A historic cannabis banking bill was recently passed by House legislators hoping to secure a safe haven for financial institutions that serve hemp and hemp-made CBD companies. Los Angeles hemp business attorneys know this key measure is necessary, despite the passage of the 2018 Farm Bill that made hemp legal.
The banking bill, also known as H.R. 1595, passed 321-103 in the House with wide bipartisan support, with 91 of those who voted for it being Republican. It’s unclear whether it will face much fierce opposition in the Senate or what the president’s position would be if it lands on his desk. There are Senate committee chair Republicans who are in support of cannabis banking reform measures, though none have specifically mentioned hemp.
If passed, the measure would direct U.S. banking regulators to draft guidelines to federally-backed financial institutions affirming the legality of both hemp and CBD products extracted from it – within 90 days of the law’s passage. The federal regulatory directive would outline best practices for banks on how to follow the law in offering financial services to any hemp-related business (which can include contractors, landlords, plumbers, etc.).
In the last year since hemp and CBD were legalized, farmers, businesses, processors, retailers and even labs have reported trouble obtaining banking services. Many have had to rely on cash-based transactions, which has proven difficult – and has even stunted their growth in terms of electronic sales.
Will SAFE Banking Law Resolve Pot Payment Problems?
Although many political analysts say the bill’s future is uncertain, one thing most agree on is that the law itself may not entirely resolve the cannabis industry’s payment and financial services woes. For one thing, it deals solely with non-psychoactive hemp and the cannabidiol oil that is often extracted from it, containing only trace amounts of THC.
Hemp and CBD oil can be ingested in various forms, but both are very versatile. Although CBD oil in particular has been touted for its health effects, neither will get a person high.
Marijuana, which is also derived from cannabis, does contain THC and is designated a Schedule I narcotic by the federal government, absurdly placing it in the most dangerous class of drugs with high addiction risk and no medicinal value. This is true no matter the marijuana law in the state you live. This more than anything is what has kept banks from entering the industry fray, as they would risk money laundering charges (by taking and “cleaning” the “dirty money”).
As Los Angeles marijuana banking lawyers can explain, the lack of clarity from the federal government, states where marijuana is legal have had to legislate their own protections for credit unions and banks, folding them into state banking law.
The SAFE Banking Act is a good step in the right direction – one that the 60 percent of U.S. voters who support marijuana legalization deserve to see. Innovations for cannabis payment would allow for better tax collection and economic benefits – locally for now and possibly far beyond if interstate sales are ever possible.
The ultimate goal is to lay the foundation of clear financial and banking standards in the industry so that consumers are protected and cannabis businesses can operate without hesitation in the bounds of state law.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.
Hemp banking protections pass US House as part of landmark cannabis bill, Sept. 25, 2019, By Jeff Smith, Hemp Industry Daily