On 12/3/2019, four regulators (FDIC, Federal Reserve, OCC, and FinCEN) issued a joint statement to clarify requirements for providing financial services to hemp-related businesses.
The statement, which runs only three pages long and has about as many footnotes as it does content, emphasizes that banks are no longer required to file SARs for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.
Similar to recent NCUA hemp guidance, it is important to note that this guidance seems to reiterate that SARs are not required when hemp is produced “in accordance with applicable laws and regulations.” As those laws and regulations are new and somewhat in flux, it may be difficult for financial institutions to understand if a hemp-related business is truly operating “in accordance with applicable laws and regulations.”
While the guidance doesn’t really provide the level of detail financial institutions really need regarding hemp and hemp-related products like CBD oil, the joint statement provides a few key points from the recent USDA rule:
Consistent with the USDA interim final rule, hemp may be grown only with a valid USDA-issued license or under a USDA-approved state or tribal plan. Research and development initiatives authorized under the Agricultural Act of 2014 (2014 Farm Bill) remain in effect until one year after the effective date of the USDA interim final rule.
A state or tribal government may prohibit the production of hemp, even though it is legal under federal law. The 2018 Farm Bill provisions related to USDA-approved state or tribal plans did not preempt state or tribal laws regarding the production of hemp that are more stringent than federal law.
Separately, marijuana is still a controlled substance under federal law. The 2018 Farm Bill amended the definition of marijuana only to exclude hemp from the Controlled Substances Act.
While the statement will most likely be disappointing for financial institutions looking for direction from their regulators, it does provide a small amount of hope as the statement explained that FinCEN will eventually issue additional guidance after further reviewing and evaluating the USDA interim final rule.
The joint statement on hemp-related businesses can be found here.