Letter to the Hon. Jerome Powell, Chair of the Federal Reserve, the Hon. Jelena McWilliams, Chair of the Board of Directors of the Federal Deposit Insurance Corporation, and the Hon. Joseph Otting, Comptroller of the Currency - Schumer: Growth of rapidly-emerging industrial hemp industry in Rochester-Finger Lakes region & WNY hindered by lack of access to traditional financial services for the crop; senator urges Feds to issue new guidance to better harvest potential of versatile and valuable crop

Letter

Dear Chair Powell, Chair McWilliams, and Comptroller Otting:

I write to request that the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) provide guidance to financial institutions looking to provide services to the growing hemp industry. In 2018, Congress passed the Agricultural Improvement Act (2018 Farm Bill), removing hemp as a schedule I controlled substance. This law removes the obstacles that have prevented hemp businesses from gaining access to all financial services and products available to other agricultural businesses.

The Hemp Farming Act of 2018, which I was proud to cosponsor and fought to include in the 2018 Farm Bill, did five important things for farmers nationwide, including in my home state of New York. The 2018 Farm Bill removed industrial hemp from Schedule I of the Controlled Substances Act, empowered states to be the principal regulators of hemp, allowed hemp researchers to apply for competitive grants from the U.S. Department of Agriculture, made hemp farmers eligible to apply for crop insurance and allowed industrial hemp to be grown as an agricultural commodity if farmers choose. Since the bill's passage, the New York hemp industry has grown significantly, as new farms and businesses have emerged and existing ones have expanded. This has brought considerably more jobs and revenue to New York, making hemp an important part of the State's agricultural industry. As hemp farmers and businesses are exploring the full benefits of the 2018 Farm Bill, however, their growth has been hampered by regulatory uncertainty at financial institutions that has effectively led to a lack of access to financial products and services.

The enactment of the 2018 Farm Bill legalized the production and sale of hemp, yet financial institutions have continued to question whether they can extend their services to hemp-related businesses. Without access to traditional financial services, such as checking accounts and credit, many hemp businesses have been unable to effectively expand beyond their basic business operations. In order to alleviate these concerns, updated guidance would provide certainty for financial institutions to assess risk and make available a wider range of financial products to hemp cultivators and manufacturers. Small businesses and new entrants are hit hardest by these regulatory uncertainties. It is critical that hemp farmers and businesses have access to adequate financial resources to maintain and grow their operations, if hemp is to become an integral part of the New York agricultural enterprise.

It is important that financial institutions recognize hemp as a legal agricultural industry as set forth in the 2018 Farm Bill. I urge the FDIC, Federal Reserve, and OCC to provide guidance and best practices to the institutions under their authority that are looking to serve hemp farmers and businesses.

Thank you for your consideration of this matter.

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