Your Bank for Hemp At TFNB Your Bank for Life, we understand the unique struggles this emerging market creates for early adopters. We love working with innovative entrepreneurs on the next big thing, and we believe Hemp is exactly that. For over 130 years, we’ve been getting to know our clients and helping them plan for their future, at times we’ve been the only ones who will listen. Come tell us your story and plans for your venture. Our success is predicated on your financial well-being, and we love to help our customers achieve their goals. TFNB - Your Bank for Hemp
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Growers Processors Manufacturers Retail tfnbtx.com (254) 840-2836
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MERCHANT SERVICE DIFFICULTIES IN THE HEMP ARENA
BY JESSE WILLIAMS
Anybody that’s a veteran in the marijuana space will tell you quickly, “Banks don’t wanna touch you, and neither do the credit card companies.”
I
t’s an easily understandable notion because marijuana is still a federally illegal substance, making money tied to it dirty as well in the eyes of a court. Banks fear hemp is still tied heavily to marijuana. Hemp made its mark just over 2 years ago though when it became a fully legal product in the US under the 2018 farm bill. Still, to this day professionals across the hemp space will tell you that finding a merchant services provider to deal with their business is insanely difficult. Even this publication you’re reading has run into this problem. So what’s the deal? Why the hassle? The farmers already know a form of this - it’s a high-risk venture. The rules for the industry can change within a short time. Just look at what the US saw take place from the end of 2018 when the farm bill was signed, the next year when the USDA came out with interim rules, late 2020 with vape mail bans, and then early 2021 with new USDA rules. As well, the FDA and DEA are still setting up their own framework and that can change at a moment’s notice. Add to that the risk of how the public perceives the company and what it doing in the industry by being a hemp commodity.
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Shady actors in the industry do not help with any of this either. The fact that there are people that create products that are over THC limitations. How can they do that? People can cook in-house COA lab reports due to lack of 3rd party testing or they can pay off a shady lab to falsify a lab report for them. None of this would be clear to the public until a product is independently tested and found to not be compliant. This is why something like the block chain Hempliance (see our podcast Episode 21 for more info) is seen as a necessity by some to keep this industry in a positive light and track product from creation to sale. THR discussed this very issue in a 2020 podcast with the company Verileaf. When speaking on the topic it was noted that this is one of the first times in American history that the current situation has occurred with a crop. A situation where while the crop is growing, it is perfectly legal in any state. But, the hemp crop has the possibility to grow into one that is illegal and worthless. Nobody is going to grow tomatoes randomly so big that they worry the state or DEA is going fine them for it. Banks and credit unions have oversight groups both federal and state. The two or three of those groups that come in several times a
year, they come in and ask how a bank knows that it isn’t a cartel putting up a front. They ask the bank how do they know the product on a shelf in a store they do business with isn’t just pure THC. How does the credit union know that the farm isn’t growing all hemp except for one acre that is marijuana? All they have to trust is the time spent with these farmers and having the license. The oversight groups don’t feel it’s enough. There are other high risk groups that these banks have to deal with an alcohol is one of them. One of the issues is that hemp is treated to a higher bar than any other high risk group. Luckily as the industry grows and sorts out its character and brings on new advisory techniques with trained personnel, this issue will slowly dissolve away to a better format. Companies such as Verileaf that have done a Texas Hemp Show podcast with us in the past, have talked about this very thing. That episode (number 2) be found on our website at texashempreporter.com. It would likely go a long way for farmers to find entrepreneur banks that are looking to venture into new industries and take that risk. As well, any training that a future hemp industry entrepreneur can take and learn about the hemponomics chain they will work in, will likely go a long way in convincing a financial institution to trust them in the process of getting services. When the industry demonstrates that it has a way of getting people on a better path for success and staying inside the lines of regulation, the rest of the dominoes will fall into place.
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THE HEMP MARKET AFTER THE DELTA 8 BOOM
BY JESSE WILLIAMS
The hottest commodity in the hemp space right now is delta-8 and it will eventually die as a product until full legalization takes place. For the hemp market as a whole to see an increase, the market requiring industrial hemp will need to increase massively.
