National Credit Union Administration: Yes, It’s OK to Work With Cannabis Businesses

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 entire U.S. truly banking this market.” 

There’s a willingness to meet the financial demands of cannabis businesses, but what that process actually looks like remains a thorny tableau. Not in the slightest is everyone in the financial industry on the same page. Florida’s First Green Bank, for instance, began offering services to medical cannabis businesses in the Sunshine State. Then the larger Seacoast Bank acquired First Green and shuttered its cannabis accounts.

For credit unions, even Hood’s NCUA proclamation isn’t going to be enough to completely assuage regulatory, political and personal concerns with the cannabis space. In Alaska, Credit Union 1 abruptly ended its cannabis banking pilot program this summer after its insurance broker threatened to cut its liability coverage. Credit Union 1 had launched its pilot program in November 2018, and it had since gathered four clients in Alaska’s cannabis market. 

“While the purpose of our pilot program was to determine the feasibility of a larger MRB [marijuana-related business] project, we understand that this decision may be disappointing news,” CEO James Wileman told the Anchorage Daily News. “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.”

Indeed, while the NCUA has made its stance as clear as can be in this hazy regulatory environment, the ancillary industries connected to credit unions (already themselves an ancillary industry to the cannabis marketplace) have not yet found their place in this burgeoning business space.

At the moment, the most significant attempt at evening out the financial landscape is the SAFE Banking Act, a piece of federal legislation (H.R. 1595) aimed at creating a “safe harbor” and protecting banks from any prosecutorial or regulatory backlash when servicing cannabis business clients. The U.S. Senate held a public hearing on this bill July 23, where cannabis industry stakeholders reiterated the fundamental problem: “The situation has become completely untenable,” Cannabis Trade Federation CEO Neal Levine said. 

While attitudes and guidance like the NCUA’s recent statements are turning the tide on cannabis banking, it’s legislative approval that will open the doors to financial security and a sense of normalcy in the ever-expanding cannabis market.