Washington Credit Unions Move to Serve Pot Biz
The $369 million Salal Credit Union in Seattle and the $1.3 billion Numerica Credit Union in Spokane, Wash., said they plan to work with the legalized marijuana business in their state.
The restrictions will be numerous, including working only with growers, processors and producers of cannabis-infused products – and not dispensaries – and all deposits made via armored car during regular business hours.
“We believe providing banking services to Washington state-licensed cannabis businesses will advance the research of the proven and potential health benefits to patients suffering from chronic health issues, improve public safety and assist these state-regulated small businesses to become established, and provide jobs and tax revenue,” said Salal President/CEO Russ Rosendal.
Salal opted to focus on growers and producers because it's anticipated they will have fewer, but larger transactions, and require relatively less oversight to comply with federal guidelines.
Meanwhile, Jane Ronnfeldt, vice president of marketing for Numerica, said, “Numerica is neither an advocate nor an opponent of marijuana legalization; we’re simply a financial institution serving a need in our community.”
Both worked with the Washington State Division of Credit Unions. “We haven't spoken directly with the Department of Justice, but the state regulators have been very helpful in making sure we’re all on the same page,” Ronnfeldt explained.
So far, no Colorado credit unions have given a green light to marijuana companies, according to the Mountain West Credit Union Association.
“Our position on the matter hasn't changed. We still believe the best course of action will come from Congress,” said Scott Earl, president/CEO of the Denver-based association. “Until the law is changed, the risk is still great and the future is uncertain for financial institutions.”
However, the Colorado legislature recently voted to create the nation's first state-run financial cooperatives for marijuana sellers. If approved, the proposed “cannabis co-ops” could cut into new revenue territory that could have been claimed by credit unions, Rosendal said.
No accounts had been opened at Salal or Numerica as of May 12, but hundreds of inquiries have been received.
Both organizations plan to open accounts on a limited basis over the next few months to ensure the proper procedures, policies and monitoring are in place to serve the new members.
To open an account at either credit union, business owners must have all the appropriate paperwork, including marijuana licenses from the state.
At Numerica, the business must be operating in a municipality with a local Numerica branch.
Applying members must have significant business background and financial acumen with sufficient assets to sustain and grow their business and comply with Washington state and U.S. Department of Justice requirements.
To mitigate risk, the amount of cash in all pot business accounts will not be allowed to exceed 5% of the credit union's total deposits, said Lynn Ciani, Numerica's EVP and general counsel.
Both boards were actively involved in the decision-making process, the credit unions said.
“Salal's board is very supportive of entrepreneurship,” Rosendal explained. “We first started talking about this possible revenue stream in 2012. The board discussed the rationale for serving these businesses and supports the credit union in opening accounts on a limited basis.”
Numerica has drafted guidelines designed to ensure businesses conduct banking with a large degree of transparency and limited each account to $5 million in total deposits.
As other steps toward security, Numerica said, it will not issue debit cards or credit cards tied to the cannabis accounts, and shared banking services will not be allowed.