House to Look at Hemp Banking
Legislation that would encourage U.S. banks and credit card companies to do business with hemp and CBD companies will hit the floor of the U.S. House of Representatives as early as today.
Difficulty in finding banks and credit card companies to handle financial transactions has been an issue surrounding the hemp industry for many months. There are financial institutions that refuse to do business with hemp and CBD companies, worried about the risk that they will be sanctioned by federal agencies.
According to U.S. Hemp Roundtable, a coalition of U.S. hemp companies, Rep. Andy Barr (KY) has suggested a solution. Language that he drafted in close consultation with the U.S. Hemp Roundtable was added to the SAFE Banking Act, a bill pending that would provide federal protections for banking with all cannabis businesses. Specifically, Rep. Barr’s language would:
• Provide a safe harbor for hemp financial transactions, ensuring that banks and other financial institutions would not face federal punishment for those activities; and
• Direct the federal financial regulators (FDIC, Federal Reserve, etc.) to issue clear, formal guidance to banks, credit card companies and other financial institutions about the legality of hemp and CBD commerce.
This comes after learning that last week, Senate Majority Leader Mitch McConnell—after consulting with the U.S. Hemp Roundtable—introduced report language that would require the FDA (U.S. Food and Drug Administration) to issue formal “enforcement discretion” on the sale of hemp CBD products.
A primary policy challenge facing the hemp CBD industry has been FDA’s guidance that it is illegal for CBD to be introduced into interstate commerce as a food additive or dietary supplement.
The U.S. Senate Appropriations Subcommittee on Agriculture marked up language submitted by Senator McConnell that would require the FDA to formally stand down on any enforcement of its anti-CBD guidance. Specifically, the language (view the draft language here) would require FDA to:
• Within 90 days, provide Congress a report outlining its efforts to develop an enforcement discretion policy on hemp CBD;
• Within 120 days, issue its formal enforcement discretion policy on hemp CBD;
• Keep the enforcement discretion policy in effect until the agency has implemented its final regulatory process; and
• Ensure that going forward, CBD manufacturers would be able share safety data through existing FDA notification procedures to be fully compliant with federal law and policy.
The Natural Products Association (NPA) released a statement and urged members to contact their representatives in support of the legislation. According to the NPA, “The SAFE Banking Act allows financial institutions the opportunity to provide services, including extending credit to CBD-related businesses. Financial institutions are imperative for businesses large and small. Access to these services allows companies including minority and women-owned companies, to invest in research & development, expand or open new facilities, and invest in human capital.”
While the Democratic-controlled House is expected to pass the bill, some analysts warn that the measure may face a tougher road in the Senate.
