When the 2018 Farm Bill passed both houses of Congress and became federal law, many thought that hemp-derived CBD businesses were in the clear to take advantage of all of the necessary services that other legitimate businesses have always had as financial options – lending, business banking, payment processing, and the security of federal insurance. Despite what the initial public view was at that time, many legitimate CBD-related businesses are still having difficulty procuring such services due to many banks still seeing the industry as “high-risk”.
Although hemp-derived CBD farmers across the nation continue to grow plants that are according to the Farm Bill “less than 0.03% tetrahydrocannabinol (THC) in order to be distributed legally”, the individual states these farmers, producers, or businesses reside in can still determine their own statutes. That means that state and local banks have to be extremely careful to abide by their state’s Controlled Substance Act (CSA) to ensure that they themselves are not going to be put out of business for illegal activity by being involved with businesses that are transacting in what could still unfortunately and incorrectly be considered controlled substances.
These facts are coupled with federal prohibition of THC- containing cannabis itself – something of which lends itself to a misunderstood distinction between cultivating hemp plants for CBD and cannabis plants for THC. This is another example of creating a “risk” of running afoul of federal regulations or to ultimately be accused of a money laundering or illegal interstate commerce.
The good news is that hundreds of banks across the country do offer financial services to fully-compliant CBD businesses because they don’t really see an issue in establishing a relationship with a business that sells or advertises a product that has been federally legalized. According to a June 2021 real-time market data analysis by FINCANN via the Bank Branch Locator Database, “there are 212 fully-compliant and industry-friendly banks working with cannabis/CBD industry purveyors – which is roughly 4% of all national and local banks in the entire U.S.” With yet another passage of the Safe and Fair Enforcement (SAFE) Banking Act in the U. S. House of Representatives the long-shot hope is that in 2022, a largely divided U.S. Senate can see the greater good in providing federal protection to banks and financial institutions who provide much-needed services to cannabis, hemp, and ancillary related