Banking On Dank

August 20, 2019 Business Insight

Earlier this month the federal regulators of the National Credit Union Administration (NCUA) announced that credit unions will not be punished solely for working with a marijuana business. What this means is that credit unions in states where medical, and/or recreational, marijuana is legal can finally accept cash deposits from dispensaries. As long as the credit union sleeps with one eye open. Though members of the NCUA have publicly stated that they support the rise of the growing marijuana industry, there are still other federal agencies that perceive the plant as nothing but criminal. Chairman of the NCUA, Rodney Hood, has expressed that a lot of uncertainty in banks receiving money from marijuana businesses could be dismissed if Congress simply descheduled marijuana. In fact Hood has been involved in presenting the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which involves actions such as decriminalizing marijuana at the federal level by removing it from the Controlled Substances Act, requiring federal courts to expunge prior marijuana-related convictions, allow prior offenders to request expungement of their criminal records, and would impose a 5% sales tax on marijuana and marijuana products.

Good news: this bill has already been introduced to Congress.

Bad news: the bill hasn’t been touched since it was introduced to congress in 12/13/2018

Why is national bank support such a big deal to the marijuana industry? Well, without a bank or credit union backing a business, a business cannot set up a credit or debit account. This means that all digital transactions must be carried out through a third party system (no thank you “convenience” fees) or that the business only accepts cash. As annoying as those hurdles seems, they also inadvertently support a much more serious threat:

Dispensary Robberies.

It has been proven that legalizing marijuana takes power and money away from the black market. And it’s no secret that marijuana dispensaries have to have large sums of cash on hand to meet the demands of their everyday, legal transactions. Because of this, dispensaries have become a target to many robberies. Some even resulting in violence and/or death of employees, security guards, and customers. With credit unions given the blind eye by some federal agencies and static silence by Congress it has become a gamble to invest in dispensaries. On one hand a credit union could support (and profit) off a lucrative business. On the other hand, they could have all of that money seized, depending on which federal agency looks at their transactions through a microscope.  “It’s a business decision for the credit unions if they want to take the deposits,” Hood told the Credit Union Times. If you were the head of a credit union, which would you choose?



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