On August 19th, Chairman Rodney Hood of the National Credit Union Administration (NCUA) issued Regulatory Alert 19-RA-02. The alert advises federally insured credit unions since the Federal Government changed the status of hemp, they should either consider providing financial services or extend their services to already legitimate hemp companies.
This alert is just another example of the growing support and the need for financial services to assist potential customers in the hemp industry.
Last Spring, my company ILoveCompliance partnered with Solvent to accelerate the onboarding process for credit unions and other financial institutions to conduct business with hemp and cannabis companies. In the current onboarding environment, it is a paper-intensive process laded with inefficiencies to process effectively. We knew there would be a greater need for hemp companies requiring additional financial services once the Agriculture Improvement Act of 2018 (Farm Bill) was signed by President Trump. Changing the status of hemp made our goal even more important because there was traction for onboarding.
The essence of the Regulatory Letter released by NCUA identifies several areas, many of them highlighted in the red boxes:
Accountability- Due Diligence
Transparency- Remain Alert
All of these are the foundation of the Solvent platform that was released to support these initiatives.
It is great to see that Hemp farmers, producers, and retailers are able to operate using technology platforms like PowerDMS and Solvent to bring all of these key points into the operation of the business. Compliance tends to invoke images of mountains of paperwork and checklist, it is, but with technology makes it manageable and operational.
In the upcoming months, we should see financial legitimacy and accountability within the hemp industry. We applaud the NCUA for being a leader in promoting much needed financial services to new and current hemp customers. I also want to thank those credit unions and financial institutions we work with around the country for supporting the industry.
This event along with the recent statements from Senator Mike Crapo (R-Idaho) give hints to change is coming. He made these statements during the hearing, “Challenges for Cannabis and Banking: Outside Perspectives.”
“I look forward to learning more about the SAFE Banking Act and understanding how the safe harbor would work, what the compliance challenges regarding interstate commerce could be, and the challenges presented when banking legacy cash, specifically ensuring that the legacy cash complies with the FinCEN guidance.”
“Having a conversation about whether banks should be able to provide banking services to entities engaged in federally illegal behavior brings up the issue and concern that there has been a push to choke-off legal industries from the banking sector. “
“I have said this many times and I will say it again, Operation Choke Point was deeply concerning because law-abiding businesses were targeted strictly for operating in an industry that some in the government disfavored. Under fear of retribution, many banks have stopped providing financial services to members of these lawful industries for no reason other than political pressure, which takes the guise of regulatory and enforcement scrutiny.”
Operation Choke Point was inappropriate and Congress needs to pass legislation to prevent future Operation Choke Point Initiatives.
Always remember that basic processes and procedures are the foundation of a great business. Our golden rule, “if it is not documented, it didn’t happen!” should be the foundation of every business, not just cannabis and hemp.
Writer: Solvent Board of Advisor & ILoveCompliance CEO Tim Gunther