Shortly after the 2018 Farm Bill passed, legalizing industrial hemp, we predicted that banking services for hemp businesses would be slow going. That has proven to be the case. For this reason, a bipartisan pair of U.S. Senators, Sen. Ron Wyden (D-OR) and Senate Majority Leader Mitch McConnell (R-KY), sent individualized letters to four federal banking and financial regulatory institutions on April 2, 2019, pleading them to prevent banking discrimination of the newly legal hemp industry.
As you might recall, Senators McConnell and Wyden were chief proponents of the hemp legalization provision that was included in the 2018 Farm Bill that ended federal prohibition of the very-low-THC cannabis variety. Readers of this blog may also recall that Senator Wyden similarly penned a hemp-related letter to the Food and Drug Administration, asking that agency to clarify its stance on hemp-derived CBD in consumable products.
In the more recent letter, sent February 2, the Senators stated as follows:
As authors of the Hemp Farming Act, McConnell and Wyden are committed to listening to the concerns of hemp farmers and producers and to urging federal agencies to properly implement the law.”
That statement was included in the Senators’ offices’ press release issued the same day, advising that the Senators sent the letters “reiterating hemp’s legality and requesting timely guidance and clarification to help ease concerns from lawful hemp farmers and producers about the lack of access to financial services.” The press release went on to recognize that Oregon and Kentucky “have been on the forefront of hemp production” since the authorization of industrial hemp pilot programs established by 2014 Farm Bill. However, despite the passage of the McConnell and Wyden language in the 2018 Farm Bill, which was signed into law on December 20, 2018, hemp businesses continue to face significant barriers.
The letters were addressed to the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, and the Farm Credit Administration (FCA). While each letter varied slightly from the others, the letters generally presented that the hemp industry “continues to face challenges with regulatory uncertainty as federal agencies work to implement this significant change in federal law.” Definitely at the top of their list of concerns, hemp businesses still face the substantial hurdle of accessing capital and traditional lending services through financial institutions that have essentially steered clear of the newly-legal industry.
We have consistently heard from lawful hemp producers about the lack of access to financial products. Specifically, we continue to hear from hemp producers who are interested in accessing credit through the Farm Credit System and their difficulties in securing financing and credit products to start, expand, or operate their businesses.”
The letters requested that the regulatory bodies “offer guidance to ease any concerns” their regulated entities might have regarding engaging with and providing services to hemp businesses. “Legal hemp businesses should be treated just like any other businesses and not discriminated against,” the letters urged. Here’s hoping the Senators’ requests are timely heeded and guidance is soon provided. Although some of our hemp clients are banked (and even have crop insurance) many others are still underserved.