Federal financial regulators will no longer treat hemp businesses as suspicious, removing a major barrier between hemp-related businesses and traditional financial services. Previously, banks were required to file Suspicious Activity Reports with the federal government whenever they opened a hemp-related business account.
The four agencies said the changes come after Congressional action legalizing hemp in 2018 and the U.S. Department of Agriculture interim rule published in October giving states and tribes the greenlight to establish hemp programs.
Rob Nichols, president of the American Bankers Association, told the New York Times that the financial reforms for hemp businesses “clarify regulatory expectations for banks.”
In 2014, the Financial Crimes Enforcement Network issued guidance outlining their cannabusiness policies, which included the SAR filings. At the time, the agency said the changes would “enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses” and used policies set forth in the scrapped Obama-era Cole Memo to allow some cannabis and hemp businesses access to banking services. In 2017, FinCen said there was more than 300 banks and 100 credit unions serving the industry; however, in early 2018 then-Attorney General Jeff Sessions rescinded the cannabis industry protections outlined in the Cole Memo. Following that change, FinCen said their 2014 guidance remained in place but, by and large, cannabis companies have not had access to traditional financial services, even after the passage of the Farm Bill.
Earlier this year, U.S. Bank subsidiary Evalon stopped providing merchant services to hemp businesses and, although states have passed hemp laws, most are still waiting for USDA approval, continuing the leave the legal status of some hemp products and banking access in flux.
In September, the Democratic-led House approved the SAFE Banking Act, which would allow state-approved medical, adult-use, and hemp companies access to financial services. The bill is currently in the Republican-led Senate Committee on Banking, Housing, and Urban Affairs.
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