Treasure Valley Extractions, a hemp processing company in Ontario, Oregon recently had its six accounts with U.S. Bank closed due to what the company proprietor Jim Hutchins attributes to his company’s hemp-related activities.
This action was taken abruptly despite the fact that Hutchins has banked with this same bank for 40 years.
Treasure Valley Extractions harvests and processes industrial hemp into CBD, which is currently on high demand across country and beyond.
Last year, Hutchins and a team of local investors worked together to secure a former golf course in Ontario. They established a hemp processing plant there with a capacity of processing 1,500 pounds of hemp dry matter each day.
Additionally, Hutchins’ company signed supply contracts with 20 local hemp farmers so that the processing facility could have a sufficient volume of hemp to work with. Currently, the facility directly employs eleven people and there are plans to increase the number of employees to 25 in the near future.
However, all these plans are now in jeopardy after U.S. Bank closed all the accounts of the company and left Hutchins with the task of finding another banking institution so that crucial activities, such as payroll processing, aren’t delayed.
Hutchins says that this whole situation is confusing because the 2018 Farm Bill legalized hemp as long as it doesn’t contain more than 0.3 percent THC content. By law, banks are required to file SARs (suspicious activity reports) for any transaction that seems to involve illegal activities. However, the existing guidance given to banks exempts hemp transactions from the SARs requirements, so it is hard to understand why U.S. Bank decided the way it did.
One possible explanation for their action may lie in the 2018 Farm Bill which has a stipulation to the effect that the USDA will have to pass rules under which the law legalizing hemp is implemented. Those rules have not been released, so banks are probably still unsure about what aspects of the hemp industry are legal and which ones aren’t.
To compound matters even further, the Farm Bill of 2018 put the food and drug aspects of the hemp industry under the purview of the Food and Drug Administration. This means that the FDA has to formulate the rules under which CBD can be used in supplements, foods and beverages. Those rules are not yet in place, so the applicability of the Farm Bill is still shaky.
For the sake of stability for businesses like that of Jim Hutchins, industry watchers wouldn’t be surprised if hemp industry players like HTC Extraction Systems (TSX.V: HTC) and Lexaria Bioscience Corp. (CSE: LXX) (OTCQB: LXRP) stepped up their calls for the speedy release of the hemp industry rules.
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