Interagency guidance between the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC), the Federal Reserve and the Financial Crimes Enforcement Network on banking hemp-related businesses will be issued within a weeks, an FDIC spokesperson told Banking Dive on Tuesday.
Following the U.S. Department of Agriculture's release last week of draft rules for growing the crop, the bank regulators plan to issue their own interagency guidance soon, the FDIC said.
- The production and sale of hemp, which is a strain of the cannabis plant and typically contains less than 0.3% of the psychoactive substance tetrahydrocannabinol (THC), was legalized with the passage of the 2018 Farm Bill. Many financial institutions, however, still question whether they can bank businesses associated with the product.
Interagency guidance on banking hemp will come as welcome news to some lawmakers, growers and banks who want to service the industry.
Several lawmakers, including Sens. Michael Bennet, D-CO, and Chuck Schumer, D-NY, say hemp businesses are struggling to open bank accounts because many financial institutions still question whether they can extend their services to the industry, and have called for regulators to resolve the issue with guidance.
FDIC Chair Jelena McWilliams said she has held meetings with various state officials, asking about applications and how hemp products would be regulated to ensure their THC level is below 0.3%. She said the hemp banking issue is "a complicated predicament for bankers to be in."
"As I talked to more and more of the state supervisors and understood how this is being done, I have been leading the regulatory effort and making sure that we actually are able to come out with a guidance to our banks on how to bank hemp," McWilliams told Banking Dive. "And so that's forthcoming."
The decision to issue guidance on the hemp-banking issue is a departure from previous responses issued by regulators. The OCC and the Fed released statements in August indicating they had no plans to issue clarity.
In separate responses to a letter from Bennet requesting clarity, Fed Chairman Jerome Powell and Comptroller of the Currency Joseph Otting said their agencies did not plan to issue guidance.
Powell and Otting said they expected institutions to apply their established policies to the hemp industry, and said their respective agencies would continue to monitor the issue.
In her own response to Bennet's letter in August, McWilliams did not indicate whether the agency planned to issue guidance, but said it was "in the process of providing training to our examiners on changes to the legal status of hemp and instructing them that the suspicious activity filing requirements prescribed by the Financial Crimes Enforcement Network for cannabis do not apply to hemp."
Institutions should assess the issue on a "case-by-case basis," McWilliams said at the time.