Delta-8-THC and Cannabis Banking: What Do We Know – Or Don’t Know?

Cannabis banking is complicated enough on the surface, between navigating the distinction between hemp and marijuana and the tension between federal and state laws. However, when you look closer at some of the more niche sectors of the cannabis industry, such as the less-intoxicating delta-8-THC distillate being produced by some extractors, things become even more convoluted. Read on to learn more about delta-8-THC and where the businesses that sell it fall in the labyrinthian world of cannabis banking. 

What is Delta-8-THC?

Delta-8-THC is similar to the more renowned delta-9-THC but produces a less intoxicating experience. Delta-8-THC is one of the four most common cannabinoids – alongside THC, Cannabidiol (CBD), and Cannabinol (CBN). What makes it unique from Delta-9 THC is its legal status: delta-8-THC is not a Schedule I substance under the federal Controlled Substances Act (CSA). Therefore, extractors of both hemp and high-THC “marijuana” have taken to isolating delta-8-THC and producing manufactured products such as vape cartridges and tinctures, and some retailers have started to sell the hemp-derived varieties even in states where cannabis remains illegal.

Why is Delta-8-THC different from other cannabis products?

Market research suggests that demand for delta-8-THC products is growing quickly, making delta-8-THC the “fastest-growing product in the hemp sector.” Increased production driven by that demand has lowered prices for delta-8-THC products, making them more accessible. While sales remain small compared to CBD product sales, delta-8-THC is clearly an up and comer in the space.

However, the legality of delta-8-THC products isn’t entirely clear and largely depends upon how it was extracted. Delta-8-THC isolated from hemp plants (cannabis containing less than 0.3% THC) are generally considered legal, while that isolated from marijuana (containing 0.3% THC or greater) are generally considered illegal. Overall, though, few regulations exist around delta-8-THC.

The regulation of both delta-8-THC should fall under the purview of the U.S. Food and Drug Administration (FDA), an agency which remains so far behind on the development of CBD regulations that these businesses remain an uncertain risk for cannabis-friendly banks, even though the hemp from which CBD is derived is federally legal. As a result of the lack of regulatory guidance, it remains unclear from a banker’s perspective whether the sale of delta-8-THC or cannabis seeds is technically legal or, more importantly, a sustainable market to work with for the long-term.

Hemp-derived vs. marijuana-derived Delta-8-THC

Part of the legal ambiguity surrounding Delta-8-THC is that it can be isolated from both hemp and marijuana – that is, the two legal definitions of cannabis describing varieties containing less and more than 0.3% THC content, respectively. 

Hemp-derived Delta-8-THC is extracted from hemp plants, which are considered legal under federal law. Similarly, the cannabinoid can be extracted from marijuana plants, which are legal in some states but remain illegal under federal law. Proponents contend that Delta-8-THC is not a controlled substance under federal law and is therefore legal, however some government officials and members of law enforcement could beg to differ. 

Although there is a distinct lack of regulatory clarity around this question, the presumption is that marijuana-derived Delta-8-THC should only be handled by THC licensees because businesses that sell it could be considered “plant-touching” entities. This would mean they are subject to the anti-money laundering requirements banks adhere to and, without a THC license, would not meet the criteria. 

Hemp-derived Delta-8-THC, on the other hand, is generally considered a federally legal product available for interstate commerce, so long as those transactions occur in accordance with state laws. As a result, it is generally easier to find banking for hemp-derived Delta-8-THC than its marijuana-derived counterpart.

How does Delta-8-THC’s murky status affect banking?

As of March 2021, there are close to 200 cannabis-friendly banks providing checking accounts and merchant processing services for the cannabis industry, including some that will work with delta-8-THC products. However, much of the availability of this banking is because bankers aren’t particularly informed about this sector of the cannabis industry. At any moment, a bank could take a closer look, notice the vague and murky legal status of delta-8-THC, and decide that banking these products is too risky. This can lead to account termination, leaving a company high and dry. 

That’s why it’s most important to establish a transparent, open relationship with a cannabis-friendly bank that understands your business and wants to help you succeed. Finding these banks for mainstream cannabis businesses, like dispensaries or ancillary companies, is hard enough, but it can be even more difficult for niche businesses like extractors who sell Delta-8-THC or product manufacturers.

Not only do the typical consequences of lying to your bank about your business’s operations apply, delta-8-THC businesses are best served by establishing a trusted relationship with a cannabis-friendly bank today so they can educate them about the nature of their business and demonstrate that they are a good client to work alongside. That way, should the bank ever take a closer look at those sectors, the existing relationship could serve as the deciding factor in preventing an account termination.

Where can you find cannabis banking for delta-8-THC?

Cannabis-friendly banks typically don’t advertise in neon lights that they work with cannabis businesses. As a result, finding a cannabis-friendly bank can be difficult unless you know where to look. For many businesses, this has meant a vicious cycle of lying to a bank to secure a checking account, being uncovered as a cannabis business, losing their account, and finding a new bank to begin the process anew once more. 

This process is unnecessary, risky, and bad business in today’s cannabis banking environment. There is banking available to all sectors of the industry – including delta-8-THC and cannabis seeds – in all 50 states. There is no longer any reason to work with a bank that isn’t willing and eager to work with legally compliant cannabis businesses. But how do you find them?

Fincann has spent years establishing a network of trusted banking partners that are cannabis-friendly and fully compliant with federal regulations and anti-money laundering requirements. Not only can Fincann secure banking for your cannabis businesses, regardless of the sector you’re in, but can also provide merchant processing accounts that support legally compliant, transparent debit card transactions for cannabis businesses. 

Banking with Fincann means a 100% transparent relationship in which the bank knows everything about how your business operates, ensuring compliance and availing you to all the services a bank offers its clients. The future of cannabis banking is one based on trust and transparency, and we’ve worked hard to establish the network of cannabis-friendly banks needed to bring the industry out of the shadows. With Fincann, there’s no longer any need to hide your cannabis business from your bank.