New York Governor Andrew M. Cuomo has directed the state’s Department of Financial Services to advise the local finance sector on how to support banking services for medical cannabis and industrial hemp businesses.
While the Governor has been very active in supporting both industries while in office, cannabusinesses have still been experiencing problems with accessing services from financial institutions. This is because cannabis is still listed on Schedule I under the Federal Controlled Substances Act. With regard to industrial hemp specifically, while the cultivation, marketing and sale of the crop is legal under both Federal and New York State law when carried out in connection to research purposes, the Schedule I confusion remains a problem*, scaring banks away.
As in other states, many New York cannabusinesses have had to rely on cash transactions, which as well as being inconvenient also pose a significant security challenge. Cash intensive businesses and their suppliers, employees and customers have an increased risk of being targets of criminals.
“The ability to establish a banking relationship is a challenge that legal industries face unlike no other,” Governor Cuomo said. “As the federal government continues to sow discord surrounding the medical marijuana and industrial hemp businesses, New York has made significant progress in creating a supportive economic development and regulatory landscape for these companies.”
The Department of Financial Services has told New York’s chartered institutions it will not impose any regulatory action on any state-chartered bank or credit union for establishing a banking relationship with a medical marijuana-related business that operates within the law in New York, assuming certain requirements are met. Additionally, the DFS has encouraged New York State-chartered banks and credit unions to support the development of the state’s industrial hemp sector.
“DFS stands ready to work with our chartered institutions to assist them in moving forward towards helping New York’s medical marijuana and industrial hemp businesses operate in a safe and sound manner,” said Financial Services Superintendent Maria T. Vullo.
Lieutenant Governor Kathy Hochul said the Federal Government was ignoring the benefits of medical marijuana and industrial hemp, and that the guidance will go a long way to supporting both sectors.
A copy of the guidance can be viewed here.
* This may soon be solved if the Hemp Farming Act of 2018 is passed as it specifically removes industrial hemp from the federal list of controlled substances. The Bill for the Act, included in the Agriculture Improvement Act of 2018 (Farm Bill), was passed by the U.S. Senate earlier this month.