The USA’s National Credit Union Administration says federally insured credit unions are able to provide some financial services to hemp businesses operating legally.
The 2018 Farm Bill was signed into law on December 20, 2018. It defined hemp and removed it from the Controlled Substances Act, provided for its inclusion in various USDA research and pilot programs, and enabled insurance coverage for hemp farmers.
While industrial hemp was made legal with the passing of the 2018 Farm Bill, confusion has remained among financial institutions with regard to whether they can work with businesses in the sector.
8 months on and cannabusinesses still face hurdles when accessing financial services. The banking situation for the sector is beyond inconvenience – it poses a security risks to businesses without bank accounts as they need to deal in cash. This not only provides physical risks, but also added cost in terms of security.
Back in June, the American Bankers Association wrote to a number of heads of U.S. financial regulatory agencies calling for clarification.
While the NCUA, an independent federal agency that charters and regulates federal credit unions among its functions, didn’t appear to be among them; the body issued interim guidance earlier this week concerning the situation with credit unions specifically.
The NCUA says credit unions are able to provide financial services to hemp businesses including loans – and its guidance will be revised and updated once the United States Department of Agriculture (USDA) finalizes hemp regulations and guidelines.
“Lawful hemp businesses provide exciting new opportunities for rural communities,” said NCUA Chairman Rodney E. Hood. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved.”
In order to be considered a “lawful business”, hemp producers need to be operating under an approved state plan or under a license from the USDA.
No doubt the USA’s credit unions have experienced increased contact from hemp businesses since the announcement. Currently 45 states currently have enacted legislation allowing cultivation of hemp for commercial, research, or pilot programs.