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Hemp Businesses Can Get Bank Accounts But Cannabis Still Blocked
Among the flurry of cannabis and hemp confusion, a Federal Reserve Bank district is making clear that financial institutions no longer have to automatically treat hemp businesses as suspicious under reporting rules. The St. Louis Federal Reserve Bank clarified on their website that since hemp was legalized federally under the 2018 Farm Bill banks no longer have to report transactions that involve the crop. Cannabis–the THC kind– will continue to be flagged as the intoxicant is still federally illegal.
Banks Still Nervous
Hemp contains very low levels of tetrahydrocannabinol (THC), the chemical that induces an altered state when smoked or consumed. It contains less than 0.3 percent, which is considered legal. Despite the changes in hemp legality bankers are still showing reluctance to work with the industry because of regulatory concerns.
Despite clarifying memos released by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of Currency and the Financial Crimes Enforcement Network, it is apparent that some institutions remain reluctant.
No More Suspicious Activity Reports
Banks no longer need to file a Suspicious Activity Reports (SARs) when working with a hemp producer customer. They can follow standard procedure. Moreover, the post goes on to note that continued guidance will be released on federal hemp rules from financial regulators. It is unclear as of yet what that information will look like.
While cannabis the intoxicant is still facing a complicated federal status, there is significant interest from Federal Reserve Banks in ensuring that the rules are clarified. The Federal Reserve Bank continues to monitor the growing industry leading the Kansas City branch to issue a report of the Colorado cannabis market. Ultimately, they concluded that the industry is primed to continue growth as public support increases.