SAFER Banking Act Clears Senate Committee

NCIA (and myself personally!) have been talking about the SAFE Banking Act for years

After the Senate Banking Committee’s hearing on the topic of financial services and the cannabis industry in May, it became clear that in order for the bill to continue on in the legislative process and receive a markup that changes to a few sections needed to be made. 

As a result, a slightly new (and improved?) version of the bill was introduced as the SAFER (S. 2860: Secure and Fair Enforcement Regulation) Banking Act last month. Most of the changes in the bill pertained to Section 10, which bars federal banking regulators from taking discriminatory enforcement action against any industry (not just cannabis). 

Once SAFER was formally introduced, the Senate Banking Committee announced that a markup was scheduled for September 27. It’s important to note that this was the first time ever that a Senate committee held a markup on a pro-cannabis bill. 

During the markup session, multiple amendments were offered. The first, offered by Chairman Brown (D-OH) was what’s known as a “manager’s amendment” and primarily made technical changes to the bill. That amendment also made changes so that the Treasury secretary would be given one year (instead of 180 days) to issue updated guidance to financial institutions that work with cannabis businesses that was first released during the Obama administration in 2014. It also stipulated that federal home loan banks are now included under a list of financial institutions that would be protected from being penalized by federal regulators simply for working with state-legal cannabis businesses.

Another amendment, from Sen. Warnock (D-GA) would have created a 5-year sunset for the legislation unless a report from the Treasury Department certified that it had decreased the racial wealth gap and ameliorated other negative economic impacts of the war on drugs. This amendment ultimately failed. 

Additionally, amendments from Senators Hagerty (R-TN), Rounds (R-SD), Crapo (R-ID) were also offered but were ruled out of order, withdrawn, and failed, respectively.

Republican members of the committee voiced concern that the bill allowed for financial institutes to utilize reputational risk to de-bank certain accounts they do not align with ideologically and argued that no financial regulator should be able to pressure any financial entity to refuse to provide service to a lawful entity.

Some Democrat members, particularly Sen. Warnock (D-GA), voiced concern that the bill does not adequately address the disproportionate impacts of marijuana criminalization and its exacerbation of the racial wealth gap in the United States. Other members of the committee encouraged amendments and future legislation intended to improve the quality of life for those most negatively impacted by marijuana criminalization in addition to creating safer conditions for banks and other financial institutions. Sen. Warnock was the lone Democrat who voted “No” on the bill during the markup. 

Ultimately, the bill passed out of the committee markup by a bipartisan vote of 14-9. This sets the stage for a full Senate floor vote, which Majority Leader Schumer (D-NY) has committed to scheduling as soon as possible, with the possibility of adding the HOPE and GRAM Acts to the bill before passage.

I don’t know about you, but I’m not done making history yet! Stay tuned for the latest on the SAFER Banking Act and how you can help get the bill passed! 

Committee Blog: Banking in the Cannabis World

By: Shawn Kruger, Avivatech
Contributing Authors: Paul Dunford, Green Check Verified | Todd Glider, MobiusPay Inc. | Kameron Richards, Kameron Richards Esq.
Produced by: NCIA’s Banking & Financial Services Committee

The Landscape

With recreational marijuana legalized in 23 states, Washington D.C. and Guam, the public continues to broadly favor legalization for medical and recreational purposes. Why then, is it still a challenge for the cannabis industry to access financial services? The short answer: cannabis banking is risky for financial institutions (FIs), and bankers are committed to avoiding unnecessary risk. Historically, FIs have worked to keep funds associated with illegal activity out of their banks and credit unions, so FIs are sensitive to conflicting state and federal cannabis laws. For example, many FIs are regulated by federal agencies, but marijuana is a Schedule I controlled substance.

Navigating the Challenges

However, there are many banks and credit unions that have taken this risk for a variety of reasons, including creating new sources of income, a desire to serve the unbanked in their communities, and supporting the social equity initiatives in the cannabis industry. These FIs are usually discreet about their cannabis banking programs, and it’s often hard to identify them through your typical approach: prowling websites, Google searches or even trade shows (although this has improved over the past 12 to 18 months). 

