Agencies clarify requirements for providing financial services to hemp-related businesses

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From Board of Governors Federal Reserve System

Agencies clarify requirements for providing financial services to hemp-related businesses

December 3, 2019 

WASHINGTON-Four federal agencies in conjunction with the state bank regulators today issued a statement clarifying the legal status of hemp growth and production and the relevant requirements under the Bank Secrecy Act (BSA) for banks providing services to hemp-related businesses.

The statement emphasizes that banks are no longer required to file suspicious activity reports (SAR) for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.

This statement provides banks with background information on the legal status of hemp, the U.S. Department of Agriculture’s (USDA) interim final rule on the production of hemp, and the BSA considerations when providing banking services to hemp-related businesses.

This statement also indicates that the Financial Crimes Enforcement Network (FinCEN) will issue additional guidance after further reviewing and evaluating the USDA interim final rule.

The statement was issued by the Federal Reserve Board, the Federal Deposit Insurance Corporation, FinCEN, the Office of the Comptroller of the Currency and the Conference of State Bank Supervisors. Banks can contact the USDA, state departments of agriculture, and tribal governments with further questions regarding the Agriculture Improvement Act of 2018 (2018 Farm Bill) and its implementing regulations.

Joint Guidance on Providing Financial Services to Customers Engaged in Hemp-Related Businesses (PDF)

For Federal Reserve Board media inquiries please contact Darren Gersh at 202-452-2955.

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FROM THE DESK OF THE KY AG COMMISSIONER RYAN QUARLES

Grass-Oval-Sticker

Ryan F. Quarles

Commissioner

KY Department of Agriculture

Friends,

As we start 2018, I wanted to give you an update on the status of the Kentucky Department of Agriculture’s (KDA) Industrial Hemp Research Pilot Program.

2017 was a good year, and we did much to put this crop on a path towards commercialization in Kentucky once Congress acts to remove industrial hemp from the federal list of controlled substances.

Last year, our growers planted more acres of hemp than ever before, with more than 3,200 acres and another 46,000 square feet in indoor facilities. I am happy to report to you that we have approved more than 12,000 acres for industrial hemp research in 2018.

We also have more processors than ever before, filling a huge research need, and allowing us to explore the many applications of industrial hemp. It is imperative that Kentucky attract processors to drive innovation and spur economic development.

By now, applicants have been notified whether or not their 2018 grower applications were approved. Once conditionally approved applicants have attended mandatory training, the KDA will begin issuing licenses in March for the 2018 growing and processing season.

As you may know, I have still not received a formal response from the DEA, USDA and FDA regarding its 2016 Statement of Principles on Industrial Hemp (SOPIH). This is disappointing. I sent another letter to the DEA last month requesting a response to our concerns about the SOPIH and also for a meeting to discuss my concerns. You can read my comments here and watch my video message to the DEA here. Specifically, recent statements by a DEA spokesperson claims that consumable hemp-derived product is illegal to consume, a view which we are currently pushing back against.

I am hopeful that 2018 will be a great year for agriculture all around, and specifically for our industrial hemp research pilot program. I want you to know that if you ever need anything from the KDA’s team, please don’t hesitate to contact a member of KDA’s Hemp Staff.

Happy New Year!

Ryan F. Quarles

Commissioner

KY Department of Agriculture

105 Corporate Drive

Frankfort, KY  40601

First new hemp strain bred for US farmers

By: Chris Conrad

Retail Hemp field crop

A new industrial hemp cultivar has passed the THC hemp trials managed by the Colorado Department of Agriculture, the first hemp seed variety bred for the US to pass a Department of Agriculture hemp trial in any state.

Thomas Jefferson was a jealous hempseed breeder who allegedly brought Chinese seeds in from France in the 1790s to mix with the European strains. Later the US Department of Agriculture adopted an aggressive program to breed plants that were drought resistant and climate or soil specific for different parts of the United States and came up with some of the best hemp strains in the world. That all came to an end with the Marijuana Tax Act of 1937, when hemp farming was essentially banned. The national seed banks died out when the federal Drug Enforcement Agency took control in the 1970s and destroyed them in the name of the Drug War.

Act of Congress opened the way for new hemp seedlines

In February 2015, Congress passed the hemp amendment to the Farm bill and opened new avenues for cannabis hemp. Two years later, Rely™ by New West Genetics has become the first modern hemp variety bred for the U.S. to pass Colorado Department of Agriculture hemp trials. The plants have a stable THC content below 0.1 percent, compared with the federal standard of 0.3 percent or less.

“This is a landmark victory for New West Genetics, as well as hemp production in the United States overall,” said Wendy Mosher, CEO for New West Genetics. “The use of regionally bred hemp seed for production is imperative for the US hemp industry to succeed, and we hope that the results for Rely™ act as a catalyst for other U.S. hemp product makers to recognize the benefit of regionally bred varieties – better yield, disease resistance, sustainability, etc. and demand those be used for their products.”

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Kentucky Congressmen Seek Clarification on Federal Hemp Rules

By Matt Markgraf Oct 27, 2016

Three members of Kentucky’s U.S. Congressional delegation joined 16 other members of Congress in a letter Wednesday seeking clarification from federal agencies regarding industrial hemp guidelines.

Senator Rand Paul and Representatives Thomas Massie and John Yarmuth signed a letter to The U.S. Department of Agriculture, Drug Enforcement Administration and Food and Drug Administration looking to revise the ‘Statement of Principles’ issued in August.

The Congressmen say there is confusion over pilot programs approved in the 2014 Farm Bill allowing state ag departments and universities, including Murray State, to grow the plant for research. Guidance also could have a limiting effect on sales and transportation, the letter argues. Federal law prohibits farmers growing for commercial profit, but retail sales of products made with hemp are legal.

Kentucky’s Ag Commissioner Ryan Quarles sent a letter to the USDA last month objecting to the rules, saying they “could hinder industrial hemp’s economic potential.”

Read the letter sent Wednesday

 

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