Federal regulators loosen banking restrictions for hemp companies

WASHINGTON — A group of federal banking and currency regulators reduced the level of scrutiny banks are required to have toward hemp businesses nationwide.

In a joint statement between the Federal Reserve, Federal Deposit Insurance Corp. and three anti-money laundering agencies, banks are no longer required to file suspicious activity notices to the government solely because a business grows hemp. Those growers could still be subject to additional scrutiny, but only if a bank notices behavior that would merit an investigation into a company in any other type of legal industry.

However, bank customers engaged in hemp-related businesses outside of cultivation are still subject to additional scrutiny.

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Hemp, a low-THC cannabis plant, was legalized nationwide in the 2018 Farm Bill. The U.S. Department of Agriculture started accepting hemp regulation plans from states and tribal nations at the end of October, and established its own licensing program for hemp growers in states that don’t anticipate forming their own regulations.

The Colorado Department of Agriculture started licensing industrial hemp growers in the state after the passage of Amendment 64.

Morris Beegle, founder of the Colorado Hemp Co. in Loveland, welcomed the policy as a step in the right direction toward nationwide adoption of hemp. He said many companies that grow hemp or make products using the plant have had problems getting banked or processing credit card orders in the past because of hemp’s previous association with marijuana.

However, he said the industry still faces regulatory hurdles from the U.S. Food and Drug Administration and from banks and groups that conflate marijuana and hemp.

That association, and the hurdles it causes, will remain until the SAFE Banking Act or another bill that creates a safe harbor provision for banks to deal with marijuana industry money without violating drug law goes into effect, Beegle said.

“Congress was clear on when they wrote the legislation that hemp is now an agricultural commodity and should be treated like corn, wheat, soy, strawberries, all these other things,” he said. “But all these other agencies within the branches of the government react slowly, banking being one of them.”