On Tuesday, federal and state financial regulatory agencies issued guidance clarifying that banks no longer have to take extra steps to report their customers for growing or cultivating hemp. Until hemp was legalized under the 2018 Farm Bill, banks that worked with hemp growers were required to file suspicious activity reports (SARs) for accounts associated with the crop because it was a Schedule I controlled substance treated the same as marijuana.
It took the USDA almost a year to develop rules for the industry, but once they were released on October 31st, bank regulators prepared to take action. Tuesday’s joint statement from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency, as well as the Conference of State Bank Supervisors, finally provided banks an updated on the legal status of hemp. The statement specified that while banks do not have to accept hemp accounts, if they do, those clients should not be treated any differently than customers from any other legal industry. Though financial institutions are still required to file SARs for cannabis businesses, the rate of those reports being submitted has leveled off in the last quarter of 2019.