Hemp and CBD Businesses May Finally Have Access to Financial Services

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Business owners in the hemp and CBD industries may soon have access to essential financial services.

The National Credit Union Administration (NCUA) has announced that credit unions can work with law-abiding hemp and CBD businesses. The NCUA seems to be recognizing that the hemp and CBD industry is becoming intertwined with mainstream business.

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“Some credit unions have lawfully operating hemp businesses within their fields of membership,” the NCUA said in a release.  “Businesses dealing with hemp and hemp-derived products include manufacturing, distribution, shipping, and retail, among others.  With recent changes in federal law, more hemp-related businesses may be founded, and existing ones may expand.”

The NCUA also is recognizing the positive financial potential CBD can have local economies.

“Growth in hemp-related commerce could provide new economic opportunities for some communities, and will create a need for such businesses to be able to access capital and financial services.”

Acquiring capital to start a hemp or CBD business typically is difficult. Business owners often have no choice but to seek out venture capitalists who will trade investment in the company for partial ownership. NCUA’s new position would help alleviate this problem for hemp and CBD businesses. 

“Credit unions may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp-related businesses within their fields of membership,” the agency said. “The information in this alert is intended to help credit unions better understand what they should consider in providing financial services to lawfully operating hemp businesses.”

Despite the development, credit unions would still need to be careful about the companies they are dealing with. 

“Credit unions need to maintain appropriate due diligence procedures for hemp-related accounts and comply with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity,” the NCUA said. “ It is the NCUA’s understanding that SARs are not required to be filed for the activity of hemp-related businesses operating lawfully, provided the activity is not unusual for that business. Credit unions need to remain alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.”

Financial institutions working with hemp companies also will be expected to be knowledgeable about local hemp and CBD regulations.

“If a credit union serves hemp-related businesses lawfully operating under the 2014 Farm Bill pilot provisions, it is essential the credit union knows the state’s laws, regulations, and agreements under which each member that is a hemp-related business operates,” the NCUA said in the release.  

A similar position by the NCUA was just announced for THC dominant cannabis products.

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