been difficult, and it was even a breath of relief when popular payment processor Square agreed to service CBD shops earlier this year, making common-sense transactions more streamlined in the industry.
Sources
[2] https://www.nytimes.com/2019/12/03/business/hemp-producers-banks.html
