A recent advisory memo from a federal financial regulatory agency is causing a stir among some legal hemp companies, who say they’re concerned the advice will make it more difficult to obtain business loans to expand and stay competitive in the growing national market.
The Farm Credit Administration (FCA) issued the informational memo on July 12, addressing financial institutions that are considering whether to extend credit to hemp producers and processors. In it, Kevin Kramp, the director of the agency’s Office of Regulatory Policy, outlined a number of issues lenders should examine when weighing financing decisions.
Of particular note to many currently operating companies, Kramp implied that lenders not make loans to hemp growers unless they’re enrolled in a state system that’s been approved by the U.S. Department of Agriculture (USDA). Under the 2018 Farm Bill, which federally legalized hemp—a category of cannabis containing a concentration of less than 0.3 percent THC—states are required to submit their regulatory plans to USDA for approval.
“If your institution decides to proceed with financing hemp, you should consider collecting, analyzing, and documenting the following information from each applicant,” the memo advises. First on the list is a “copy of the USDA-approved plan issued by the state or tribe.”
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