CannaTrac CEO on Federal Agencies’ Relaxed Financial Services Rules for Hemp-Related Companies
December 23rd, 2019
App, Exclusive, News, Top News
To say finding financial services has been difficult for cannabis and hemp companies in recent years is a gross understatement. For many, even understanding regulations has been arduous at best. A lack of continuity in regulations between states and federal laws has traditional banks steering clear of the industry for fear of backlash, but that doesn’t need to be the case with the new hemp laws, according to the industry financial services experts at CannaTrac Technology.
In December 2018, the Agriculture Improvement Act of 2018 (aka 2018 Farm Bill) was signed into law, legalizing hemp at the federal level at the start of 2019. Still, banks remained distant and cautious because of murky regulations. Earlier this month, five government agencies unitedly clarified policy for financial institutions with regards to hemp-related businesses.
“They’ve removed some of the archaic processes for banks in tracking accounts for companies dealing with hemp,” said Thomas Gavin IV, Vice Chairman and CEO of CannaTrac, in a phone conversation with CFN Media. “Now that hemp is no longer federally scheduled alongside marijuana, some requirements have been eased, which is terrific for our industry.”
CannaTrac specializes in financial services in the cannabis/hemp space. The Chicago-based company offers a suite of services for financial institutions as well as its industry-leading cashless mobile payment systems solution branded CannaCard that benefits retailers and consumers alike.
Why the Hesitancy for Banks?
Although they look essentially identical, hemp and cannabis have a major differentiating factor. Specifically, hemp is a non-intoxicating version of Cannabis Sativa, meaning that it contains zero to negligible amounts of THC, the compound in cannabis responsible for the “high.” Having no psychoactive effect along with many industrial, cosmetic and potential medical uses underscored hemp being removed as a Schedule I drug under the Controlled Substance Act with the passage of the 2018 Farm Bill.
While cannabis is legal in 33 U.S. states and Washington, D.C. for either medical or recreational uses, it remains a Schedule I narcotic and illegal at the federal level. The federal designation means that the majority of banks don’t want to touch money stemming from cannabis operations.
Hemp being a cousin of cannabis has muddied the situation for banks there also. Without traditional banking services, companies operating in either the hemp or cannabis markets (or both) have been forced into all-cash models.
This is a highly inefficient and unsafe practice that companies have been coerced into.
Apropos, a partnership between Pacific Banking Corp and CannaTrac addresses this obstacle by allowing licensed retailers to apply for the CannaCard system and traditional banking services at the same time.
What the Agencies Said
On December 3, the governing bodies looked to provide some clarity about changes in banking services with the 2018 Farm Bill. In a statement, the group – consisting of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency and the Conference of State Bank Supervisors – did just that, writing:
“Because hemp is no longer a Schedule I controlled substance under the Controlled Substances Act, banks are not required to file a Suspicious Activity Report (SAR) on customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”
The agencies also said that it remains up to a state’s or tribal government’s discretion to allow hemp operations regardless of the legal federal status.
Rob Nichols, President of the American Bankers Association, applauded the regulatory guidance, calling it “long-sought” while particularly pointing out that the onus for complying with regulatory requirements is on bank customers in the hemp industry and not the bank serving those customers.
“Effectively, hemp-related companies aren’t being singled out anymore,” said Gavin. “To that point, financial institutions from the Fed’s purview can service these companies and need only to act in accordance with policies that they would for their other customers as allowed by local laws.”
The guidance further made it clear that all federal regulations regarding marijuana businesses have not been affected in any manner and that all policy outlined in prior years remains intact with cannabis remaining a Schedule I drug.
Most strongly believe that someday there won’t be an all-cash model for marijuana companies, whether it comes in the form of new banking laws, de-scheduling of cannabis or outright legalization of the plant. It’s going to be a slow change, considering it took nearly a year for some clarity on financial services in the hemp space.
Currently, CannaTrac stands head and shoulders above the crowd with its CannaCard system and is being rolled out in states where marijuana is legal, including the massive California market. The company is in the process of a $15 million capital raise to fuel its tremendous growth opportunity in the US and internationally, as it prepares to become a publicly traded entity.
“While we are a leading player in the cash-only cannabis world today, we’re also thinking three steps ahead,” commented Gavin. “We have our model competitively priced with today’s conventional card services, which will give us an edge as the established name brand in the business when full marijuana legalization occurs in the future.”
In the face of an industry-wide shakeup, the outlook of the cannabis financial markets remains positive according to some industry experts. Take Terry Patton, Founder and Chairman of CannaTrac, a financial markets veteran, for example. He agrees wholeheartedly with Danny Moses of The Big Short who was quoted in a recent interview as saying “I‘ve never seen a sector have the political tailwinds, the economic tailwinds, and the wellness tailwinds that this sector potentially has…” Patton further added, “In my years of experience, when people are flocking out of the market, this has often been the greatest opportunity for the steadfast investor to take advantage of lower price points of entry in growth companies to accumulate wealth.”
CannabisFN.com is not an independent financial investment advisor or broker-dealer. You should always consult with your own independent legal, tax, and/or investment professionals before making any investment decisions. The information provided on https://www.cannabisfn.com(the ‘Site’) is either original financial news or paid advertisements drafted by our in-house team or provided by an affiliate. CannabisFN.com, a financial news media and marketing firm enters into media buys or service agreements with the companies that are the subject of the articles posted on the Site or other editorials for advertising such companies. We are not an independent news media provider. We make no warranty or representation about the information including its completeness, accuracy, truthfulness or reliability and we disclaim, expressly and implicitly, all warranties of any kind, including whether the Information is complete, accurate, truthful, or reliable. As such, your use of the information is at your own risk. Nor do we undertake any obligation to update the items posted. CannabisFN.com received compensation for producing and presenting high quality and sophisticated content on CannabisFN.com along with financial and corporate news.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
Follow Us on Social Media
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.