U.S. Senate Minority Leader Charles Schumer (D–N.Y.) wants banks and other financial institutions to realize that the industrial-hemp industry is now legal and needs services “to better help it seed and grow across upstate New York.” Schumer explained that without access to traditional financial services, the industrial-hemp industry Upstate and in Cortland County is being […]
U.S. Senate Minority Leader Charles Schumer (D–N.Y.) wants banks and other financial institutions to realize that the industrial-hemp industry is now legal and needs services “to better help it seed and grow across upstate New York.”
Schumer explained that without access to traditional financial services, the industrial-hemp industry Upstate and in Cortland County is being “unfairly restricted, preventing further economic growth and the creation of good-paying jobs.”
Industrial hemp is from the plant species Cannabis sativa and has been used worldwide to produce a variety of industrial and consumer products., per the website of the Agricultural Marketing Resource Center (AgMRC). Ames, Iowa–based AgMRC provides “unbiased, science-based marketing information for U.S. farmers and ranchers,” its website says.
The 2018 Farm Bill legalized the production and sale of industrial hemp, removing it from the Controlled Substances Act, Schumer’s office said.
Standing at Main Street Farms in Cortlandville with growers, producers, and industry experts, Schumer discussed an effort to “iron out a thorny issue for the burgeoning industrial-hemp industry” in the region, his office said in an Aug. 12 news release.
Allan Gandelman, owner of Main Street Farms, joined Schumer for the senator’s remarks.
To address this issue, Schumer requested that the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) issue “expedient” guidance to financial institutions confirming the legality of providing services to the industrial-hemp industry.
Even though the 2018 Farm Bill — including Schumer’s Hemp Farming Act of 2018 — legalized the production and sale of industrial hemp, financial institutions have “continued to question” whether they can extend their services and products to industrial-hemp oriented businesses.
“The industrial hemp industry is seeding and growing all over upstate New York, with new businesses like Main Street Farms popping up left and right, which is why I fought so hard to strip the burdensome and outdated federal regulations from it by passing the Hemp Farming Act of 2018. However, if these businesses aren’t able to get financing from a bank or find a credit-card processor that doesn’t charge them an arm and a leg, none of that matters all that much,” Schumer said. “If the financial institutions aren’t given updated guidance by the major federal financial regulators clarifying the legality of industrial hemp, the industry in Central New York and producers like Main Street Farms will continue being tightly bound, prevented from growing and creating the good-paying jobs they’d otherwise be able to. That’s why I’m urging the FDIC, Federal Reserve, and OCC to issue updated guidance to the financial institutions looking to provide services to industrial hemp-oriented businesses as soon as possible, to help growers, producers and industry harvest the massive potential of this versatile crop.”
Since the 2018 Farm Bill removed the federal regulatory “shackles” from industrial-hemp production, manufacturing, and selling, Schumer noted that New York’s industrial-hemp industry has started to grow “significantly, with new farms and businesses emerging and existing ones expanding operations,” his office said.
It has resulted in “considerably more good-paying jobs and revenue” to upstate New York, making industrial hemp a “critical new part” of the state’s agricultural future.
For example, Canopy Growth recently held a groundbreaking event for its new industrial hemp industrial park in Broome County, which will bring 400 new jobs to the region, “with the potential for many more” industrial hemp-oriented businesses to locate to the region.
Main Street Farms
Schumer pointed to Main Street Farms as the “perfect example” of an industrial-hemp business “brimming with potential that’s being tightly bound by the lack of regulatory clarity.” Main Street Farms has a 100-acre industrial-hemp farm in the town of Cortlandville, and just recently announced plans to open up a processing facility in the city of Cortland.
Main Street Farms says the two operations expect to employ a combined 80 people, Schumer’s office said. However, Schumer noted that Main Street Farms went to five different banks to get financing after the passage of the 2018 Farm Bill and was turned down by all five, due to its association with industrial hemp.
The company eventually found a local credit union willing to offer its services, but the inconsistent access to financial services made launching the business “challenging.” Main Street Farms also had to pull numerous products off its website, as those products prevented credit-card processors from working with the company.
A couple of credit-card processors will work with Main Street Farms and similar industrial hemp-oriented businesses, but they charge “well above” average rates, Schumer’s office said. Additionally, the lack of access to financial products not only affects the hemp businesses, but its employees as well. Schumer said his office has heard stories from employees of hemp businesses being unable to access private loans due to the nature of their jobs.
Schumer explained that “in order to alleviate these concerns,” updated guidance would better help financial institutions assess risk and make available a wider range of financial products to industrial hemp cultivators and manufacturers.
Contact Reinhardt at ereinhardt@cnybj.com