NEW YORK (MainStreet) — Washington State based O Bee Credit Union - founded in 1955 to serve commercial accounts and private customers in the beer industry - has recently opened its doors to the cannabis industry. It currently has about 30 cannabis-related clients who deposit as much as $25,000 weekly, according to the credit union.
Federal law still creates large risks for this kind of business and as a result, the board of O Bee was initially against the idea of serving commercial cannabis accounts. That said, last September, the credit union finally approved a plan to work with the industry and opened doors to commercial marijuana clients.
"The opportunities inherent in serving a blossoming industry like the cannabis industry are there for any institution to see, and the early movers will benefit the most," said Taylor West, deputy director of the National Cannabis Industry Association. "I'm sure O Bee's experience working with another highly regulated industry gives them some insight and confidence in making what will be a smart business decision."
The advent of marijuana banking for O Bee fits very much within the original mission for credit unions.
"Credit unions were formed, because certain people were denied banking services," said Lee Wojnar, vice president of marketing for O Bee. "The decision to serve I-502 businesses was in response to our members who, having opened their own legal marijuana businesses in Washington State, had no access to banking services. They had no place to safely deposit their money. They didn't even have a safe way of paying their employees -- or paying taxes. Everything was in cash. We are here to serve our members. That's what it came down to."
O Bee's decision to proceed with this line of business also mandated that the credit union create a different business model for cannabis accounts as Wojnar explained.
"The Washington State Liquor Control Board put together excellent and comprehensive guidelines for working with I-502 account," Wojnar said. "We modeled our own program on their hard work. We thoroughly investigate the state license of each I-502 business before we can determine whether or not we work with a new I-502 business. Fees for these businesses are higher because of the extra time and staff required to serve them."
West believes that this kind of industry leadership will prove profitable for O Bee and other financial institutions like them.
"While I understand the desire of many institutions to keep their industry involvement under wraps, the reality is that those who market to our industry and show themselves to be willing proud partners will gain the biggest share of business," she said.
Because O Bee is one of the first financial institutions in the country not only to serve the cannabis industry but to do so openly, not only has business been brisk, but O Bee has received interest around the country from both credit unions and the banking industry as a whole.
Only 105 banks of the more than 13,000 financial institutions in the country currently work with the marijuana industry, and of those, most do not promote such activity.
"It is recognized that the industry here is underserved," said Wojnar. "The most common question is, 'How do you do it?' Our response is that it's complicated, and there are certainly risks, but in the end our reason for being here is to serve our members. That's the bottom line."
Despite the attention the credit union's decision has brought O Bee, so far, it has not actively advertised this service.
"We have made an announcement through our members-only newsletter," Wojnar said. "We want our members to know that we are providing this service. Their reaction has been positive. Many are proud that we were the first in the country to step forward to serve retail marijuana businesses. Others see it as an important public safety issue. Most people in Washington who are involved in the I-502 industry know about us. It's a small community and our charter allows us to serve only Washington State."
As for the long term impact of O Bee's impact on the still-outstanding federal and state banking regulations that have held back other financial institutions from moving into the space, Wojnar is extremely positive about the future.
"We believe that careful risk management and due diligence in working with our I-502 members will set a satisfactory standard for our industry and federal oversight," he said. "Just as any shift in national acceptance and law, it takes a long time for a standard to change. The acceptance of reduced legal penalties, increasingly legalized medical marijuana and now increasingly legalized recreational marijuana over the past few years would reasonably lead some to believe that the momentum for full federal acceptance is here."
West is also upbeat about the pace of financial reform for the industry.
"We continue to be optimistic about progress on the issue," she said. "Federal agencies have made it clear that they want to see solutions."
The Republican House of Representatives passed legislation last year that would have addressed the issue if the Senate had also taken it up.
And even elected officials who aren't staunch advocates for marijuana reform are calling for our businesses to have access to banking.
"The issue is high-profile now, and as financial institutions begin stepping into the market, the pressure to fix the problem will only increase," West said.
--Written by Marguerite Arnold for MainStreet