Fortunately, the best approach is also a well-trusted option: word of mouth. Contact lawyers, accountants and bookkeepers in your area. If they represent or work with other local marijuana related businesses (MRBs), they may know who they are banking with or know someone who does. You should also consider contacting the FIs directly, even if you don’t know if they are working with MRBs. You might be surprised to find that they do, and if they don’t, they might redirect you to another FI in the area. Finally, organizations like the PBC Conference team, provide resources to aid your search, including a Cannabis Banking Directory published annually.

Focus your search on credit unions, community banks, and regional banks. We are entering a new phase of cannabis banking with some FIs offering more than just a place to park your cash. A growing number now offer loans, payroll services, business insurance, etc., so take time to see what’s available, compare multiple FIs’ programs, and find the best match for your cannabis-related business’ (CRB) needs. 

Be Prepared

Every action taken by an FI, regardless of their location or asset size, is closely scrutinized by state and federal banking regulators, and law enforcement agencies. They want to make sure that banks and credit unions are only working with legitimate and legal state CRBs. Therefore, you can expect an FI to require a combination of the following:

  • Driver’s license or other acceptable state-issued identification for all account holders
  • Information on all beneficial owners of the company, not just those who own a percentage of the company above a certain percentage threshold (such as 20%)
  • Tax returns for the previous year for both the company and the beneficial owners
  • Financial information such as profit and loss accounts and capitalization tables
  • A copy of any required state licenses
  • Operational data such as projected annual sales and number of patients/customers
  • Corporate formation documents such as articles of incorporation and business plans
  • Sales transaction data (store reports or invoices) for the past thirty days

Behind the scenes of cannabis banking, FIs must do a lot to ensure that they are onboarding only legitimate CRBs; from collecting and analyzing market transactions to conducting reporting. This means that FIs often have additional staff to fulfill their compliance duties and they invest in software to automate some of their monitoring. FIs invest heavily in banking cannabis and account fees help offset those expenses. This means you can expect to pay account setup fees and monthly account maintenance fees to help cover these costs. Prices have come down in recent years. The days of paying $5,000 per month for an easy deposit account are long gone, but the fees will remain high as long as a lot of oversight and reporting falls on FIs.

Embrace the Journey

FIs are far savvier about detecting MRB activity among their existing customer/member accounts. At this point, it’s not a question of “if” your FI will find out you’re an MRB, but when. Few things are more disruptive to a business than getting a letter from your FI informing you that your account will be closed in thirty days. Don’t put yourself in that position.  Additionally, you may be missing out on vital financial and business services by staying “under the radar” and not having a transparent relationship with a bank or credit union.  Start looking for a cannabis-friendly bank or credit union today!

Member Blog: The Evolution of Cannabis-Friendly Banks and Credit Unions

If you are a cannabis-related business (CRB) looking for banking services, that search is becoming less demanding. With the U.S. cannabis market expected to exceed $70 billion by 2030, financial institutions are increasingly becoming aware of the opportunity to boost their bottom lines, while supporting the safety and economic development of their local communities. As friendlier cannabis banking legislation emerges from Washington, D.C., we expect to see thousands of financial institutions actively serving the industry, up from the approximately 250 banks and credit unions serving the industry today.

Early on, smaller credit unions were among the most prevalent pioneers in the industry. Even today, most banks and credit unions that are cannabis-friendly are less than $1 billion in size. That trend is changing rapidly, though, and with it, an increased level of sophistication is supporting the cannabis ecosystem. In fact, at least two banks with assets larger than $50 billion on the East and West Coast respectively have entered the market and by all accounts, have booming portfolios.

When looking for a banking partner, CRBs should consider a few key questions:

  • Does the bank or credit union have an existing cannabis portfolio?
  • What are the fees for service?
  • Can the financial institution provide ACH services for business-to-business transactions?
  • How does it handle cash deposits?

