Companies that sell cannabis products-even those comprising CBD derived from hemp, which was legalized in the U.S. throughout the Farm Bill late last year—are continuing to have difficulty accessing fundamental financial services that are available to businesses in other industries.
That includes being able to keep bank accounts and process their customers’ credit cards.
“Square is presently running an invite-only beta for a few CBD products,” a spokesperson for the firm said in an email.
The spokesperson said that the business watches evolving public policies and attempts to create new opportunities for clients when asked. This comes after years of refusing to operate with CBD companies.
In any scenario, the beta effort of Square comes at the ideal time for businesses in the CBD space. US Bank subsidiary Elavon, that has until recently managed payment processing for businesses selling goods with all the cannabis compound, is moving to shutter those accounts.
Last week, Rep. Andy Barr pushed national financial regulators about the problem during a hearing.
“I’ve had constituent businesses tell me their access to financial products, specifically card services, have actually deteriorated because we descheduled industrial hemp in the Farm Bill,” he explained. “This obviously conflicts with congressional intent.”
In April,” Senate Majority Leader Mitch McConnell and Sen. Ron Wyden—who together championed hemp legalization throughout the Farm Bill—delivered a string of letters to various federal agencies pushing for new guidance about financial services access for hemp companies.
“While some financial institutions have agreed to offer financial products into the developing hemp business, a number of them have not because of confusion over the legal status of hemp,” the bipartisan duo wrote.
“However, as hemp is not a controlled substance, financial institutions should feel secure in engaging with this business.” For hemp-derived CBD goods, which contain trace amounts of THC and thus do not create a”Stoned” feeling, manufacturers have long operated in a legal gray area.
The 2014 Farm Bill allowed countries to make pilot and research applications, which helped spur the growth of CBD companies. Many of these companies weren’t operating under country hemp programs. The DEA wasn’t cracking down on consumers or the CBD business. Along with the broad availability of the products lent a kind of legitimacy. There were stories of people getting arrested and stores getting raided by law enforcement who see hemp as still certainly illegal. With the passage of the Farm Bill, it seemed that CBD will be lawful.
Square’s entry into the CBD area comes to allow wider access to financial services for bud companies is currently gaining momentum in Congress.
In March, the House Financial Services Committee voted 45 to 15 to approve a bill to protect banks for working with marijuana businesses from being penalized by national regulators. That legislation currently has 184 cosponsors-more than a third of the membership of their chamber, and a floor vote is expected within the upcoming several weeks. A companion Senate bill has 29 lawmakers signed on, but Banking Committee Chairman Mike Crapo has so far refused to perpetrate holding a hearing on the proposal.
Groups that don’t traditionally support marijuana law reform are currently exerting pressure to behave. Bankers institutions from all 50 states sent a joint letter urging the cannabis financial services laws to be moved by Crapo ahead. This month, members of the National Association of Attorneys General, that represents the very best law enforcement officials in each state, sent a similar letter endorsing the bud banking bill.
Last week, The National Association of State Treasurers adopted a resolution supporting a legislative fix, writing that “Cash-based systems are inefficient, costly, and opaque, making the illicit activity harder to track and posing a substantial risk to public safety by increasing the likelihood of violent offense.” While this story was being reported on Tuesday, the website New Consumer published an early report about Square’s movement, citing an unnamed industry source.
For taking the step, Morgan Fox, media relations director for the National Cannabis Industry Association, praised the Square.
“Forward-thinking businesses are stepping in to fill the gap created by aged federal banking policies, and helping tackle the issues caused by an absence of financial services in the cannabis business,” he said.
“Lawmakers should take heed and open this space to all institutions.”