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Earlier this month, League President & CEO Todd Mason traveled to Washington as part of a two-day study trip with Maine’s Superintendent of the Bureau of Financial Institutions Lloyd LaFountain to examine Washington’s regulatory framework for cannabis banking. The trip, organized by NASCUS President and CEO Lucy Ito, convened state regulators including the Washington Department of Financial Services and the Washington Liquor and Cannabis Board, Numerica Credit Union of Spokane, and Cinder, a cannabis business.
“Washington legalized marijuana in 2012 and understands the challenges regulators and financial institutions here in Maine are currently facing,” said Mason. “The stakeholders we met with provided us valuable insight and raised many issues for us to consider as we develop our own policies to address the financial needs of legal cannabis businesses.”
NASCUS coordinated the trip in an effort to share best practices and serve as a bridge among colleagues. The timing is beneficial as Maine is developing its own regulations for adult-use cannabis.
“The experience that Washington has collected over the past seven years—and the robust regulatory framework it has developed—made the state an ideal place to learn about the industry,” remarked Ito.
Day one of the trip began in Olympia with a meeting with the Washington Department of Financial Institutions (DFI). Director of Credit Unions Amy Hunter, Supervisor Myriam Powers, and Director of Banks Roberta Hollinshead provided Mason and LaFountain an overview of the framework and approach they use to regulate, monitor, and examine cannabis banking activities. The day also included a meeting with representatives from the Washington Liquor and Cannabis Board (LCB), the primary oversight agency for the state. LCB Director of Licensing and Regulation Becky Smith and LCB CFO Jim Morgan detailed licensing, regulation, and enforcement.
“The state has learned a great deal as it worked—and continues to work—through licensing and oversight, and has even modified its approach over the years,” said Mason. “One thing that hasn’t changed is the close collaboration and communication between the LCB, DFI, state legislature, credit unions and other financial institutions, cannabis business, and other stakeholders.”
On day two, the Maine delegation traveled to Spokane to meet with Numerica Credit Union, one of only four state chartered credit unions serving cannabis businesses. The credit union has been accepting cannabis banking deposits since 2014.
“The Numerica team detailed the size and scope of its operation and outlined its risk profile, which was enormously helpful to hear,” said Mason. “The credit union certainly does its due diligence. Numerica conducts onsite reviews with all of its cannabis business members and meets regularly with vendors, community groups, law enforcement, and regulators. In addition, Numerica’s BSA team meets weekly to review SARs and discuss any unusual activity.”
The final meeting was with Cinder, a cannabis retailer. Cinder’s owner mentioned how thankful he was to have access to financial services from his credit union and noted the safety and security those services provide his business. He also said more should be done to assist the industry. For example, many of his employees have difficulty securing loans and other banking services because they work at a cannabis business, despite earning good incomes.
The League hopes passage of the SAFE Banking Act of 2019 will help ease the burden and risk for those financial institutions interested in serving cannabis businesses in states like Maine where adult-use marijuana is legal. With positive votes from both Congresswoman Pingree and Congressman Golden, the legislation passed the U.S. House of Representatives earlier this fall. It is now before the U.S. Senate for consideration.
In the interim and as the state continues to develop guidelines for cannabis banking, the League will continue advocating in support of the SAFE Banking Act. It also will be forming a task force to explore issues around cannabis banking and resources for members. If your credit union is interested in joining the task force, please email League Executive Vice President Cheryl Lancaster at clancaster@mainecul.org or League Public Affairs & Communications Manager Jen Burke at jburke@mainecul.org.
“One big take-away from our trip is the strong need for collaboration,” said Mason. “Collaboration within our own network, collaboration with policymakers and regulators, and collaboration with peers in other states will all be critical. By keeping an open dialogue and learning from one another, we can provide the cannabis industry the support it needs to safely grow and succeed in Maine.”