Los Angeles CBD business lawyer - Cannabis Law Group

Hemp, CBD and Banking: An Ongoing Struggle for L.A. Cannabis Companies

Cannabis Law Group — Wed, 19 Jun 2019 15:37:21 GMT

California hemp and CBD businesses continue to struggle with the lack of access to banking – despite removal from the list of U.S. Controlled Substances Act by the 2018 Farm Bill. As Los Angeles CBD business attorneys can explain, federal lawmakers expressly called for businesses selling CBD and industrial hemp products to be treated as any other legitimate, lawful business. But that isn’t happening.

We can thank the lack of clear federal banking law and the reticence of financial institutions. Worse is that ramping up access to these critical business services appears to be happening in fits-and-starts.

This regulatory gray area has caused all kinds of headaches. CBD companies will have access to things like processing of credit card processing one day and the next, the institution has changed its mind, leading to a host of practical problems for businesses in terms of customer satisfaction but also just practically tracking expenses.

Baking Confusion Over Hemp, CBD

Recently, the American Bankers Association (ABA) submitted correspondence to federal regulatory agencies overseeing finance to request additional clarification on when/how banks can service businesses that sell hemp and hemp-derived CBD products.

In the association’s letter, it was stated that financial institutions want to serve legal businesses in support of local economies, but require more unequivocally clear direction and assurance from the federal government that hemp and CBD businesses are distinguished from cannabis companies under federal law. Otherwise, they fear they may be subject to harsh penalties under civil and and criminal law as well as regulatory sanctions.

The letter further sought confirmation that CBD and hemp are no longer deemed controlled substances under the law for purposes of requiring financial institutions to file suspicious activity reports, as they are required to do if/when servicing businesses that sell cannabis and related products.

It should be noted that both Sens. Ron Wyden, D-Oregon and Mitch McConnell, R-Kentucky, submitted letters to four major federal banking agencies asking that they open the door to financing and processing services for hemp and CBD businesses.

The senators sent those letters to the Office of the Comptroller of the Currency as well as the Farm Credit Administration, the Federal Reserve System and the U.S. Federal Deposit Insurance Corp. (better known as the FDIC). In their letters, Wyden and McConnell underscored that hemp was legal post-2018 Farm Bill. They specifically sought guidance from these agencies, urging them to help ease whatever concerns banks and other financial services providers may have in catering to hemp farmers, CBD product manufacturers and sellers. They stated point-blank that hemp and CBD companies are to receive equal treatment and that discrimination against them is not the intention of the legislature in passing the 2018 Farm Bill.

Although the FDIC has yet to respond directly to these letters, the agency head did tell members of the U.S. House and Financial Services Committee last month that it is conducting extensive training and that examiners with banks should know understand that hemp and its derivatives are legal and thus purveyors should have access to banking services.

Additionally, as our Los Angeles CBD business attorneys can explain, a memo from 2014 from the FinCEN reportedly already sets forth a guideline for how banks can serve BOTH marijuana and hemp clients (if and when the products became legal).

Hemp and CBD Entrepreneurs Feel Unfairly Jilted

Numerous hemp and CBD companies in California and throughout the U.S. say their understanding was that with the 2018 Farm Bill passed, they’d be able to sale through the regulatory and banking process necessary to truly get operations off the ground. That hasn’t happened.

In fact, some even report being instructed to lie on their applications in order to get them approved. This is almost never recommended. Before taking any such measure (which could result in both criminal and civil penalties) we recommend a thorough discussion with an experienced Los Angeles CBD business lawyer.

We understand that the inability to access banking services for many means they are stuck, unable to truly launch their businesses, sometimes with thousands of dollars of hemp and CBD products at risk of expiration.

CBD companies facing some of the most significant challenges are those that sell their products online through e-commerce. Fast and efficient e-commerce requires online payment processing. Most medical marijuana dispensaries that sell cannabis and CBD allow the products to be ordered online, but payment is processed in-person to delivery personnel – and in-cash.

