UPDATE: MADISON (WKOW) — A local credit union which recently refused to take on a CBD business as a customer says they want to wait until state laws are in compliance with financial regulations. State officials say that’s already established.
Summit Credit Union verified that Hemp Haven was notified their account would be closed by next week. In a statement provided to 27 News, Summit President and CEO Kim Sponem said they want additional oversight before opening accounts to industrial hemp, CBD oil, etc.
“Summit Credit Union has always championed the small businesses and entrepreneurs throughout the communities we serve. While the 2018 U.S. Farm Bill legalized the industrial sale of hemp, individual states must develop an oversight program to be approved by the USDA; Wisconsin has not developed such a program yet.”
The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) oversees the Industrial Hemp Pilot Program. Brian Kuhn works in the Bureau of Plant Industry for DATCP, and says Wisconsin already has an oversight program.
“We have an industrial hemp program that conforms to the 2014 Farm Bill, which allowed for the pilot research program,” Kuhn said.
Summit says they don’t want to serve industrial hemp businesses until the federal government sets guidelines on growing and selling CBD products. The USDA has not yet issued any guidelines on how to regulate hemp or CBD. Wisconsin is allowed to operate without USDA approval, because the state was approved to launch a pilot research program and will eventually be grandfathered in with federal guidelines.
“I think a lot of them are waiting for that federal program to roll out where states can get approved, which will (then) get approved by USDA,” Kuhn said.
According to a memo from Wisconsin’s Legislative Council, states can continue operating hemp pilot programs until either the USDA grants the state’s regulatory authority over hemp production or until federal law repeals pilot programs. Once the federal government establishes a plan, a hemp producer must be licensed either by the USDA or by state government officials.
Kuhn says based on discussions with state legislators, they expect a bill will be brought before the Legislature this session that will make changes to Wisconsin’s law and align its hemp program with the farm bill. DATCP expects to shift from a pilot program to a production model by the 2020 growing season. Kuhn says by then, concerns and uncertainties with financial institutions should clear up.
“But they still need a little more time and a little more confidence in that the market is going to be there before they’re willing to invest in it,” he said.
The Wisconsin Bankers Association (WBA) said it’s not uncommon for confusion to grow regarding federal and state law. They do not work with credit unions but are telling their members it’s “okay” to invest with CBD and hemp businesses. However, it’s up to their discretion if they choose to wait until the federal government establishes new protocols.
“They’re going to want to know more, and they’re going to want to learn about the industry,” said Assistant Legal Director for Wisconsin Bankers Scott Birrenkott. “Because they have been so new, bankers are not going to know much about the industry itself – they’re probably going to have more questions.”
In December of 2018, WBA conducted a poll asking 95 bank CEOs and presidents whether they would “actively seek to provide loans to industrial hemp farmers and/or processors in Wisconsin.”
An overwhelming amount of participants did not approve. 83% of bankers said “no”, with 17% responding “yes.”
Birrenkott said if banks are unsure about a business, they’re here to help. Since the poll, they’ve issued education to members about industrial hemp.
“Learning about this as it develops – not only the law, the compliance, but also the industry – we’re then disseminating that among our membership through various forms of education and publications,” Birrenkott said.
MADISON (WKOW) — A handful of CBD stores and hemp growers in Dane County are being told by their financial institutions their accounts will be closed. One lawmaker thinks it’s because there’s still confusion whether the products are legal or not.
This week Brain Seamonson, owner of the Hemp House in Deerfield, was notified by his credit union it will no longer accept him as a customer. Seamonson provided 27 News with a copy of the letter sent to his wife, which states the financial institution “does not provide accounts to anyone whose primary business involves marijuana, industrialized hemp, CBD oil, etc.”
“It’s extremely frustrating. We’re not doing anything illegal. The credit union said they know we’re not doing anything illegal; it’s just a lot of confusion on the federal level,” said Seamonson. “It makes it difficult for us because we’re here trying to help people.”
27 News has verified the letter is from a local financial institution but declined to share the companies information until we hear back from them.
Under the 2018 Farm Bill, the regulation of production and possession of hemp under federal law was reduced. Prior to the passage, Wisconsin launched a pilot program in 2017 which allowed those with a permit grow, produce and distribute CBD.
Senator Patrick Testin (R-Stevens Point) helped launch the industrial hemp pilot program in Wisconsin. He said it’s not the first time he’s heard CBD businesses having problems finding a bank to take their money.
“I think as more and more people get involved in the program it’s going to generate to financial institutions that here’s an opportunity to get more customers,” said Testin. “We’re continuing to educate banks and credit unions to make them aware that this is now legal and they’re free to do so.”
The owners of Enlightened Alchemy, Hemp Haven Farms, and Quality CBD told 27 News they were also denied accounts from their financial institutions. All found another bank or credit union, but Enlightened Alchemy owner Trevor Becker fears he could be denied at any moment.
“We were lucky at first to find another bank after another dropped us, but it could happen again,” said Becker.
Seamonson says the process to find another financial institution can take weeks.
“That’s what makes it troublesome for us. Our only option now is to take cash, which makes it difficult for everyone,” he said. “The last thing we want to be doing is walking out of our store with a bunch of cash and now we have nowhere to put it.”