Deposit taking is the primary focus of cannabis-friendly financial institutions however there is activity in a few key areas relevant to the industry.

Lending

Fast-growing industries like cannabis are always in need of growth capital, and the banking sector has been slow to fill this void. The exception to this is in mature markets (such as Oregon, Colorado, and Massachusetts) where banks and credit unions in search of low-cost deposits are increasingly offering lending to attract legal cannabis operators to their institutions. While interest rates are still higher than typical business loans and generally require personal guarantees, the advent of cannabis lending is a welcomed relief to founders and others who have historically had to part with equity to meet capital needs.

Fortunately, lending is increasingly becoming mainstream. By our estimates, 50 or so banks and credit unions have opened their wallets in this regard, with most of the lending activity tied to commercial real estate. Equipment financing has also become more prevalent, and operating lines of credit are extended rarely to those firms with deep operational experience and more substantial balance sheets.

Payments

Until federal legalization occurs, the payments space will continue to include workarounds created by fintech entrepreneurs and others. ACH wallets tied to loyalty programs are often seen in medical markets, and until the end of 2022, cashless ATMs had widespread adoption on the adult-use side.

Most recently, PIN-based debit solutions running on the regional debit rails are gaining traction, and these options pass compliance hurdles that were not present with cashless ATMs. With their advent, merchants are also seeing an increase in sales of 20% or so as compared to cash-only environments.

Access to banking and financial services in the cannabis industry has come a long way in the last decade yet has a long way to go. There is a real advantage for early movers to provide services and we expect more and more financial institutions to recognize the opportunity and get involved.

Service Solutions | 10.26.22 | Show Me the Money – The Current State of Cannabis Lending

NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.

In this edition originally aired on Wednesday, October 26, 2022 we were joined by the experts from cannabis-focused financial institutions FundCanna, Safe Harbor Financial, and AVANA Companies to dive deep into the current state of cannabis lending with leading industry journalist John Schroyer of Green Market Report.

A decade after California and Colorado became the first adult use states, the regulated U.S. cannabis market encompasses over 70,000 cannabis-related businesses. Shockingly, most of those businesses still lack easy access to debt and other forms of growth and operating capital. From federal prohibitions and the impact of IRS regulation 280e, to state and local taxation issues, the costs of operating a regulated cannabis company continue to remain nearly unendurable.

Learn what may change in the coming six to 12 months so you’ll know how to access debt capital most cost-effectively in this ever evolving environment. No matter your place in the industry or the supply chain from cultivators, manufacturers, vendors, suppliers, distributors and retailers this conversation will provide the insights to meet your financial needs.

At the conclusion of the discussion our panel hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the financial services space, join today to contribute to future conversations!

Panelists:

Adam Stettner
Founder & CEO
FundCanna

Sundie Seefried
Founder and CEO
Safe Harbor Financial

Sanat Patel
Co-Founder and CEO
AVANA Companies

John Scroyer
Senior Reporter
Green Market Report

Session Chapters & Discussion Outline

00:00 – Session Intro

01:09 – Moderator Intro

01:45 – Panelists Intro

02:13Equity vs. Debt: With equity dried up, should cannabis companies be looking at debt financing to grow now?

07:28Equity vs. Debt: What do borrowers need to do before approaching a debt provider (vs. an equity provider)?

13:25Equity vs. Debt: What can cannabis companies or entrepreneurs do to improve their overall credit worthiness prior to seeking capital?

17:16 – How has the interest rate increases by the Federal Reserve impacted capital markets (and the industry at large) in 2022?

26:07Audience Q&A: “If there’s “no reason not to have banking” for your cannabis business how can I easily (and inexpensively) establish and maintain a compliant bank account?”

28:56Lending: What significant lending challenges are your clients currently facing within the industry?

33:56Lending: What advice can you provide business owners for evaluating lenders that you should (or shouldn’t) work with and tips for avoiding predatory lending practices?

39:05Cannabis Reform: What impact do you expect President Biden’s recent announcement will have on the industry?

