WAUKESHA — The 2018 Farm Bill
was the catalyst for the CBD craze across Wisconsin in 2019, but
local CBD businesses now face a set of new challenges with some
banking institutions closing their accounts.
Beyond Full Spectrum, a CBD business in downtown Waukesha, is now on
their second bank account, said Michelle La Count, coowner of Beyond
Full Spectrum. After having an account with Summit Credit Union for
several months, Beyond Full Spectrum was informed their account
would be closed.
In a statement to The Freeman, Summit Credit Union CEO and President
Kim Sponem explained their decision to close Full Spectrum’s account
and called for more clarity in state and federal financial
institution laws before opening accounts for a business selling CBD.
“Summit Credit Union has always championed the small business and
entrepreneurs throughout the communities we serve. 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 announced Friday
they will only accept cash transactions for the foreseeable
future, as credit card processors are also pulling out of the CBD
industry, said Aleksandr Gerasyuta, co-owner of Beyond Full
Spectrum. The business 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, Gerasyuta added.
The USDA has not yet issued guidelines on how to regulate hemp or
CBD. However, the sale and production of hemp and CBD is allowed in
Wisconsin without USDA approval because the state was approved to
launch the hemp research pilot program, which would be grandfathered
into federal guidelines.
States will be able to operate hemp pilot programs until either the
USDA grants states regulatory authority over hemp production or
until federal law repeals pilot programs, according to a Wisconsin
Legislative Council Act Memo.
La Count and Gerasyuta say the banking troubles have been
frustrating, especially since they know from a legal standpoint
they’re complying with state regulations required to sell CBD.
“We know what we’re doing is completely acceptable and it falls
within all of the parameters,” La Count said. “It’s a bit of a
pickle, but I think we'll have it all squared away pretty quickly.”
Lake Country CBD owner Brett Klug said his business is also
experiencing the same challenges, but as customers come in seeking
CBD as a holistic remedy for their ailments, he remains hopeful, he
“The more people that share their success stories, the more people
that are going to use it,” Klugg said. “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.”
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 percent 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.
Although regulations for credit unions and banks differ, Wisconsin
banks are facing similar challenges when servicing businesses in the
Banks must comply with several federal guidelines, some of which are
not clear when it comes to bank accounts for CBD businesses, said
Scott Birrenkott, assistant legal director for Wisconsin Bankers
Association “We’re looking at a situation where the government is
going to come into the bank and look at these files, but the banks
don’t know what to be prepared for because they haven’t told them,”
However, banks are also hesitant to open accounts for CBD or hemp
businesses because some banks may be unfamiliar with the industry,
“This is very new and a very complex issue,” Birrenkott said. “There
might be growers, processors and retailers that understand and know
this industry very well, but it’s new to the financial industry.”
But despite the confusion, Birrenkott said there are banks that are
interested in learning more about how to serve customers with CBD
businesses, and the WBA has been educating members by providing
webinars and seminars on CBD and hemp, Birrenkott added.
“Banks really do want to help their customers, but at this point,
they’re just asking questions and trying to learn,” Birrenkott said.
“Until they have all these answers and the guidelines, they’re going
to keep asking their questions.”
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