Over the past year, many consumers have been dismayed to discover that after trying to purchase hemp-based products online, they were unable to take advantage of a brand’s shopping cart platform. Since most online purchases involve a credit card or payment processing system of some kind, this has proven problematic. Although solutions exist, brands are in a constant game of whack-a-mole to ensure they have a reliable payment processor so their customers can purchase products.
But the issue is even more far-reaching. Companies that deal in cannabis have extremely limited options when it comes to banking services. This includes basic business checking accounts, lines of credits, and loans. As a result, most businesses have to deal with large amounts of cash. As you might imagine, this is not only an inconvenience but a serious safety and security concern.
It is expected that the CBD industry will reach around $16 billion in sales by 2025. Why would financial institutions not want to reap the benefits of being in partnership with one of the most lucrative industries in recent history?
The answer, of course, lies with the federal government and a whole lot of red tape. Because the US government still classifies cannabis as an illegal Schedule 1 drug, businesses operating within the space are subject to laws that have been on the books since the 1980s to prevent money laundering and drug smuggling.
Since US banks are required to report to the FDIC (a federal agency), most fear that doing business with cannabis companies could have serious legal and financial consequences. In short, the problem is not that they don’t want the business, but that they fear what it could mean to them overall.
The SAFE Banking Act
This conundrum led key leaders in the banking and political arena to look into a potential solution called the SAFE banking act. The bill was introduced to the House of Representatives in September 2019 and is intended to give federal protection to banks doing business with cannabis retailers in the industry, specifically as it relates to CBD and hemp. It aims to give clear guidelines to financial institutions that would allow them to work with retailers without fear of reprisal from the federal government. On Wednesday, September 25th, the bill was passed by the house with overwhelming support.
But Wait, There’s More
Although the decision in September by the house represented a major victory, the initiate still needs to pass the Senate, and that’s the major holdup. The US Hemp Roundtable has set up an easy way for consumers to contact their Senators and express their concerns and desires. It is vital that your senators hear from you in order to know the will of the people. You can access the online form here. Your voice truly can make a difference!