26 MAY / JUNE 2019 GR SUMMIT Banking on Hemp How the 2018 Farm Bill impacts Indiana banking Last December President Donald J. Trump signed into law the 2018 Farm Bill. The new law includes key provisions relating to the broader legalization of hemp, including the removal of “hemp” from the definition of “marijuana” under the Controlled Substances Act. The Farm Bill went further by creating a pathway for farmers to legally grow and harvest hemp under certain restrictions, plus it provides a framework for the legalization of some hemp derivatives. These changes create opportunities for financial institutions in the long term, but challenges in the short term, as implementation of the new standards evolves throughout 2019. The 2018 Farm Bill essentially legalized the production of hemp by removing it from the Controlled Substances Act. Included in this change by way of definition, hemp or any derivative of the plant may not have a concentration of THC1 of more than 0.3%. The Farm Bill also allows each state, as the primary regulator over the production of hemp, to submit a plan for monitoring and regulating hemp production to the U.S. Department of Agriculture. If a state does not submit a plan, the Secretary of Agriculture will serve as the primary regulator. Until the state plan is approved, it remains illegal to produce hemp outside of the limited structure set forth in the Agricultural Act of 2014 that created pilot programs. Indiana is currently in the process of building the structure of a state plan through legislative action. Indiana’s state plan to monitor and regulate hemp has been initiated by the Indiana General Assembly. Senate Bill 516, Regulation of Hemp, takes several important steps in placing Indiana in position to submit a plan to the USDA later this year. Most notably, the bill creates a Hemp Advisory Committee tasked with advising the state seed commissioner on the state’s approach and subsequent plan to monitor and regulate the cultivation of hemp. The Indiana Bankers Association worked with the bill authors during the legislative session to include the Indiana Department of Financial Institutions as a seat on the committee, ensuring that the industry will have a voice in the discussion moving forward. The bill provides a deadline of Dec. 31 to the state seed commissioner to submit a hemp regulation plan to the USDA for approval. The USDA secretary then has up to 60 days to approve the plan. Until the state plan is submitted and approved by the USDA, the production of hemp still falls under the restrictions of the Agricultural Act. In addition to creating a pathway to cultivate hemp legally, the 2018 Farm Bill potentially solved a lingering issue in Indiana related to banking CBD oil.2 Indiana had legalized the distribution of CBD oil and other low-THC products under last year’s Senate Enrolled Act 52. However, the product is still technically illegal until further action is taken regarding the Food and Drug Administration’s approval, an authority granted in the 2018 Farm Bill. Dax Denton Senior Vice PresidentGovernment Relations Indiana Bankers Association ddenton@indianabankers.org @ibagovrelations
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