Once the Farm Bill’s golden child. Now a liability.
For years, hemp operators walked with confidence. The 2018 Farm Bill gave them the kind of legitimacy cannabis operators could only dream of. "We’re legal," they said. "We’re federally compliant. We’re not cannabis."
But 2025 isn’t playing by 2018’s rules.
What we’re seeing now is a quiet purge. National payroll providers—yes, the big ones you know: ADP, Paychex, Paylocity, QuickBooks—are slowly, silently, and systematically backing away from hemp and CBD operators. Not just cannabis. Hemp.
If you’re a hemp operator and still think your banking and payroll situation is “safe,” let this be your warning shot: you are under the microscope whether you know it or not.
MSOs Say It’s Cannabis → Hemp. But Why?
Talk to the major MSOs (multi-state operators), and you’ll hear a surprising sentiment: it’s more likely that cannabis will move into hemp than the other way around.
Why?
Because hemp—especially the seltzer and beverage side—is hot. Consumer demand is surging for low-dose, legal intoxicants. Delta-8, THC-infused seltzers, CBD mocktails—these are inching closer to mainstream every day. They’re shelf-ready, shippable, and for now, skirting many of the regulations that plague traditional cannabis SKUs.
So cannabis operators, with experience in cultivation, extraction, and marketing, are seeing hemp as a faster path to profit. Fewer barriers. National distribution. And maybe even fewer headaches.
But that may no longer be true.
The Enthusiasm Bubble Has Burst — Here's Why That Matters (Especially If You're New)
At one point, hemp was the darling of compliance departments.
It was federally legal, thanks to the 2018 Farm Bill. That piece of legislation effectively separated hemp (defined as cannabis with less than 0.3% Delta-9 THC) from marijuana (which remains federally illegal under Schedule I). Because of that technical distinction, banks and payroll providers were comfortable working with hemp operators, assuming lower risk and cleaner compliance.
That made sense—for a while.
But the rules haven’t changed, even though the perception of risk absolutely has.
Let’s break down why the safety net is unraveling in 2025:
- Rescheduling Delays (Still No Relief for Operators)
Many hoped cannabis would be moved from Schedule I to Schedule III under the Controlled Substances Act—something the Department of Health and Human Services recommended in 2023. That shift would have lessened banking hurdles and opened doors to basic financial services. But the DEA hasn’t acted. Without legal reform, banks are acting on perception and are lumping hemp in with cannabis when it comes to compliance. - SAFER Banking Stalled Out
The SAFER Banking Act, which aimed to give financial institutions protections for working with legal cannabis businesses, still hasn’t passed. No legislation means no liability protection. As a result, financial providers are playing it safe by rejecting anything remotely cannabis-adjacent—including many hemp and CBD operators. - State-Level Crackdowns on Hemp-Derived THC
States are now taking aim at intoxicating cannabinoids like Delta-8, THCP, HHC, and others. Over 23 states have restricted or banned Delta-8 outright (NCSL). That patchwork of regulation creates enough uncertainty for national providers to say, “Not worth it.”
Even compliant hemp operators are being regulated like cannabis without access to the same licensing protections or banking carve-outs. It’s a lose-lose scenario for anyone not proactively managing their risk exposure.
Hemp: The New Target
Let’s call it what it is. Hemp is being rebranded—not by its operators, but by financial institutions—as a ticking compliance time bomb.
And you know who gets hit first? Not the large, high-profile brands with in-house compliance teams.
It’s the small hemp operators. The independent CBD shops. The niche beverage startups. The farmers in rural states who thought the Farm Bill would protect them forever.
They’re getting blindsided.
And national payroll companies? They aren’t giving second chances. They’re hitting the eject button—and fast.
If You're in Hemp and Think You're "Fine" — You're Not
Here’s the uncomfortable truth: you don’t get to decide whether you’re considered “safe.” Your payroll provider does. And more of them are deciding that hemp is just not worth the trouble.
You may be:
- Licensed
- Compliant
- Transparent
- Technically legal
But none of that matters if your provider sees you as a reputational, financial, or regulatory risk.
If you're in hemp, CBD, or anything adjacent to smoke shops—and still using a mainstream payroll or banking service—you are already on the radar.
Time to Wake Up or Get Wiped Out
This isn’t fear-mongering. It’s happening right now.
We’ve seen it.
- Hemp beverage companies suddenly scrambling for alternatives
- CBD shops shocked to find their accounts frozen
- Smoke shops ejected mid-pay period with no contingency plan
The scariest part? Most of them had no idea they were being watched. No warning. No audit. Just… locked out.
What to Do Next
If you're in hemp, here’s your reality check:
- Audit your payroll provider’s stance. Don’t assume they’re still supportive just because they were in 2022. Ask for updated documentation.
- Start conversations with cannabis-compliant providers now. Even if you’re not ready to switch, you’ll want a backup when the hammer drops.
- Pay attention to state regulations. As states crack down on delta-8 and other hemp-derived THC, the risk classification will only get worse.
- Don’t wait for rescheduling to save you. Washington gridlock doesn’t care about your next payroll run.
Frequently Asked Questions (FAQs)
Is hemp really being treated like cannabis by payroll companies now?
Yes. More financial institutions are classifying hemp as high-risk due to overlapping product types and legal ambiguity at the state level.
Didn’t the Farm Bill make hemp legal federally?
It did. But legality doesn’t guarantee financial services. Banks and payroll companies use internal risk models, and those models are now placing hemp in the same category as cannabis due to increased enforcement, intoxicating product profiles, and public pressure.
Who’s most at risk of being dropped?
CBD shops, Delta-8 or THC beverage companies, small hemp startups, and smoke shops using legacy payroll providers like ADP, Paychex, Paylocity, or QuickBooks.
What happens if I get dropped by my provider?
You could lose access to payroll systems, fail to meet pay deadlines, miss tax filings, and damage employee trust. Recovery is difficult without a pre-vetted cannabis-compliant partner.
Supporting Data and Sources
- CBD market projected to hit $28.4B by 2031 (GlobeNewswire)
- 23+ states have restricted or banned Delta-8 (NCSL Delta-8 THC State Laws)
- 2 in 3 banks still consider cannabis-adjacent businesses high risk (ABA Briefing)
- ADP has dropped compliant hemp clients without notice (Benzinga)
Tips, Queries, and Things to Consider
Tips:
- Back up employee records, W-2s, and banking details regularly
- Create a payroll transition plan in case of ejection
- Diversify your banking and vendor relationships to mitigate risk
Key Questions to Ask Your Current Provider:
- “Can you provide written confirmation that my business is still supported under your compliance policy?”
- “Are there any planned risk reassessments for hemp or CBD accounts?”
- “Would any of my SKUs or services trigger a compliance review or suspension?”
Things to Watch For:
- Sudden requests for documents from risk departments
- Frozen direct deposit services
- A shift in customer service tone or communication delays
- Payroll platform limitations (ex: blocked W-2 processing or ACH delays)
How to Be the Hero (If This Applies to You)
If you're a hemp or CBD business reading this and realize you're more vulnerable than you thought—here’s how to lead through the storm:
- Get proactive. Don’t wait to get dropped. Pre-vet compliant vendors who understand your industry.
- Ask the hard questions. Most providers won’t volunteer risk updates—you have to ask.
- Build your backup plan. If you're relying on one platform, start the process of documenting your systems and evaluating others.
- Educate your peers. Your insight could help others avoid a financial disaster. Share what you’re learning.
- Align with providers who advocate for your space—not those tolerating you for profit. That's how you build resilience in a shifting industry.
