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There is big news in the world of hemp businesses! Thanks to action by federal agencies, hemp businesses may now make use of banking services in a manner similar to any other lawful business.
As a refresher, the Michigan Regulation and Taxation of Marihuana Act (MRTMA), legalized the possession, cultivation, transfer, and transportation of industrial hemp. MCL 333.27960(i). Contemporaneously, the Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, authorized the cultivation of hemp and the transfer of hemp in interstate commerce. You can read more about the complexities of Michigan and federal law relating to industrial hemp here.
Despite the legalization of hemp and hemp products, however, hemp businesses faced a significant issue when it came to banking. Prior to the passage of the 2018 farm bill, hemp was classified as a Schedule 1 controlled substance, which required banks to file suspicious activity reports with the federal government when an account was suspected to be associated with hemp.
This week, however, the Federal Reserve, FDIC, FinCEN, and other agencies issued guidance to banks regarding the hemp industry and banking. In essence, this guidance indicated that banks may now manage the accounts of hemp businesses in the same way that they would any other legal business. Now, a bank is only required to file a suspicious activity report if there is evidence of suspicious activity; association with an otherwise-lawful hemp business no longer rises to that level.
The full text of the FDIC’s guidance can be found here. It is important to note that only hemp grown with a valid USDA-issued license, or grown under a USDA approved state plan, qualifies as legally grown hemp for federal purposes. Hemp grown for research and development purposes under the 2014 Farm Bill is also consider legal.
Although this is good news for hemp producers, it is important to recognize that these reforms do not apply to marijuana businesses, as marijuana is still considered a Schedule 1 controlled substance by the federal government. In addition, banks are not required to do business with the hemp industry, even if they are permitted to do so. Nevertheless, this change marks a significant step in the right direction.
If you are interested in learning more about the possibility of starting a hemp business in Michigan, don’t hesitate to give our office a call. Our expert cannabis team would be happy to help you in becoming a part of this growing field!