Two U.S. senators recently acknowledged a conundrum facing the hemp industry. Despite passage of the 2018 Farm Bill, hemp farmers and producers continue to face challenges accessing banking and other financial services.
In April 2 letters, Sens. Mitch McConnell (R-Kentucky) and Ron Wyden (D-Oregon) requested that four regulatory bodies provide guidance to institutions under their jurisdictions to alleviate any concerns over providing financial services to the hemp industry. The Agricultural Improvement Act of 2018—otherwise known as the Farm Bill—removed hemp from the Controlled Substances Act and treated the crop as an agricultural commodity.
The burgeoning industry, nonetheless, continues to face hurdles accessing financial services.
“We have consistently heard from lawful hemp farmers and producers about the lack of access to financial products from banks,” McConnell and Wyden wrote in a letter to Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corp. (FDIC), an independent agency whose objective is to maintain public confidence and stability in the country’s financial system. “Many of them have faced difficulty securing financial and credit products to start or expand their businesses, and difficulty establishing accounts to manage cash flow and business expenses.”
Several banks are not offering services to the hemp industry because they are confused over hemp’s legal status, McConnell and Wyden observed.
The senators clarified hemp is no longer a controlled substance. Marijuana, on the other hand, remains a Schedule I controlled substance under federal law, perhaps a reason for continuing confusion over hemp’s legality.
“Legal hemp businesses should be treated just like any other businesses and not discriminated against,” McConnell and Wyden said in the letter to McWilliams. “We believe clarification from the FDIC on this front would help ensure this legal industry can compete on a level playing field.”
The senators addressed similar letters to the Office of the Comptroller of the Currency (OCC), the Federal Reserve System—the Central Bank of the United States—and the Farm Credit Administration (FCA). A spokesperson for the Federal Reserve said the central bank received the letter and intended to respond to it. A spokesman for the OCC said the office does not comment on congressional correspondence and the other two institutions did not immediately respond to requests for comment for this article.
Jonathan Miller, general counsel to the U.S. Hemp Roundtable, a coalition of hemp companies, expressed gratitude to McConnell and Miller for their leadership on the above issues.
“The 2018 Farm Bill removed hemp from drug control, and financial institutions should now feel comfortable transacting in business with the industry,” said Miller, a member-in-charge of the law firm Frost Brown Todd LLC, in an email. “That many don’t is a significant burden for the growing hemp business. We hope that federal agencies heed the [senators’] request and clarify the ability of financial institutions" to conduct business with hemp companies.