WASHINGTON—A top official with the Federal Reserve stated the department would clarify that hemp is a legal crop and that financial institutions are allowed to provide hemp businesses with services without violating the law.
During her confirmation hearing for a renewed term, Fed Board Member Michelle Bowman was pressed on what kind of guidance the department has provided to FIs in the time since the 2018 Farm Bill federally legalized hemp and its derivatives. Bowman said the department generally refers financial institutions to existing anti-money laundering legislation, reported Marijuana Moment.
Sen. Jon Tester (D-MT) said that hemp farmers in his state “still face barriers to access to the financial system” and that additional clarification is warranted.
“Senator, this is an important issue that when I meet with bankers from across the country, many states have engaged heavily in this crop for growth,” Bowman said at a Senate Banking, Housing and Urban Affairs Committee hearing.
‘Not Our Job’
While the Fed emphasizes the importance of assessing which clients banks take on, “we absolutely tell them that it’s not our job or our role to tell them who their customers should be and that they should understand what their business strategies and risks are with respect to any customer that they have,” Bowman said, according to Marijuana Moment.
The senator asked specifically how the department is providing clarity when it comes to hemp, and Bowman responded, “We have not told them that they cannot bank them.”
A Different Message?
Tester responded by observing while he and the Fed official might be on the same page, it’s possible FIs have been hearing a different message, which is why they’re still experiencing difficulties accessing credit. He said clarification is especially important at this stage because of fallout from trade wars with China and Mexico, as hemp represents a potentially lucrative crop for American farmers, Marijuana Moment reported.
“I would agree with you. We would not discourage banks from banking these types of customers,” Bowman said. “We’ll try to clarify that. Hemp is not an illegal crop.”
“That’s what I wanted to hear,” Tester said.