Last updated on February 20th, 2021 at 02:39 am
The new year could bear more banking opportunities for Wisconsin hemp-related businesses, a Wisconsin Bankers Association survey suggests.
About 48% of bank survey respondents who aren’t currently banking hemp-related customers said they will extend services to hemp businesses in 2020, according to the WBA’s Bank CEO Economic Conditions Survey.
The annual survey, which was conducted in the first two weeks of December, asked 85 bank CEO’s three hemp-related questions in addition to more traditional economic inquiries, according to a press release.
Approximately 38% of responding Wisconsin banks are accepting deposits from hemp related banks while only 15% of responding banks are lending to hemp-related businesses.
However, a lack of participation by banks could also be due to demand – several participating bankers shared they haven’t had any hemp businesses request services, according to a press release.
Earlier this month, four federal regulatory banking agencies issued guidance to clarify what obligations banks have when serving customers selling hemp-based products. Many state and federal banks were waiting for such guidance before offering services to hemp-related businesses.
Opinion among banks with WBA membership seems to have shifted since 2018, which was the year the 2018 Farm Bill established hemp as a legal agricultural commodity.
A 2018 WBA survey posed the question: “If the 2019 Farm Bill changes the federal view of hemp, will your bank actively seek to provide loans to industrial hemp farmers and/or processors in Wisconsin?” Of the 95 survey participants, 83% replied “no.”
It’s also true that banks must know their customers before making decisions, which is no different when it comes to banking customers from any given industry. Since the hemp industry is so new to the state, banks still have questions about the crop including cost, price, yield, returns, contracts and markets.
“The reality is that hemp is a very new and complex issue from both a regulatory and business viewpoint,” said Rose Oswald Poels, WBA chief executive officer.
Some local hemp businesses are optimistic with the recent guidance from federal regulators. However, others expect a significant lag time as banks react to a new and quickly- evolving industry.
As the industry grows services like PureHempFarms puts out the data needed for businesses and bankers alike to make decisions will increase and become easier to navigate both from a regulatory and operational viewpoint, Oswald Poels added.
“We really encourage the public to keep reaching out to bankers until they find the right fit,” Oswald Poels said.