49:32Audience Q&A: “Are your financial institutions planning to offer lending and banking services in New York, New Jersey and other new markets?”

51:42Audience Q&A: “With the mindset of “Investors are betting on the Jockey not the Horse.” What type of CEO or founding team would be a red flag or not a viable investment?”

55:19Audience Q&A: “How can I start to shift my retail company from being primarily a cash-only business?”

58:00 – Final Thoughts & Contact Information

1:01:24 – Session Outro & Upcoming Events

1:05:03 – NCIA Member Appreciation Credit Sequence

 

Sponsored By:

Committee Blog: Four Tips for Cannabis Businesses to Maintain Cannabis Friendly Financial Services

by Kameron Richards and Steven Schain
Members of NCIA’s Banking & Financial Services Committee

Obtaining legitimate, cannabis-friendly financial services is among the cannabis industry’s biggest hurdles. Obtaining financial services is challenging for dispensaries, marijuana grows, and testing labs but it could also be an obstacle for non-plant touching businesses or individuals engaged in the cannabis industry. Without cannabis-friendly financial services, individuals and businesses related to the cannabis industry are deprived of simple financial solutions, like checking accounts, resulting in large amounts of cash being held at company facilities or the operator’s residence, posing significant risks.

Because only a small amount of insured banks and credit unions offer cannabis businesses financial services, finding cannabis-friendly financial services offered by FDIC or NCUA/CUNA institutions is challenging, and following a certain approach may fortify the longevity of a relationship with a financial institution.

Know Your Company Information and Banking Needs 

Thorough onboarding initiates the account opening process for cannabis companies seeking financial services. Cannabis-friendly financial institutions exercise enhanced due diligence at account opening for compliance purposes, which will be further discussed in this article. 

Financial institutions may require information on state licensing, corporate structure, and governance documents. Institutions generally collect information regarding the company’s underlying products and whether those products or services violate The Controlled Substances Act (“CSA”). Information collected during the onboarding process often determines the institution’s fee, risk-based categorization, and willingness to provide financial services to a particular cannabis company. 

During the onboarding process, cannabis companies should determine if the financial institution provides all services necessary for its specific operation. The services offered by cannabis-friendly financial institutions may vary based on its risk tolerance.

Know Compliance Requirements and Cannabis-Specific Programs 

Financial institutions serving the cannabis industry must comply with The Bank Secrecy Act’s (“BSA”) requirements set forth in the Treasury Department’s Financial Crimes Enforcement Network’s (“FinCEN”) BSA Expectations Regarding Marijuana Banking (FIN-2014-G001) (“FinCEN Guidance”). To mitigate the possibility of money laundering, institutions assemble extensive risk-based BSA programs centered around assessing the risk of each cannabis account and detecting and reporting “Red Flags” set forth by FinCEN Guidance. 

To understand the constraints under which financial institutions are forced to operate, cannabis companies should familiarize themselves with relevant cannabis industry regulatory guidance and, if possible, structure its operations to ease its financial institution’s compliance efforts. Further, cannabis companies should understand any contractual terms and operation of any specific cannabis programs required by its financial institution (e.g., participation in cannabis-specific programs to support loan approvals, liquidity management or the coordination of cash courier services).

Know the Risk-Based Approach

FinCEN Guidance requires institutions to perform enhanced due diligence on cannabis companies, because the risk category of each cannabis account is determined during the onboarding process, institutions are required to obtain corporate and state licensing documentation and detect any negative news on the potential account signers and the business.

Because there is no mandated risk-based structure for institutions to follow, it is critical that cannabis companies know its institution’s specific risk-based structure. Further, if a cannabis company is utilizing more than one institution, it should understand that each institution’s risk-based categorization may have specific factors or considerations. Some institutions use a tiering structure (which can vary by institution) or make this determination based on the direct or indirect relationship that the account’s source of funds has with cannabis prohibited by the CSA. An institution’s risk-based categorization could determine an account holder’s compliance obligations or eligibility for financial services such as lending, treasury services, payment processing, and 401(k)/retirement solutions.

