Many folks both in and out of the industry believed that banking and payment processing hemp industry enterprises would become a non-issue with the passage of the 2018 Farm Bill by the U.S. Congress in December 2018. However, even though significant time has passed, Fincann continues to receive a continuous stream of inquiries from hemp and CBD companies seeking simple, transparent, and compliant business checking accounts after being turned away from all the banks they’ve contacted.

Companies seeking retail and e-commerce merchant processing accounts experience similar frustration. We were all relieved and elated when U.S. Bank merchant services subsidiary Elavon began onboarding CBD merchants in late 2018 with reasonable pricing and next-day settlement. However, it became apparent that they had jumped in before carefully studying and resolving serious legal and compliance issues, obliging the company to exit the sector in April 2019. This move left thousands of merchants without viable alternatives, and many CBD merchants were left scrambling. Their exit had a chilling effect on worthy competitors now obliged to reconsider their plans to enter the market.

Why is it assumed that the 2018 Farm Bill resolved hemp and CBD banking issues?

There is a prevalent misconception that the 2018 Farm Bill made hemp and its derived products legal and therefore the still-prevailing banking restrictions seem contradictory. The actual effect of the legislation was to remove hemp and hemp-derived products, including CBD from the Controlled Substances Act (CSA) and transferred legal jurisdiction over hemp and hemp-derived products from the Drug Enforcement Administration (DEA) and the U.S. Department of Justice (DOJ) to the U.S. Department of Agriculture as a regulated agricultural crop and the U.S. Food and Drug Administration (FDA) for products intended for human or animal consumption. However, the legal confusion arises from the fact that hemp is now a regulated agricultural crop without a regulatory framework yet in place.

The U.S. Department of Agriculture has mandated that the individual states develop their own regulatory programs, including licensing and registration where appropriate, and submit those programs for their approval. Although this process is well underway, many banks remain unwilling to support hemp cultivation and processing business customers until the state(s) they operate in have stood up their regulatory framework and can issue appropriate licenses.

​Add to this the fact that many states have varying standards of what is or is not permissible in their state. This creates a regulatory and legal thicket that was primarily responsible for Elavon’s untimely exit from the industry.

How Fincann helps hemp and CBD businesses obtain compliant banking

Due to the partially-implemented state and federal regulatory framework in place for hemp and the virtually non-existent framework yet for CBD, banks’ and merchant processors’ willingness and appetite for these sectors varies widely. We work with financial institutions that will accept some hemp and/or CBD verticals and not others, and especially in the absence of clear guidelines these criteria are also ever evolving.

Fincann is continuously engaged with all the banks in our exclusive Cannabis Banking Financial Network™, helping them to broaden their tolerance and compliance programs, beta-test new sectors, and understand their risk tolerance to assure the best partnership and fit for all stakeholders.
We can now confidently provide U.S.-based merchant processing service to all reputable businesses in the hemp sector, including flower and seeds. Our clients have several choices throughout the U.S. in providing compliant, transparent and sustainable full-service commercial bank accounts to all hemp operators, including overseas and Canadian companies with American branches. These services include, but not limited to:

• Checking​
• Lending
• Treasury
• Payroll
• Payments and cash management
• Lockbox service

Be prepared when applying for banking or merchant services that until USDA and their individual state guidelines are promulgated and published, and also afterwards reputable service providers will require substantial due diligence, proof of compliance, product integrity and background checks before opening accounts. Fincann provides its clients expert guidance and advisory in navigating this process to a speedy and successful conclusion.
Under these circumstances, it’s best to allow 1 to 4 weeks for account onboarding and activation.

We recommend you also take a few moments to view real time state by state regulations for a current summary of prevailing rules and restrictions for hemp commerce in the states you operate in or are contemplating entering in the near future.