U.S. Bank Subsidiary Pulls Out of CBD Industry

Brian Baum was pulling up to the Dallas-Fort Worth International Airport on March 19 when he got an email alert: His merchant services account had been terminated. The CEO of hemp-derived CBD product manufacturer Cannovia tells Cannabis Business Times that Evalon’s abrupt message forced him and his team into damage-control mode. They weren’t alone.

“Fortunately, the industry itself—CBD and the cannabis industry—is a pretty tight community,” Baum says. “We, of course, very quickly started looking into: What are the alternatives? How do we move forward?”

The Cannovia team connected with FINCANN, the “cannabis banking financial network” run by CEO Nathaniel Gurien. The company acts as a broker, in a way, connecting businesses with banking and other financial partners. It’s not a simple task—even for the nascent U.S. hemp industry. “It’s interesting,” Gurien says. “There’s an expectation that the moment a sector of our industry becomes legal, so to speak, that banking and other types of services that are virtually unattainable will suddenly open up. But I don’t think we’re going to see it suddenly.”

Evalon, a subsidiary of U.S. Bank, quietly began offering merchant services to hemp-derived CBD businesses last fall. (“Merchant services” refers to a banking relationship that allows a business to accept secure credit card or debit card transactions.) This week, the institution pulled out of all CBD business accounts. Of course, much has happened between last fall and the present: Congress passed the 2018 Farm Bill, and the outgoing FDA commissioner has publicly wobbled on how hemp-derived CBD products will (or won’t) be regulated. Uncertainty abounds in this industry, and financial channels are caught in the middle.

The merchant services provider has given client companies a 45-day grace period to continue doing business and to find a new financial alternative. All applications still in the underwriting process have reportedly been canceled.

Source: https://www.cannabisbusinesstimes.com/article/us-bank-evalon-pulls-out-merchant-services-cbd-industry/