On Monday, the US House of Representatives again passed the SAFE Banking Act (Secure and Fair Enforcement) with 321-101 votes.
The law aims to protect institutions that provide financial services to state-legal cannabis, hemp and ancillary businesses.
“This bill will give banks, insurance companies and card processors additional clarity that they can actually do business with legally operating hemp businesses,” said Rep. Andy Barr (R-Ky.) During a debate on Monday afternoon. “It would also direct our federal financial regulators to update best practices for hemp and CBD companies.”
RELATED: How the Hemp Industry Overcomes Banking Problems
Despite the national legality of hemp, many business owners still struggle to find financial institutions to partner with them – especially when it comes to cannabidiol (CBD) businesses. To this end, many industry associations support the bill.
But there is a small provision in the bill that affects others.
Larry Farnsworth, spokesman for the National Industrial Hemp Council (NIHC), points out that the SAFE Banking Act defines “hemp-related legitimate companies” as companies that conduct hemp or CBD businesses “in accordance with agriculture.” [sic] Improvement Act of 2018. “
In other words, those operating in states that are still running their hemp pilot programs under the Agricultural Act of 2014 (the 2014 Farm Bill) may not receive the same protection as those in states with new plans approved by the US – Department of Agriculture (USDA) approved. .
It’s a huge piece of the puzzle that may be left out, says Farnsworth. There are currently 20 states planning to operate as part of their pilot programs in the coming season, including some of the country’s largest producers such as Colorado, Kentucky, and Montana. (Under the USDA’s final rule, states are allowed to operate under their pilot programs until January 1, 2022.)
RELATED: 2020 Cultivation Dates
Overall, according to Farnsworth, almost 75% of the hemp produced in 2020 came from states that are still operating under pilot programs.
In addition, many farmers still have leftovers from previous years that were made through pilot programs, Farnsworth says. With the current language of the SAFE Banking Act, banks may hesitate to do business with this leftover product.
“Ironically, we are delegitimizing hemp as a business while giving the … marijuana industry access to the banking system,” Farnsworth says.
The good news
According to Farnsworth, the NIHC is currently working with Congress to amend the bill to include all legally operating hemp companies, regardless of whether they operate within the framework of the 2014 or 2018 agricultural legislation.
“We want a hemp economy that works for everyone,” says Farnsworth.
Other than this provision, the NIHC and other industry groups broadly support the SAFE Banking Act.
The calculation went through several iterations over a period of several years. According to the US Hemp Roundtable, a language was added in late 2019 that revolves around hemp and CBD companies. Importantly, the bill also clarifies that hemp companies are not subject to the same scrutiny that is required for adult cannabis.
The House has passed the SAFE Banking Act three times since 2019, but each time it has failed in the Senate. The bill is now going to the Senate for a vote again.
“The prospects for the bill seem to improve this year with the change of control in the Senate,” writes the US Hemp Roundtable on its website. “And the bill itself has been significantly improved to explicitly protect financial and credit card transactions for hemp growers and processors, as well as for companies involved in the handling, manufacture and sale of cannabinoid products made from hemp such as CBD.”
Tony Lange, Associate Editor of Hemp Grower, contributed to this report.