New BSA guidance on USDA’s hemp regulation
Greetings Compliance Friends!
A few weeks ago, we provided an update on the Marijuana Banking Landscape, including NCUA’s recent Regulatory Alert 19-02 which reaffirms credit unions’ authority to serve lawful industrial hemp businesses and provides a Bank Secrecy Act (BSA) framework for hemp banking. Since this time, the U.S. Department of Agriculture (USDA) has issued an interim final rule establishing a regulatory regime for domestic hemp production. In light of these developments, NAFCU expects NCUA to update its guidance at a future time. Until then, recent joint guidance from financial regulators may help credit unions further develop their BSA/AML compliance program if making the business decision to serve hemp-related businesses.
The USDA’s Interim Final Rule
As a refresher, hemp is defined as the plant cannabis sativa and any part or derivative of that plant with a delta-9 tetrahydrocannabinol concentration (THC level) of not more than 0.3 percent. The THC level is what separates hemp from marijuana, and a THC level at or below 0.3 percent does not cause an intoxicating “high” effect. The cultivation of hemp was fully legalized under the Agriculture Improvement Act of 2018 (2018 Farm Bill) which distinguished hemp from the definition of “marihuana” under the Controlled Substances Act of 1970 (CSA). A few years prior, the Agricultural Act of 2014 (2014 Farm Bill) permitted hemp production where authorized through a state or tribe’s research and development pilot program. The 2018 Farm Bill extends this authorization, providing states and tribes the option to regulate hemp production within their borders. The law also requires USDA to establish procedures for approving state or tribal plans and for regulating lawful domestically-produced hemp in states or tribes without a USDA-approved plan.
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