The move was welcomed by the state’s credit unions. “It’s an issue that’s been extremely important to our association and its members,” says Michael Lieberman, VP of governmental affairs for the New York Credit Union Association. The announcement was the culmination of several months of work, he added. It fits with state efforts to promote […]
The move was welcomed by the state’s credit unions. “It’s an issue that’s been extremely important to our association and its members,” says Michael Lieberman, VP of governmental affairs for the New York Credit Union Association.
The announcement was the culmination of several months of work, he added. It fits with state efforts to promote medical marijuana and industrial hemp as industries in New York.
More than 60 farms and businesses have research permits under the state’s Industrial Hemp Agricultural Research Pilot program. Eighteen New York companies have registered to process industrial hemp.
State figures show that some 3,500 acres of farmland were approved for hemp research across the state this year. That is up 75 percent from last season’s 2,000 acres.
In 2017, New York State launched a
$5 million Industrial Hemp Processors Grant Fund to improve hemp processing and support business development. The program helps cover capital costs related to industrial-hemp processing including new construction and the purchase of equipment, the state says.
In January, the state also invested $650,000 through the Regional Economic Development Councils to establish a
$3.17 million industrial-hemp processing facility in the Greater Binghamton area. Southern Tier Hemp, the company leading this effort, develops, manufactures, and sells hemp-based health products using a proprietary method of extraction.
According to Lieberman, the DFS’s announced new policy will make it easier for financial institutions to establish relationships with companies involved in medical marijuana and industrial hemp industries because they needn’t fear state prosecution. “Providing they are doing what they are supposed to be doing,” he quickly adds.
In making the announcement, state officials stressed that the relaxed policy applies only to businesses that are in full compliance with state laws and made it clear banks and credit unions have a responsibility to check on that.
“The DFS guidance provides that any institution that seeks to provide financial services to entities that are or wish to be engaged in the growing or cultivation of industrial hemp should assess and verify the eligibility and authority of the entity for participation in a research program, as authorized under the New York Agriculture and Markets Law,” the state said in a release. “As with any other lending activity, DFS’s guidance says that banking institutions should establish and conduct appropriate underwriting and customer due diligence, including verification of eligibility of a research program and other requirements of federal and New York State law.”
Marijuana remains a controlled substance under federal law, creating complications for some financial institutions. That situation prompted a cooler response to the DFS’s changed policy from Michael P. Smith, president and CEO of the New York Bankers Association.
“The decision whether or not to accept any business customer — including medical marijuana-related businesses — rests with each individual New York State-chartered financial institution, based on its own risk assessment and business plan. In this regard, federal law continues to classify marijuana as illegal to produce, possess or dispense,” he said in a statement. “As a result, New York banks have historically been reluctant to enter this line of business.”
Lieberman doesn’t disagree. “Ultimately this is a federal issue that will require federal regulation,” he says.
“We don’t have a position on whether marijuana should be legal. We do believe where it is legal, credit unions should be able to serve the industry without fear of prosecution,” he adds.