Since industrial hemp is excluded by the DEA from the definition of marijuana in the CSA (Controlled Substances Act), any product derived from industrial hemp would be considered legal (including cannabinoid products such as CBD) as long as it is compliant with the Federal Agriculture Act of 2014 (Farm Bill). This bill authorizes research and cultivation but not retail sales in states where hemp production is legal.
CBD is legal and sold by both licensed and unlicensed enterprises in states where medical and/or recreational marijuana is legal. Outside of these, many states have legalized CBD often with restrictions.
Further, since both the DEA and the FinCen division of the US Treasury Dept consider CBD produced and sold outside the guidelines of the ‘Farm Bill’ to be a CSA Schedule 1 substance and therefore federally illegal, a financial institution providing a bank account to an unlicensed CBD producer, distributor or retailer is obliged to file a ‘Suspicious Activity Report’ (SAR) at regular intervals to alert law enforcement to the illegal activity. With all this swirling legal ambiguity and confusion, banks which were already generally unwilling to welcome any kind of marijuana related businesses are even more unwilling to touch CBD enterprises of any kind.
CBD operations whose apparent business or profession is not cannabis-related have often opted not to disclose the CBD part of their business and may be able to avoid detection by the bank or merchant processor for a while depending upon the extent of their public profile in the industry. However even in these instances, banks under pressure from regulators are taking advantage of ever more rigorous software and detection tools now available to more effectively detect and identify this unwanted activity.
Of course, those ancillary providers of goods and services who advertise or disclose their CBD related activities are at much greater risk, especially now, of having their accounts closed. Depending upon one’s public profile, it’s likely CBD operators masking the nature of their business risk the continuing harassment of having their accounts closed several times a year.
FINCANN now offers transparent, compliant 100% US-based MasterCard, Visa, Amex, and Discover merchant processing at competitive rates! FINCANN can provide stable, transparent, compliant US banking for any CBD operator. It will cost a little more than a ‘covert’ account, but for most folks, it’s well worth the peace of mind. Generally, there is an initial application fee of around $500, a modest advisory fee and ongoing account maintenance fees of between 0.2% - 0.35%.