NCUA Advises Credit Unions They Can Provide Financial Services to Hemp Businesses

Last week, the National Credit Union Administration (“NCUA”) released interim guidance advising federally insured credit unions that they may provide certain financial services to legally operating hemp businesses. The interim guidance was released in response to the passage of the 2018 Farm Bill in December 2018 that removed certain hemp-derived products, including cannabidiol, from the list of Schedule 1 drugs in the Controlled Substances Act. 

The NCUA advises credit unions that they need to “understand the complexities and risks involved” if they choose to serve hemp-related businesses, and reminds credit unions that they “must have a Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program” that addresses the risks related to hemp-related businesses. While the guidance encourages credit unions to “consider whether they are able to safely and properly serve lawfully operating hemp-related businesses within their fields of membership,” it also reminds credit unions of the “long and successful history” many credit unions have had in “providing services to the agricultural sector.”

The NCUA will issue additional guidance after the U.S. Department of Agriculture publishes its final regulations and guidelines.

Congress Takes Another Step Toward Reforming U.S. Cannabis Laws. A Good Sign for the SAFE Banking Act?

Yesterday the U.S. House of Representatives, Committee on the Judiciary held a first-ever hearing which, essentially, advocated for significant reforms of our nation’s marijuana laws. The hearing was titled "Marijuana Laws in America: Racial Justice and the Need for Reform," and you can watch it on YouTube here, if that’s the sort of thing you’re into. 

At least a majority of the committee seemed to start from the premise that marijuana should not be a Schedule I controlled substance. Even the Republican minority offered a witness who supports significant marijuana reforms, including passage of the STATES Act which, for those who may have forgotten, would protect state-legal cannabis businesses from federal prosecution. 

Hopefully, this hearing is also a positive sign for the future of the SAFE Banking Act, which would further open the door to federally chartered banks working with cannabis businesses (our previous posts on this Act are available here). The SAFE Banking Act is still waiting for a vote on the House floor, after being approved by the House Financial Services Committee last March. 

These federal reforms, even the discrete ones, really will matter to New England’s marijuana industry. Even if Congress acts piecemeal, a little bit of reform here and little bit there could quickly give a massive boost to the industry by opening the door to things like banking and credit card processing, and eliminating the constant looming threat of federal enforcement against state-legal businesses.

The Latest USDA Guidance on Hemp Law

The United States Department of Agriculture (USDA) Office of General Counsel issued some guidance last week on its view of the current legal status of hemp. The takeaways are:

1. Hemp is no longer a Schedule I Controlled Substance under federal law.
2. At the moment, states cannot prohibit the interstate transport of hemp (or hemp products) lawfully produced under the 2014 Farm Bill. Why the 2014 Farm Bill, when the 2018 Farm Bill just became law, you might ask? Well, point 3 gets to this.
3. The 2018 Farm Bill loosened the requirements for hemp to be grown legally, but this more relaxed regime only takes effect after the USDA publishes the necessary regulations. Once these regulations are published, then states and tribes may not prohibit the interstate transport of hemp produced under a state or tribal plan or under a license issued by the USDA.
4. While states and tribes cannot prohibit the commerce of hemp legally grown elsewhere, they can enact and enforce laws which prohibit the growth of hemp within their territory.
5. The Food and Drug Administration (FDA) retains authority to regulate hemp under applicable FDA laws. In other words, the FDA can and will continue to crack down on those who make unapproved therapeutic claims related to CBD, and may continue to regulate the addition of CBD to food products.

Overall, this guidance is probably good news for those who are growing or sourcing their product legally, and want to reach a national market. It could also be interpreted as another baby step in the direction of nationwide legalization of one species of cannabis.