H
emp was never intended to be legalized to create an intoxicating product, one with psychoactive effects. The complete opposite was desired. Hemp was to be a product that could be harvested, sold as a commodity that people claim has helped them medically, and the rest processed to create everything that we currently use corn and other plants to create in the market space. It was thought that everything that is found on the plant with less than a given amount of THC would not be intoxicating, and neither would any of its derivatives that were authorized. Delta-8 (D8) has flown in the face of that notion and has become one of the, if not the highest selling items made from hemp in the market right now. For those that do not know, D8 is a form of THC naturally found in cannabis plants, just like delta-9 THC that is found in marijuana. Naturally, the compound is only found in small amounts in either marijuana or hemp plant flower. The amount typically found on those plants is not enough to cause any sort of psychoactive effects to a consumer. When lab testing is done on a typical cannabis flower, there is usually such a small amount that nobody is to be concerned about it causing the plant to be considered a hot crop. So how is this a thing people see sold in cartridges, claimed as D8 flower and the like? It’s a hemp derivative in those forms. Processors can take the parts of the hemp flower, run it through an extraction process and a conversion process to take CBD, Delta 9 (D9) THC, and other analogs to convert them into delta-8. Given that it is not legally synthetic, the compound is now legal
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as a derivative of hemp. There is no such thing as a D8 flower. Just hemp flowers covered with D8. D8 that was mixed into a solution with a solvent that will evaporate after a spray application to hemp flowers or ground-up plants of a consumer’s choice (look back at those Spice days). So what does this have to do with the market of hemp? As mentioned before, right now it is a hot selling item and consumers are highly interested in it. Consumers are still asking questions and want to know more, since the big takeaway is that D8 will get them high and is legal to be on the shelves for sale as a hemp derivative at the moment. This will eventually end. Lawmakers in states and federally are going to crack down on this concept as a whole eventually. Texas likely will in the 87th legislative session. Part of HB 3948 by Rep. Tracy O. King has set a maximum limit of 1% total THC. This you mean if your flower or product had the maximum 0.3% total USDA allowed THC compounds contents, the most one could have with So what does this have to do with the market of hemp? As mentioned before, right now it is a hot selling item and consumers are highly interested in it. Consumers are still asking questions and want to know more since the big takeaway is that D8 will get them a psychoactive effect and is legal to be on the shelves for sale as a hemp derivative at the moment. It is a lot of money involved with its market share. This will eventually end. Lawmakers in states and federally are going to crack down on this concept as a whole eventually. It is just a matter of time. The products are already facing shady business practice issues given that some independent labs have
reported that some currently sold D8 items have over 5% D9 THC or THCA content in the final product sold on shelves. Texas likely will do away with this in the 87th legislative session. At the time of this writing Part of HB 3948 by Rep. Tracy O. King has set a maximum limit of 1% total THC. This means if your flower or product had the maximum 0.3% total USDA allowed THC compounds contents, the most one could have with D8 is 0.7%. On a federal level, anything described as hemp will probably have an addition placed on it that states that any derivative that causes psychoactive reactions cannot be sold under the hemp moniker or branding scheme. It is not just D8 that is being put to rest for hemp, but any other psychoactive derivative such as D10, which is starting to enter the conversation of the hemp market. When that part of the market goes away, the state and possibly the nation as a whole to follow will see a massive dip in the profit margins for the hemp market sector. It’s not totally a bad thing. It won’t be a sign that the market for hemp is failing either. The overall intent of this program was to create industrial and everyday products out of a new crop that can be rotated and helps clean up damage from previous crop rotation failure. This will be more of a correction for the market until the US sees a possible full cannabis spectrum legalization. At that point, the market could bring on Delta 8 under the marijuana naming. It could possibly be that between the end of the current D8 legality status and it’s return, that the industrial hemp sphere and hemp oil extract market could fill in that gap.
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HEMP BANKING HAS CHALLENGES. WE HAVE SOLUTIONS. Most banks won’t bank hemp-related businesses. At West Town Bank & Trust, we don’t just bank hemp, we embrace it. We’ve built a hemp program uniquely tailored to the challenges of hemp-related businesses. We provide a full suite of commercial banking and payment processing services and we’re experts on the rules and regulations, so you feel unquestionably safe and secure banking with us. Simply put, hemp-related businesses bank at West Town Bank & Trust because we know hemp.
Got questions? Let’s talk. Give us a call at
(877) BNK-HEMP. © May 2021 West Town Bank & Trust. All rights reserved.
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