At the beginning of December 2019, the Board of Governors of the Federal Reserve System, the Deposit Insurance Corporation, The Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency issued new guidance clarifying the legal status of hemp, the commercial production of hemp, the relevant requirements of financial institutions under the Bank Secrecy Act (BSA), as well as its implementing regulations.
The new guidance exempts banks from filing Suspicious Activity Reports on the customers who are operating hemp-related businesses and adhere to the given regulations.
On Monday, the Wisconsin Bankers Association released the findings of a recent survey where nearly 50% of the respondents who currently do not transact with marijuana businesses said that in 2020 they are going to extend their services to hemp-related customers.
In addition to the traditional economic questions, the annual Bank CEO Economic Conditions Survey added three hemp-related questions.
The participants’ responses highlighted that the majority of banks in Wisconsin are navigating through the complex regulatory issues surrounding hemp and now they believe they are better equipped to services their customers.
Forty-eight percent of the respondents said that they are working towards servicing hemp businesses in 2020.
The WBA president, Rose Oswald Poels, said that with hemp being a new crop, it has complex issues from both the standpoint of business and regulation and the Wisconsin banking community is working hard to help and serve their customers and communities. She added that working through the complexities takes time because of the absence of a one-size-fits-all approach, and the banks have different methods and timeframes.
According to the WBA poll, thirty-eight percent of the banks which participated said that they are currently receiving deposits from hemp customers while lesser than fifteen percent are providing loans to hemp businesses.
Some of the banks are not servicing hemp-related businesses because of a lack of demand because people who are operating hemp businesses have not requested them for financial services.
Wisconsin has a very diverse banking industry, giving consumers the chance to choose a banking relationship that is a good fit for their needs. Thus, Poels encourages the people who are in the hemp industry to reach out to bankers until they find the banks that can best address their needs.
The survey was conducted within the first two weeks of December 2019, and there was a total of 85 respondents.
The willingness of banks to start offering services to hemp businesses is likely to be good news to the industry, including sector players like Sugarmade Inc. (OTCQB: SGMD) and Green Hygienics Holdings Inc. (OTCQB: GRYN), since it is only logical that legal hemp businesses enjoy the same benefits as businesses in other industries.
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