But considering CBD and hemp at least are now legal under federal law, there is no reason for this, and it puts businesses that choose to be above-board at a significant disadvantage.

Business owners that sell hemp and the CBD derived from it say they are grateful for the additional input in stressing the legality of their products, but are frustrated that so many banking institutions continue to drag their feet on this critical issue.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Acknowledging hemp ‘uncertainty,’ FDIC chief says banking rules sufficient, May 20, 2019, Hemp Industry Daily

New “Magic Beans”? Jelly Belly Inventor Releases CBD-Infused Line

Cannabis Law Group — Mon, 01 Apr 2019 15:40:27 GMT

The inventor of Jelly Belly jellybeans, through his new brand Spectrum Confections, now offers a line of the confection that comes infused with cannabidiol, or CBD. But whether these beans prove “magic” for the company’s sales, they definitely won’t get you as high as giant beanstalk. Los Angeles CBD business lawyers know the real question is whether the company will be able to legally sell them, even in states like California where marijuana is legal for recreational users.

The Skinny on CBD Food and Drinks in California

Although California regulators have deferred to the U.S. Food & Drug Administration’s hard-line stance on CBD as a food or supplement additive (underscoring the prohibition on CBD-laced foods even after the passage of the 2018 Farm Bill, which legalized industrial hemp), there are indications we could soon see a shifting tide. In February, the FDA commissioner told Congressional leaders the agency may consider eventually allowing food infusions of diluted CBD with low-THC (tetrahydrocannabidinol – the cannabis compound with psychoactive effects). There is no guarantee on when that might be, though.

A more recent amendment of AB-228 in California opened the door slightly to sales of CBD food products, so long as the CBD was hemp-derived (as opposed to cannabis-derived) and had been fully licensed and regulated throughout the California cannabis supply chain. Other states have set forth their own CBD food and drink regulations.

Although enforcement of federal regulations pertaining to CBD products hasn’t appeared to be a top priority for many agencies, that’s not to say that couldn’t change at the drop of a dime until there is formal protection under the law. That’s why any company producing or selling/marketing CBD-laced products should discuss the existing (and seemingly ever-evolving) regulations with a Los Angeles CBD business attorney.

CBD Jelly Beans Just the Latest – and Unlikely the Last

Jellybeans were widely known to be the favorite of late President Ronald Reagan, though given his strict “Just Say No” stance on all drug use, we can’t say he’d have been all that enthusiastic about the CBD-laced version in the candy dish.

On the other hand, CBD lacks the same sort of psychoactive “high” that one derives from other products containing higher levels of CBD. Plus, it has a number of purported health benefits, helping with everything from anxiety to epilepsy (the latter formally approved by the FDA). Many selling CBD-infused products for recreational users tout its relaxing effects, as well as its purported effectiveness with post-workout healing and general mental wellness.

The new line of CBD jelly beans come in an array of three dozen flavors, the sweetness masking the 10 mg of CBD contained in each one.

They also are not marketed to children. The company requires users be at least 18 to purchase them. Most children won’t have the means to purchase them anyway, as an 800-piece bag sells for $600.

Will CBD Jelly Beans Cause a Drug Test Fail?

CBE is a chemical compound that can be derived either from hemp or cannabis that can be extracted into an oil. Per the U.S. Centers for Disease Control and Prevention, it is not a compound that will make a person “high” because it impacts different nervous system parts than THC.

Genuine CBD oil should not result in a failed drug test, but there is a possibility if there is cross-contamination with THC. It’s important for individuals who need to pass a drug test for work to conduct research on the CBD product of purchase to ensure the product is pure.

The CBD jellybeans are produced not to include THC, according to the manufacturer.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

No, CBD-infused jelly beans definitely won’t get you high. Here’s why, March 18, 2019, By Eli Rosenberg, The Washington Post

More Blog Entries:

California Closer to Allowing Food Containing CBD, March 25, 2019, Los Angeles CBD Business Attorney Blog