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Bank Loans For Farming Hemp
The production of industrial hemp for food, fiber and oil was legalized at the federal level when President Trump signed the 2018 Farm Bill into law. Some states have given their blessing too. However, your bank might drag its feet if you want to borrow money to grow industrial hemp.
Tanner Ehmke is the manager of CoBank’s Knowledge Exchange Division. He says the regulatory regime with the USDA and FDA is very complicated. Until that gets worked out, there’s a lot of caution and uncertainty in the banking world.
"And what that means for the industry is there’s not a lot of lending into that space. We are seeing some people in the processing sector of the industrial hemp, specifically with CBD oil, that are paying ridiculous amounts for their loans," says Ehmke. "That’s limiting the growth of the processing capacity and that’s also limiting what lenders can do to help farmers and ranchers if they want to get into it."
When a new piece of federal regulation is enacted, it takes time for all the clarity and learning curves to be worked out. Ehmke says banks need sound information about the risk and opportunities of financing the industrial hemp industry.
"We break it out between pharmaceuticals, food, supplements. I mean, all those swimming lanes of uses have to be clearly defined. That needs to be backed by science and that’s not something you just turn on right now and say, ok here’s the science and here’s the regulations, we’re just going to open up the industry and go," he says. "It takes a long time for those things to come together."