Know What Could Cause Account Termination

After completing the onboarding process and placing cannabis accounts in the requisite risk profile (which may vary among institutions), institutions are obligated to conduct ongoing enhanced due diligence on cannabis accounts in accordance with the risk each account poses. 

This enhanced due diligence encompasses staying abreast of corporate changes, confirming that all licenses are up to date and conducting periodic negative news checks that indicate FinCEN Guidance “Red Flags.” It can also include a litany of happenings that cannabis account holders may not be aware of. While cannabis account signers may be compliant, without any negative news on them or their business, their institution could also close an account due to adverse information from tax and state licensing authorities or wrongdoing by employees or vendors. Cannabis account holders should also be aware of transactions prohibited by its institution’s policies and procedures like commingling funds between non-plant touching and plant touching accounts or transferring funds to and from vague accounts at unaware institutions unwilling to serve the cannabis industry. 

Cannabis account holders with multiple relationships should be aware that each institution’s closure protocol may vary in response to adverse information or conducting transactions prohibited by internal policies and procedures (account termination terms are often contained in the depository agreement between the institution and cannabis account holder). 

Conclusion 

Beyond assisting a business’ core functioning, maintaining relationships with legitimate financial institutions leads to strategic advantages for a cannabis company and its owners and operators, like financing or payment processing.  

Further, because FinCEN requires institutions to monitor and report cannabis account transactions and file a Suspicious Activity Report (SAR) when a cannabis account is opened or closed or if “Red Flags” are detected; cannabis companies can protect their accounts and businesses by knowing applicable laws and regulations and their institution’s cannabis-specific programs’ policies and procedures. 

Member Blog: Trials and Tribulations – Compliance for Banking

by Nicole Perry, DartBank

There are not a lot of financial institutions out there that support cannabis, so finding the right one is important. What is also important is to understand the ‘why’ behind what they are asking. Opening a cannabis bank account is not as easy as opening a traditional business bank account. With cannabis being federally illegal, banks, and credit unions must adhere to the rules and regulations set forth by our regulators, also tying in the respective state that the cannabis business is operating in.  

An initial phone call is often set up for the financial institution to learn more about the cannabis business, its owners, and signers. Knowing when the business will be operational and what their big picture looks like is fundamentally important. Questions could be asked about ownership, location, growth, licenses, and compliance. Some products and services are not fully available to the cannabis industry, because other players have not fully opted in (i.e., merchant processing and debit/credit cards). This makes the financial institution banking cannabis able to create a product suite that they feel comfortable with from a risk and compliance standpoint. Pricing out cannabis bank accounts is also something that differs from the traditional businesses being banked. 

Again, not every financial institution will support cannabis, and that is because it is expensive. It is expensive because those that support the industry have had to seek guidance from consultants, their respective regulator, their state, their local cannabis groups and associations and their board of directors. The initial onboarding of a cannabis customer, after pricing is accepted, takes longer as well. Background and credit checks, as well as risk reviews need to be completed at most financial institutions, along with an initial onsite audit visit. 

It is widely understood that cannabis businesses must go through an inspection with their operating state before they are licensed, however, financial institutions are still required to make sure they know what they are working with. Most financial institutions work closely with their compliance/BSA teams to develop risk profiles so that if questions are asked of them during an audit, they can answer to the best of their knowledge the transactions that are occurring and then prove that we understand what the cannabis businesses are using their accounts for. Many financial institutions have implemented the use of compliance software that allows their cannabis departments to review transactions, seed-to-sale monitoring, monitor licensing, insurance, onsite visits, and financial changes. METRC and Bio Track are the two main seed-to-sale tracking systems used throughout the United States. Most states have adopted using one or the other and few have implemented their own manual tracking. 

