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The $1 billion Credit Union 1 in Anchorage, Alaska confirmed Wednesday that it pulled the plug on its pilot program that provided financial services to four marijuana-related businesses.
"In July, our program reached an important evaluation milestone," Credit Union 1 said in a prepared statement when reached by CU Times. "With input from an independent certified public accounting firm and other sources, the decision was made to discontinue this pilot, effective immediately. We've learned that a critical liability insurance coverage is no longer available to us. Without this coverage, our MRB program cannot continue beyond a pilot phase."
What's more, during the past several months the pilot program was not performing as expected within its organizational model, according to Credit Union 1's evaluation of the program.
If the burden of compliance wasn't so high, the program might have been a "more reasonable prospect" for all parties, Credit Union 1 President/CEO James Wileman said in an Anchorage Daily News article on Tuesday.
Credit Union 1 announced the pilot program last November to offer checking and savings accounts for MRBs to deposit and manage their cash. Even though 33 states have legalized marijuana for medical and/or recreational uses, many credit unions and banks do not provide financial services to MRBs because pot remains illegal under federal law.
Alaska voters approved legalizing recreational marijuana in 2014. Last year, the state raked in $10.8 billion in tax revenue from MRBs, according to the Alaska Department of Revenue.
Credit Union 1 is not forever shutting the door on serving MRBs.
"Should the federal perspective on MRBs change in the future and allow us to reduce our insurance risk, we will certainly consider exploration of another pilot," Credit Union 1 said in its prepared statement. "Meanwhile, we always look forward to serving MRB employees with their personal financial needs."
NCUA Chairman Rodney Hood said last week in an interview with CU Times that in states where marijuana is legal credit unions won't be sanctioned for providing services to cannabis-related businesses as long as they follow money laundering, Bank Secrecy Act, safety and soundness and other rules.
Moreover, Congress is considering legislation that would provide a safe harbor for those financial institutions.
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