Dubbed the SAFE Banking Act, the bill was introduced by Rep. Ed Perlmutter, D-CO. The bill will allow companies dealing in hemp or hemp-derived CBD products to use financial institutions that are part of the FDIC (Federal Deposit Insurance Corporation). The bill now goes to the Senate.
As one of the first states to both pass medical marijuana laws and legalize full recreational use, Colorado has been at the forefront of the CBD boom.
In the early days of the cannabis business in Colorado, as elsewhere, companies were forced to deal in cash, because no FDIC bank would agree to accept such deposits. That led to obvious difficulties, including the need to have armed guards on site.
That has changed to some degree, and some financial institutions have taken such deposits in recent years. But it’s a patchwork quilt, and one that is rapidly changing, as some credit card payment processors have abruptly shifted course and have stopped processing such payments when they had previously been doing so. Earlier this year online seller Thrive Markets was forced to suspend sales of hemp products as a result while it sought a different payments processor.
Regulatory clarity still needed
The new bill is a boon for companies trying to comply with regulations, such as they are. A number of CBD companies hawk the fact that their products are made in GMP compliant facilities, and that their products pass rigorous tests.
But all of that exists within the confounding fact that as far as the US Food and Drug Administration is concerned, CBD is still an illegal dietary ingredient. So Daniel Fabricant, PhD, president of the Natural Products Association, said that while having the banking bill advance another step in the legislative process is a good thing, there is still a long way to go.
“This is a win for legitimate businesses who are selling CBD products, but the bottom line is it doesn’t change the fact that congress needs to direct FDA to set a safe level of consumption for CBD,” Fabricant said.
“We will continue to work with the House and Senate to ensure that consumers have the information they need to make informed decisions about their health, especially when it comes to the fast-growing CBD marketplace,” he added.
FDA has said that it plans to make an announcement about the regulatory path forward for hemp and hemp-derived CBD products sometime this fall. The agency has also received a letter for Senate Majority Leader Mitch McConnell (R-KY) demanding that FDA issue a formal declaration on enforcement discretion within 120 days.