U.S. Bank Subsidiary Backs Out of Handling CBD Payment Processing

Hemp and CBD are legal but not yet legal enough for risk-adverse bankers.


3 min read


Brought to you by Green Market Report

The CBD industry has been moving full steam ahead in 2019, bolstered by the 2018 Farm Bill and advancements on the federal level to ensure cannabis banking services, but that progress hasn’t been enough for some financial services institutions to continue working with the industry.

On March 14, 2019, Elavon, a payment processing subsidiary of U.S. Bank, notified its hemp and CBD clients that it had recategorized hemp and cannabidiol-based merchants as a prohibited business type and that accounts for such merchants would be closed within 45 days.  

“After several months supporting this merchant segment, it has become clear that the pace of an evolving Federal and State regulatory framework makes it extremely difficult to validate the qualifications required to operate within this industry,” said Elavon in an email to its hemp and CBD clients.

Related: Cannabis Banking Bill Wins Approval in Crucial House Committee

As an Elavon partner, FINCANN, a cannabis banking financial network, received Elavon’s notice and began sourcing solutions for its clients at once.

“We immediately reviewed remaining available options and within 24 hours had viable USA-based excellent alternatives available,” said Nathaniel Gurien, founder and CEO of FINCANN. “Since Elavon is not terminating their existing portfolio of CBD merchants until May 15, some merchants opted to immediately apply to one of our alternatives, others decided to wait and see until at least mid-April.”

Elavon isn’t the only merchant services provider rethinking its hemp and CBD clients. On March 19, Cannovia, a maker of CBD-infused products, was notified by Stripe that its account would be terminated. Having just launched its online storefront on March 14, Cannovia attempted to appeal Stripe’s decision but was denied.

Related: Your Cannabis Company Can Get a Bank Account but Not Easily

“Prior to the notification of the merchant services cancellation, we were not fully aware of the limitations of the banking industry to support the needs of the CBD industry,” said Brian Baum, the CEO of Cannovia.

With both Stripe and Elavon out of the picture, Cannovia soon learned that finding a merchant services provider on its own wouldn’t be easy.

According to Baum, “What became clear was that the options were limited and any banks willing to consider supporting the industry were beginning to utilize the services of intermediaries such as FINCANN to assist them in managing the sheer volume of entities looking for merchant services solutions.”

Linking up with FINCANN to secure a new merchant services provider allowed Cannovia to remain operational and avoid any major interruptions.

Related: With Democrats in Control, House Looks at Ending Cannabis Banking Restrictions

Meanwhile, both financial institutions and industry stakeholders continue to keep an eye on the SAFE Banking Act, which would provide certain protections for depository institutions that work with cannabis-related businesses as well as the businesses themselves. The House Committee on Financial Services is currently drafting a report on the act to present to the House of Representatives. If the full House approves the bill, the Senate will vote on it.   

“If the SAFE Banking Act overcomes its estimated 40% likelihood of passing the Senate, it will only encourage banks currently contemplating ‘dipping their feet into the water’ to ‘take the plunge,’” Gurien said. Once financial institutions take the plunge, legal cannabis-related businesses will be able to bank just like any other legal business.

This article was first reported in Green Market Report, a content partner of Green Entrepreneur.

Source

more recommended stories

  • Keep Your Browsing Data Private With This VPN

    Surfshark VPN is a lightning-fast security.

  • Can You Still Make Money Dropshipping in 2019?

    The short answer is no. April.

  • Get Proficient With Google Analytics and Improve Your Earning Potential

    This two-day course will have recruiters.

  • How This Croatian Basketball Player Made His NBA Dream Come True

    Ivica Zubac, center for the Los.

  • How to Measure Performance of Your Outsourced Developers

    Focus on the outcome, not the.

  • 5 Reasons Why Kindness Has Become the Key to My Happiness, Both in Business and in Life

    One small act of kindness, even.

  • Why Your Stomach May Hold the Key to Your Mental Performance

    Don’t just blame your apathy or.

  • Learn How to Make Smarter Real Estate Investments

    These expert-led classes guide you through.

  • Strong Retail Sales and Corporate Earnings Results Boost Entrepreneur Index™ and Confidence in the Economy

    The Entrepreneur Index™ posted a modest.

  • Mitch McConnell Is Positioning Himself as the Champion of the U.S. Hemp Industry

    The Senate Majority Leader sees hemp.

  • An Argument for Farming Hemp

    U.S. agriculture has seen better days,.

  • Entrepreneur Index™ Down as Medicare-for-All Idea Rattles Healthcare Stocks

    The healthcare industry, normally a defensive.

  • 10 Time Management Tips That Work

    Are you working on clock time.

  • How This Entrepreneur Is Improving Women’s Health

    This non-profit is testing new strategies.

  • Netflix Surges Before Earnings Report and Pushes Entrepreneur Index Higher™

    Meanwhile, the real estate investment trust.

  • Tax Audits Are on the Rise. Here’s Why You Shouldn’t Freak Out.

    Don’t panic, a letter from the.

  • Green Entrepreneur’s New Podcast Will Make You Smarter About the Cannabis Business

    The weekly show features in-depth interviews.

  • Alibaba’s Billionaire Founder Jack Ma Says Companies Forcing Staff to Work Overtime Are ‘Foolish’

    He was responding to a debate.

  • How This Entrepreneur Used CrossFit to Build a Business

    This Entrepreneur won the 2008 CrossFit.

  • How to Negotiate the Price of a Pricey Premium Domain

    Buying a domain at the asking.

  • This Guide Can Help You Shed Your 9-to-5 and Become Your Own Boss

    Shape your own path as an.

  • Do You Have Trouble Sleeping? If So, This Might Help.

    Lack of sleep can affect your.

  • This Leader Says That 4 Words Changed His Life

    April 13, 2019 1 min read.

  • Boost Your Website’s Visibility With This SEO Course

    April 13, 2019 2 min read.

  • Strong Earnings and Big Oil Deal Push Stock Prices Higher

    Oil producer Hess Corp. helps the.

  • How to Monetize Your Podcast

    Gary Coichy, the Founder and CEO.

  • Why Is There No Green in the Garden State?

    Despite wide support by New Jersey.

  • Tesla Shares Down After Gigafactory Expansion Put on Hold

    Plus, Bed Bath & Beyond plummets.

  • Why Can’t Cops Tell Them Apart?

    Both plants are cannabis, but there.

  • Amazon Employees Call for a Company-Wide Climate Change Plan

    This doesn’t guarantee that Bezos and.

  • Bed Bath & Beyond Once Again Drives Entrepreneur Index™ Higher

    The retailer reports earnings after market.

  • 3 Tips for Getting Emails Noticed, Opened and Read (60-Second Video)

    Here’s how to make your messages.