Hemp businesses and farmers are continuing to have difficulty with financing the various operations as securing banking services.
Though federal lawmakers have made the hemp business a legitimate and lawful one in the year 2018, this problem still tends to exist.
One of the suspected reasons would be the unavailability of federal banking regulations. Many also talk about the uncertainty from the financial institutions; it is becoming increasingly difficult for businesses to get access to services like credit card payment processing.
Things appear to be grey when it comes to regulations. There will be a payment processor ready to work with the hemp businesses, but the next day they might deny it because if the lack of clarity in terms of the regulations. Company owners have been dealing with this issue for a while, which has affected their sales o hemp-derived CBD products.
Bankers are still not educated about hemp and find themselves confused in most situations. The American Bankers Association (ABA) thought it was high time to understand the financial regulations concerning hemp in order to serve the hemp businesses, like IHF LLC better.
The ABA mentioned that there is a lack of clear direction in understanding and distinguishing the federally illegal marijuana and legal hemp. It ultimately makes the banks uncertain about the legal proceeding for CBD and hemp businesses.
The ultimate goal of banks is to support their local economies and serve their communities. But it is becoming difficult for them without clarity. They will require definite assurance from the regulators regarding their standpoint on hemp so that they do not fall prey to any criminal proceeding or regulatory censure.
The ABA went further to get a confirmation that hemp isn’t a controlled substance any longer, and banks do not have to file suspicious-activity reports while making transactions related to hemp.
There were other people who sent out such letters four months before the ABA’s letter to four different financial and federal banking institutions in the hopes of opening the financial services to the cannabis and hemp industry.
The letters sent out to the U.S. Federal Deposit Insurance Corp. (FDIC), Office of the Comptroller of the Currency, Federal Reserve System, and Farm Credit Administration, they were explicitly asked to discuss the legal regulations related to hemp cultivation that was mentioned in the 2018 Farm Bill. Federal leaders were also asked to give clarification and guidance to their fellow institutions. It would ultimately help in easing out the concerns that may be related to providing the financial services to various legal hemp businesses and farmers.
The senators noted that hemp businesses and farmers must be treated equal to any other kind of agricultural businesses, and there should be no room for discrimination.
A May hearing took place in the U.S. House Financial Services Committee where the FDIC Chairman mentioned that the agency has been conducting exhaustive examiner training for ensuring that bank examiners are able to comprehend that hemp is legal and must be given appropriate banking services.
The chairman also included a 2014 memo by the U.S. Financial Crimes Enforcement Network that helps in giving clarity to the banks along with a clear path to serve marijuana and hemp clients. In reality, banks need to ensure that all legitimate businesses are having access to credit.
Hemp Entrepreneurs Feel Stuck
Joe Tucci, an entrepreneur, trying to start his e-commerce company – Cares CBD, mentioned Hemp Industry Daily that the one time he tried securing merchant services, the financial institution suggested that he needs to lie about the kind of business he does on the application for getting it approved.
He also said that he has emails that have clear indications of him being asked to lie in the application. He said that bank managers also instructed him to work his way around the whole situation. Tucci wants to be transparent, but he is not able to do so.
As he is not able to secure appropriate financial services, he hasn’t launched his business yet. Because of this reason, his product worth several thousands of dollars is still on hold.
Verghese also spoke about a similar issue to Hemp Industry Daily. The business owners want to offer high-quality CBD products using pharmaceutical technology, but they are unable to sell the products online.
She added that it is quite a challenge to find a payment processor online who will commit to having a partnership in spite of the fizzy regulations. It has ultimately made selling products online quite difficult.
Members of Congress have added an amendment recently in the Secure And Fair Enforcement (SAFE) Banking Act which is pending in the House of Representations. It reinforces the legal status of CBD and hemp and businesses related to it and confirms the legal aspects of providing financial services to the different businesses involved in selling hemp or hemp-derived products, as mentioned by Samantha Walsh, founder and CEO of Tetra Public Affairs and a Denver-based hemp lobbyist.
After passing the Farm Bill, Congress has made themselves very clear that all hemp-derived products are legal, according to Walsh.
She also added that the latest efforts made by Congress are definitely supportive and appreciative, but it also pinpoints the fact that the financial industry is continuing to keep it dragging.
The crop is quite promising, and efforts must be made to take advantage of it. And financial institutions are vital for hemp business and small farmers to do the needful.