WASHINGTON — Bank regulators will try to clarify rules allowing banks to provide services to industrial hemp businesses after the crop was legalized in the farm bill last year, Federal Reserve Board Gov. Michelle Bowman told Congress this week.
Bowman was pressed on the issue by Sen. Jon Tester, D-Mont., at a hearing to confirm her for a full 14-year term on the Fed board.
“We would not discourage banks form banking these types of customers,” Bowman said. “We’ll try and clarify that. Hemp is not an illegal crop.”
Bowman’s comments come as banks are hesitant to service industrial hemp businesses just as they have shied away from serving marijuana businesses. But even though pot is still considered a banned drug, hemp — a material used in industrial goods that contains less than 0.3% of the psychoactive compound found in marijuana — was removed from the federal list of banned substances.
Bowman was confirmed in November to fill an unexpired term on the Fed board that ends in 2020. She is awaiting Senate approval for a full term.
Tester said banks in Montana currently won’t service hemp businesses because they are concerned about regulatory ramifications.
“The 2018 farm bill decriminalized hemp and took it from the controlled substances list,” Tester said at the Senate Banking Committee hearing Wednesday. “It is now as legal as soybeans or wheat to be able to grow. … When the Montana bankers were in a month and a half ago, they said that they couldn’t bank them because the regulators told them they couldn’t bank them.”
Bowman said that the Fed is not discouraging banks from serving hemp businesses, but Tester pushed her to be proactive in clarifying that banks can services those businesses without repercussions. He noted the pressure farmers are already under as a result of international trade tariffs imposed by the Trump administration.
“Let’s be proactive about it because we decriminalized it in the farm bill … this is hemp,” Tester said. “These tariffs are killing production and agriculture. … In this economic time for production and ag, they need the banks.”
