The winds of change are strangely aromatic

Cultivation of hemp and production of hemp-based products, including CBD, were a notable inclusion in the 2018 Farm Bill.

The promise of industrial hemp is manifested in hemp-based CBD products, which include oils, creams, supplements and food items. Some worry about CBD being just another fad, like bitcoin or avocado toast. Yet AARP reports that Baby Boomers are driving the sales of CBD products, used by that demographic to treat pain without the addictive qualities of, say, opioids. It’s impossible to know if CBD’s medicinal benefits are real, of course, because hemp’s heretofore illegal status has hindered researchers. Ask around your office, though, and I’ll bet you’ll find someone who uses a hemp-based CBD product. (Don’t judge them.)

The 2014 Farm Bill created a pilot program for hemp production and much has been learned about how it fares in the field and what makes it a potentially risky investment (for a quick introduction to the plant and its complexities, see our FAQ). Wisconsin was one of those pilot states and industry professionals there shared their opinions with us on whether banks ought to jump on the hemp train.

Despite the legal complexities surrounding hemp and cannabis, it’s worth noting that change is afoot. The Secure and Fair Enforcement Banking Act, which removes the ability of regulators to punish a bank for serving legal cannabis businesses, passed through the House Financial Services Committee and moved into the full House. SAFE enjoyed bipartisan support (much like S. 2155) and had the backing of both ICBA and ABA.  

In states newly opened to hemp, cultivation is probably a growing season away. It will be up to each state’s agriculture department to first establish their own plans for hemp production (you can track progress at and then submit those plans to the U.S. Department of Agriculture, which will formalize its legal framework sometime this fall. Once that happens, banking regulators will get to work shaping industry guidance.

“We’ve already begun educating our examination teams on the farm bill and its legalization of industrial hemp,” said Fed Governor Mikki Bowman to bankers attending an ag conference put on by the Independent Community Bankers of New Mexico. Bowman clarified: “The decision to open, close or decline a particular account or relationship is made by the bank, without the involvement of their regulator.” In other words, reread the FFIEC guidance.

Are the winds of change ushering in a new era for cannabis? I’m no futurist but I can tell you this: Every day, a press release lands in my inbox announcing another cannabis-focused private equity investment.