Banking in any industry is no joke, and more times than not it can be extremely confusing and difficult to navigate. When it comes to banking in the hemp industry, the extremely confusing can turn into almost impossible to understand but luckily we have a banking expert on our side. Our co-founder and Chief Glow Officer, Rochonne Sanchez, recently quit her 9-5 at a major national bank where she was in charge of high-risk assets in the hemp/CBD industry, so she knows what she’s talking about when it comes to navigating the banking landscape. In this article, she breaks it down about everything you need to know when it comes to banking in the hemp industry.
Banking in the Hemp Industry: Rochonne’s Take
Having spent 15 years working in banking on behalf of mid sized, high risk companies I know a thing or three about why a bank would or would not choose to engage in an industry they considered high risk. When the Farm Bill was passed in 2018, I recognized an opportunity for larger financial institutions, the ones that were federally chartered and dealt with a different set of regulations, to find a path for safely banking in the burgeoning hemp industry.
I’d like to pretend that tackling this issue, of easily accessing basic banking services for hemp companies, was an easy one. That the very clear distinction between marijuana and hemp would ensure secure and immediate access, however as anyone working in conjunction to hemp - even if they weren’t touching the plant in any way - can attest the blanket term of cannabis was a giant red flag to almost every bank.
Banking in the hemp world is a daily adventure in transaction monitoring, asset management, and education. The banks engaged in this space are up against intense regulatory scrutiny that doesn’t allow for certain transactions to clear their institutions and the ones in proving to regulators that the transactions they are facilitating are allowable under the law falls squarely on their shoulders. This means that running a hemp program is expensive and requires employees to have intimate knowledge of hemp related operating cycles.
When you find the bank for you that is willing and able to offer financial services to your hemp/CBD company you can expect an intense review process in order to be approved for onboarding.
You’ll like be asked for things like:
- Disclosure of and background checks for owners that hold more than 10% of the company
- A detailed business plan including who you plan to sell to and where you intend to get your product from
- All state required licenses for your business activities from the state you operate in
- A COA for every single product you work with - it doesn’t matter where in the supply chain you fall, they’ll want to see third party proof that you are NOT working with anything above a total THC content 0.3%
And honestly the list goes on. Being approved for banking services is just the beginning. Your bank will likely recertify your company every 6 to 12 months and they’re reviewing your transactions, website, mentions in the media, and your marketing to ensure that how you represented yourself to them is how you’re representing yourself to the public.
This can all seem intense and I’m sure to some, unnecessary, but the reality is that banks are still working to fully understand the hemp industry and the risk associated. The more transparent and forthright we are with our financial operations the more secure they become in their risk assessment and the more allowances are made. Changing anything in the financial industry is akin to turning the Titanic. It will happen, but it won’t happen quickly, no matter how much we want it to.
About Eossi Beauty
Eossi Beauty embraces the power of clean and pure botanicals. Derived from nature, our uniquely effective beauty products are created by two women driven by one purpose: to make life brighter—because we all deserve to feel as good as we look, naturally. Our affordable products are carefully formulated with sustainably sourced and thoroughly vetted ingredients, such as plant-based essential oils and broad-spectrum hemp cannabinoid oil that’s independently lab tested for quality and purity. Every day, our founders Shannon and Rochonne are living the Eossi Beauty ethos: create your own dynamic energy, cultivate love, and let your beauty shine.