National Credit Union Administration: Yes, It is OK to Perform With Cannabis Companies

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Credit unions, already on the vanguard of banking reform in the cannabis industry, will not be sanctioned by the National Credit Union Administration (NCUA)—as long as they comply with necessary financial regulations, like money laundering policies, the Bank Secrecy Act and other rules.

In an interview with Credit Union Times, NCUA chairman Rodney Hood, says that credit unions are allowed to work with cannabis businesses as the industry continues to sort itself out. “It’s a business decision for the credit unions if they want to take the deposits,” Hood told the banking publication. “We don’t get involved with micro-managing credit unions.”

Estimates are difficult to nail down, but there’s certainly a handful of credit unions currently providing active banking services to licensed cannabis businesses in the U.S. In a January 2019 interview, Tyler Beuerlein, executive vice president of business development at Hypur and the vice chair of NCIA’s Banking Access Committee, pegged the number at “unequivocally less than 35 total [institutions] in the whole U.S. genuinely banking this marketplace.” 

There’s a willingness to meet the economic demands of cannabis organizations, but what that method basically appears like remains a thorny tableau. Not in the slightest is every person in the economic market on the identical web page. Florida’s 1st Green Bank, for instance, started supplying solutions to healthcare cannabis organizations in the Sunshine State. Then the bigger Seacoast Bank acquired 1st Green and shuttered its cannabis accounts.

For credit unions, even Hood’s NCUA proclamation is not going to be adequate to entirely assuage regulatory, political and individual issues with the cannabis space. In Alaska, Credit Union 1 abruptly ended its cannabis banking pilot plan this summer time just after its insurance coverage broker threatened to reduce its liability coverage. Credit Union 1 had launched its pilot plan in November 2018, and it had considering the fact that gathered 4 customers in Alaska’s cannabis marketplace. 

“While the goal of our pilot plan was to decide the feasibility of a bigger MRB [marijuana-related business] project, we fully grasp that this choice may perhaps be disappointing news,” CEO James Wileman told the Anchorage Every day News. “Should the federal viewpoint on MRBs alter in the future and let us to lessen our insurance coverage danger, we will definitely contemplate exploration of a further pilot.”

Certainly, when the NCUA has produced its stance as clear as can be in this hazy regulatory atmosphere, the ancillary industries connected to credit unions (currently themselves an ancillary market to the cannabis marketplace) have not however identified their spot in this burgeoning enterprise space.

At the moment, the most substantial try at evening out the economic landscape is the Protected Banking Act, a piece of federal legislation (H.R. 1595) aimed at building a “safe harbor” and guarding banks from any prosecutorial or regulatory backlash when servicing cannabis enterprise customers. The U.S. Senate held a public hearing on this bill July 23, exactly where cannabis market stakeholders reiterated the basic trouble: “The scenario has come to be entirely untenable,” Cannabis Trade Federation CEO Neal Levine stated. 

Although attitudes and guidance like the NCUA’s current statements are turning the tide on cannabis banking, it is legislative approval that will open the doors to economic safety and a sense of normalcy in the ever-expanding cannabis marketplace.

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