There’s no question that hemp oil/CBD has become the new buzzword. As more and more businesses, entrepreneurs, and investors enter the hemp/CBD industry, there’s a growing need of support from the banking sector, and mainly for insurance for growers of hemp.
Historically, hemp/CBD got a bad rap when it comes to insurance, since banks don’t see hemp oil/CBD as a safe investment. This was mainly because of the complex laws that governed hemp oil/CBD until recently. But, since the 2018 Farm Bill was signed into law resulting in hemp/CBD being legalized in the US, things have changed dramatically.
This piece of legislation that has been initiated in Washington is going to have a significant ripple effect across the US hemp oil/CBD industry, mainly because it provides a solution for one of the most basic needs of hemp farmers and hemp-related businesses.
According to the US Department of Agriculture, the individual states need to develop their own regulatory programs, which also includes providing licenses and registration for the growing and selling of hemp, which then needs to be submitted to the federal government for approval.
While this process is well under way in many states, the FDA has also made it clear that any hemp related product whether it’s an edible, supplement or beverage has to be approved. To date, the FDA has only approved one pharmaceutical product which has been clinically tested and found to be beneficial for human consumption, and that’s Epidiolex. This lack of direction fueled by complex rules and regulations has resulted in many banks being hesitant in providing hemp farmers with the same insurance policies as farmers of other traditional crops.
All this is going to change with the passing of an historic bill in Washington, which has opened the doors for hemp farmers to get insurance for their investment. The amendments in the SAFE Banking Act, was passed recently and now is headed to the Senate for further debate. The crux of the new bill is to instruct federal banking regulators on issuing guidance to financial institutions that confirms the legality of hemp/CBD and hemp-derived products within 90 days of the bill being passed into law.
The guidance is also going to include best practices for financial institutions when it comes to providing their financial services, including insurance to hemp farmers and hemp related businesses. This piece of legislation that has been initiated in Washington is going to have a significant ripple effect across the US hemp oil/CBD industry, mainly because it provides a solution for one of the most basic needs of hemp farmers and hemp-related businesses, which is access to traditional banking services and products. In other words, with the new SAFE Banking Act, all hemp-based businesses will be able to take advantage of the same banking products as other business owners. The new legislation is going to be especially useful for hemp farmers, who find it hard to secure insurance and other banking products to protect and scale their business.