Bank regulators on Tuesday issued new guidance clarifying that financial institutions should not report their farmer customers for growing hemp.

This was great news for hemp boosters, who cheered the long-awaited guidance, saying it was an important step toward ending the “roller coaster of uncertainty” that farmers, processors, and businesses have been on for years. It was equally good news for producers eager to supply an industry fueled by intense demand for CBD (cannabidiol)-infused personal hygiene products, foods, and beverages.

But the guidance may not do much to help some of those farmers right now. As I’ve previously reported, some have accused their long-time banks of closing business accounts and threatening to recall loans after they added hemp to their crop rotations. After reviewing the guidance, Wells Fargo, the nation’s top farm lender, says it still won’t back hemp farmers until next year.

The three-page statement was jointly issued by the Federal Reserve, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, and the Conference of State Bank Supervisors.

The guidance reiterates that hemp is not a highly controlled substance, pursuant to the 2018 farm bill, which was signed into law almost one year ago. For that reason, banks are not required to file a Suspicious Activity Report (SAR) on customers solely for growing the crop. SARs help authorities identify people who may be involved in terrorist financing, money laundering, or other forms of fraud.

But the guidance indicates that hemp is not without risks. Banks are expected to follow SAR procedures for hemp businesses, and file reports if there are indications of suspicious activity—like, for instance, a certificate of analysis revealing that the crop has levels of tetrahydrocannabinol (THC), the psychoactive chemical found in cannabis, that would qualify it as marijuana. Banks caught backing marijuana, which is a highly controlled substance, can lose their federal charter, or may have to forfeit their assets.

For that reason, the guidance isn’t likely to assuage concerned banks, says Jonathan Havens, an attorney who represents hemp businesses.

“I don’t think this is going to be a panacea, unfortunately,” he says. “Just as this industry is new to everybody, it’s especially new to banks, which is a risk-averse crowd to begin with. I think some banks are going to say, look, we don’t know whether this is hemp or whether it’s marijuana, and it’s just not worth the risk to us.”

The guidance also specifies that bank customers engaged in hemp-related businesses must operate under plans approved by the United States Department of Agriculture (USDA). But the department hasn’t yet approved any plans, which are submitted by states and tribal governments, and specify how to test for THC and dispose of “hot” plants that exceed legal limits.

The application window opened on Monday and closes in November of 2020, according to an interim final rule. Until those plans are approved, says Ann Wasik, a Wells Fargo spokeswoman, the bank will consider hemp no different from marijuana. 

“Our current position remains that we don’t presently bank or provide services to these businesses,” she says, after reviewing the hemp banking guidance.

Politicians from hemp-producing states, like Senator Ron Wyden, a Democrat from Oregon, nevertheless welcomed the news. In April, Wyden and Senator Mitch McConnell, a Republican from Kentucky and Senate Majority Leader, wrote letters to several banking regulators, imploring them to help lawful hemp businesses that were “discriminated against” by financial institutions.

“Hemp was legalized almost a year ago, yet Oregon farmers and producers have been forced to ride the roller coaster of uncertainty,” Wyden said in a statement. “These new banking guidelines are an important step toward giving hemp businesses the certainty they need. The work doesn’t stop here, however, and more must be done to make sure hemp businesses are treated fairly and allowed to fully realize this legal crop’s economic potential in our state and nationwide.”  

The guidance arrives a week after the Food and Drug Administration (FDA) issued warning letters to 15 CBD companies, reaffirming that the agency does not consider the substance, which is fueling a hemp market, to be lawful.