Letter offers more guidance to credit unions in serving hemp-related businesses

A list of 17 “frequently asked questions” about credit union service to legal hemp-related businesses is the focus of a letter to credit unions from their federal regulator issued Tuesday.

The letter (20-CU-19), issued by the National Credit Union Administration (NCUA), is intended to provide additional information to credit unions that are serving or considering serving legal hemp-related businesses, the agency said.

Nearly a year ago, the agency said (in August 2019), it released a “regulatory alert” outlining legislative changes that changed the status of hemp under federal controlled substances regulations. The alert provided guidance to credit unions related to that status change.

In particular, the agency said the change meant credit unions would be able to provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp-related businesses within their fields of membership. “The information in this alert is intended to help credit unions better understand what they should consider in providing financial services to lawfully operating hemp businesses,” the guidance stated at the time.

The FAQs released Tuesday outline some specific issues related to the law’s implementation for credit unions serving the hemp businesses.

For example, the FAQs point out that the interim rule issued by the Agriculture Department (USDA) does not mean that hemp may be legally produced in every state. “The 2018 Farm Bill did not preempt state or tribal laws regarding the production of hemp that are more stringent than federal law,” the letter states. “Further, hemp may be produced only under the 2018 Farm Bill with a valid USDA-issued license or under a USDA-approved state or tribal plan.”

More directly related to credit unions, the FAQs note that NCUA examiners in 2020 will be covering hemp. The examiners, the agency said, “will be collecting data through the examination process concerning the types of services credit unions are providing to hemp-related businesses. This data collection is intended only to help the agency better understand how it can assist credit unions serving hemp-related businesses.”

The letter also pointed out that credit unions do not need to file marijuana-related suspicious activity reports (SARs) on legally operating hemp businesses. That is, as long as the credit union “reasonably believes” the businesses are operating lawfully and the activity is not unusual for that business.

“Credit unions must remain alert to any indication an account owner is engaging in illicit or unusual activities and should follow current FinCEN guidance for filing regular SARs when they suspect the business is engaging in illicit, suspicious or unusual activity,” the letter states.

Other specific credit union-related issues covered in the letter included:

  • Issues credit union boards should consider when evaluating whether to provide services to a hemp business;
  • Whether a credit union may provide loans to a hemp-related business;
  • Expectations of a credit union to ensure the hemp business it lends to is operating lawfully.

NCUA LTCU 20-CU-19: Additional Guidance Regarding Servicing Hemp-Related Businesses