WAUKESHA, Wis.–Retailers across Wisconsin that raced to offer CBD-related products are now reporting difficulties finding financial institutions willing to serve them.
CBD, an abbreviation or cannabidiol, is a compound found cannabis, that does not provide a high but instead reportedly offers numerous therapeutic benefits and which is now included in a wide range of products. But its basis in cannabis means technically it runs afoul of federal drug laws.
The 2018 Farm Bill became a catalyst in many states, including Wisconsin, for the expansion of sales of CBD-products. But now many companies are reporting some banking institutions have been closing their accounts.
Beyond Full Spectrum, a CBD business in downtown Waukesha, for instance, told GMToday.com it is now on its second financial institution after Summit Credit Union informed the company it would be closing the relationship.
In a statement to the publication, Summit Credit Union CEO and President Kim Sponem said its decision was based on the lack of clarity in state and federal financial institution laws related to serving cannabis-related businesses.
Legal ‘Clarity’ Needed
“Summit Credit Union has always championed the small business and entrepreneurs throughout the communities we serve,” the credit union said in its statement. “While the 2018 U.S. Farm Bill legalized the industrial sale of hemp, individual states need to develop some type of certification that will be recognized by our regulators as meeting our regulatory criteria for compliance. To do so without that, financial institutions are under significant risk of being in violation of state and federal financial institution laws.”
Beyond Full Spectrum has announced it will accept only cash transactions for the foreseeable future, as credit card processors are also pulling out of the CBD industry. The business said it has applied for another bank account and credit card processor, but it could take more than a month until they find out if their business has been approved.
Word-of-Mouth Will ‘Help’
Another business owner, Brett Klug, of Lake Country CBD, reported his business has been experiencing similar challenges, but he believes the government will eventually act.
“The more people that share their success stories, the more people that are going to use it,” Klugg told the publication. “The people making the rules are going to end up personally knowing people positively affected by CBD and I think that’s going to help.”
According to GMToday.com, a 2018 Wisconsin Bankers Association survey suggests banks have little confidence in hemp businesses. The two-question survey included 95 Wisconsin bank CEOs and presidents in which 83% said they would not actively seek to provide loans to industrial hemp farmers and/or processors in Wisconsin if the Farm Bill changed the federal view of hemp.