It’s no secret cannabis businesses often have a hard time securing banking and merchant processing. CBD businesses especially are likely to have a much harder time finding these important services. Why is this? We asked expert Nathaniel Gurien, founder and CEO of Fincann, to explain the issues.

1. What is the difference between hemp banking and CBD banking?

Industrial hemp businesses have significantly fewer roadblocks. CBD businesses, on the other hand, are under a lot more pressure to demonstrate their products contain the legal level of THC, and some banks are looking for even more specificity. They might want to see lab test reports that verify your products comply with local and state laws. Most importantly, they will want to see your products do not exceed the federal 0.3% THC threshold that distinguishes hemp CBD products from federally prohibited “marijuana.”

2. What are the biggest challenges when it comes to CBD banking?

CBD is a bit more mainstream now, and bankers know what it is, so you can expect a bank to take a stance on whether it banks CBD businesses or not. However, even those that do may not work with everyone. You might also run into a problem where a local branch opens an account, but 30 days later, corporate shuts it down because it doesn’t want to bank your sector.

Photo courtesy of Fincann

3. Isn’t CBD legal? What’s the problem?

The U.S Food and Drug Administration (FDA) has said CBD for human or animal consumption cannot be legally sold in intra- or interstate commerce. It is legal for CBD to exist, but it cannot be sold unless the FDA approves it (as it did with Epidiolex). This means that technically, CBD products are not legal to sell.

Without clear regulations, banks are not protected and could get wiped out by one little lawsuit. Only a limited number of brave banks are setting internal standards on the fly and hoping it will meet authorities’ expectations.

4. What would federal legalization of cannabis mean for hemp and CBD banking?

It’s appearing as though Senate Majority Leader Chuck Schumer (D-NY) is preferring to go in the direction of a comprehensive law. That timetable means we might not get legalization on a federal level for a couple more years, because there is no way to satisfy all stakeholders, then craft and pass legislation on this scale before the end of 2021. At the end of the day, though, it might be a better process than just descheduling now and dealing with years of open-ended chaos. We need a regulatory framework in place.

5. What should CBD businesses do to prepare for the future of banking?

These are rapidly evolving, chaotic times, and we are amid a regulatory framework that is going to evolve, change and mature over the next few years. This is very significant pioneering work. It’s recommended you have somebody like Fincann who is an experienced guide to keep you on as much of a trouble-free path as possible.

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