A federal financial agency released an update to its guidelines on CBD and hemp banking on Monday in response to pressure from numerous lawmakers asking for clarification on the matter.
The National Credit Union Administration-NCUA revealed in its interim guidance that there is no problem for credit unions to provide banking services to CBD and hemp businesses since these industries became legal after the enactment of the Farm Bill in 2018.
The guidelines underscore the potential of hemp and CBD and reiterate the importance of access to banking services if the players in those industries are to realize the full potential that was envisaged when the Farm Bill of 2018 was passed.
Rodney Hood, the Chairman of NCUA, said in a press statement that credit unions have a distinction in serving the agricultural sector. He believes that this successful history will be an important tool that the credit unions can use to decide when and how to offer different services, such as loans, to the different players in the hemp and CBD industries.
Last month, Hood had written a letter to a lawmaker from Colorado, Sen. Michael Brett (D-CO), informing him that NCUA would soon release updated guidelines regarding the hemp and CBD industries. However, Hood had also added that any guidance released would possibly change when the USDA releases its rules for the hemp industry.
The guidance states that as credit unions serve the hemp industry, they should adhere to the Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) regulations in force.
More specifically, the guidance advises that credit unions should file Suspicious Activity Reports (SARs) for any transactions that seem to be illegal or possibly linked to money laundering activities. However, no SARs are required for any transactions completed by hemp businesses that are in compliance with local, state and federal laws.
The credit unions were also cautioned to be mindful that some hemp businesses are operating under the 2014 Farm Act which established hemp pilot programs. Such programs have specific rules and limitations imposed on them, so the credit unions need to familiarize themselves with those requirements so that they offer services based on their assessment of the risks inherent in the legal regime governing the hemp pilot programs.
The National Credit Union Administration promised to issue additional guidelines once the expected USDA rules are released before the 2020 planting season.
Hemp and CBD industry watchers believe that this updated guidance will come as a big relief to industry actors like Therma Bright Inc. (TSX.V: THRM) (OTC: THRBF) and TransCanna Holdings Inc. (CSE: TCAN) (FRA: TH8) who have always found it hard to find mainstream banks to offer them affordable banking services.
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