Called the SAFE Banking Act, the bill was initiated by Rep. Ed Perlmutter, D-CO. Colorado, as one of the first states to approve medical marijuana and subsequently full recreational use, has been at the forefront of the hemp movement.
Colorado at hemp forefront
At a recent event in Denver focusing on CBD products, innovations and regulation, Colorado governor Jared Polis told attendees they have the full backing of state government in fostering the industry. The event was put on the by American Herbal Products Association.
In the early days of the cannabis business in Colorado, as elsewhere, companies were forced to deal in cash, because no bank that was a member of the FDIC (Federal Deposit Insurance Corp.) system would agree to accept such deposits. That led to obvious difficulties, including the need to have armed guards on site.
That has changed to some degree, and some financial institutions have taken such deposits in recent years. But it’s a patchwork quilt, and one that is rapidly changing, as some credit card payment processors have abruptly shifted course and have stopped processing such payments when they had previously been doing so. Earlier this year online seller Thrive Markets was forced to suspend sales of hemp products as a result while it sought a different payments processor.
Consultant: Present situation amounts to harassment
“It has been the credit card and banking companies that in my opinion have to a certain extent been harassing hemp companies that are selling online,” said Steven Hoffman, who is the head of the Colorado-based consulting firm Compass Natural Marketing. Hoffman, who was an associate publisher of Natural Food Merchandiser, has worked on hemp initiatives for a number of years.
“There was a recent case where they forced a national press release distribution newswire to stop taking hemp press releases and to clear its database of all of its archived hemp press releases,” he maintained.
“Small businesses have had to deal with the credit card companies threatening them that if they didn’t pull hemp products from their offerings they’d lose payment processing services. And they’ve had to pay higher so-called ‘risk fees’ to credit card companies because of this gray area in banking policy. This needs to be addressed and the sooner the better,” Hoffman told NutraIngredients-USA.
NPA: Solution of issue will be boon for publicly traded companies
Daniel Fabricant, PhD, president and CEO of the Natural Products Association, said his organization is urging its members to contact their representatives to urge support for the bill. Fabricant, whose organization is active in the day to day legislative process, said he believes the bill has good prospects, but the final version still will have to run the full legislative gauntlet.
“I am optimistic this will pass the House. I anticipate there will be something like 300 votes in the affirmative, and that’s support from both Republicans and Democrats. We still have a way to go in the Senate,” he said.
Rationalizing the banking issue could open the way for what many observers have said is the coming shakeout in the CBD sector. Some publicly traded companies that have been developing hemp products lines in the background have reportedly been waiting on the sidelines while the banking problem and other regulatory issues are worked out.
“For those companies that are publicly traded this will be a big deal. How do you do a transaction in interstate commerce otherwise,” he said.