The seed-to-sale system your financial institution chooses to work with can integrate with your respective state’s seed-to-sale tracking system for financial institutions to monitor account transactions and seed-to-sale flow. It is common to have your financial institution reach out to you once you have been onboarded to integrate your API key (QR code that houses your cannabis licenses) into their respective compliance software to initialize the tracking component. Directly after this, the designated person at the cannabis business or CPA (to be determined by the cannabis business) will be asked to upload your financials into the compliance software monthly for tracking purposes. These systems correlate with most POS systems as well as QuickBooks for a seamless flow. Financial Institutions are often asked by cannabis businesses if this is something they can do in-house or if they can utilize an outside CPA firm to help. The answer is yes to both. It takes minimal time each month to upload your financials so doing it yourself is certainly feasible, however, there are many CPA firms out there who will do it for you, along with making sure your numbers make sense and your taxes are accounted for. Not to mention, the annual CPA attestation as well. 

Financial institutions are not asking you to do this to make your life difficult. It is simply because this is a new industry, one that is federally illegal at that, and verifying information to better understand how the industry works only helps to normalize it. It is also common for your financial institution to ask for invoices to accompany transactions such as wires, ACH, bill pay, checks, cash deposits, etc. We do this because auditors also ask us if we can, in fact, verify we know what this transaction was for and to whom the funds went. It also helps with fraud surveillance. Most financial institutions have experts in fraud or compliance who can help deter this from happening to you and your business. 

We have come a long way since inception and have learned a lot over the years. What is important to know is we are all a team. The cannabis business and the financial institution are working together to understand how they both complement each other. Together we are building the cannabis industry, so that one day, when it is stabilized and normalized, we can take that with us for the next big thing. Every industry out there was new at one point and had to go through the same trials and tribulations, and while most of us cannot remember or have never been a part of the ‘build out,’ it did happen at some point. When your financial institution asks you for something related to transactions or business, please understand that it is for the better of the industry.

We can work together to normalize and strengthen this industry. All the steps we are taking are learning opportunities. I believe everyone can say at one point they did not know how to do something, but through training, education, and a road map, we were able to develop a routine so that as we grew at understanding something we had not understood before, it became normal. 


Nicole Perry has been with Dart Bank since 2016 as the Office Manager and most recently VP/Senior Treasury Management Officer. She brings with her 20 years of financial services experience. Prior to joining Dart Bank, she worked for various financial institutions holding many different roles, specializing in business banking.

Nicole is an alumna of the Lansing Chamber of Commerce’s Lansing Leadership 2018 class and is part of the Perry School of Banking class of 2020. She received her Bachelor of Arts in Business Management with an emphasis in Human Resources from Davenport University and attended Central Michigan University for her Master of Science degree. In her spare time, Nicole enjoys attending Michigan State University football and basketball games and spending time with her family and friends at the lake.

U.S. Cannabis Business Conditions Survey Report Reveals Critical Concerns for the Cannabis Industry in 2022

by Beau Whitney, NCIA’s Chief Economist

As the largest national trade association of the cannabis industry, NCIA works to advocate for and advance the interests of hundreds of member businesses. The recent publication of the Whitney Economics U.S. Cannabis Business Conditions Survey Report offers a granular look at how respondents are feeling, and what they are worried about. 

Survey description

There were a total of 396 respondents to the Whitney Economics U.S. Cannabis Business Conditions Survey. Respondents were either licensed cannabis businesses or ancillary businesses to the cannabis industry, and were from 20 states across the country. According to the report, the objective of the survey was to “establish a baseline of data, and identify the successes and the challenges that operators in the industry are facing.” 

The survey examined policy, regulatory issues, industry successes, and overall industry sentiment using questions around demographics, questions intended to definitively answer a specific question, and questions with the opportunity to offer multiple responses or comments. We are pleased that NCIA members participated in the survey. Because this survey is intended to be conducted on a quarterly basis moving forward, we expect that a growing number of the NCIA membership will want to participate.

Key Takeaways From the Survey

  • Only 42% of respondents are turning a profit. Further, in terms of profitability, female respondents and non-white respondents are faring much worse than white, male respondents. 
    • While 58% of businesses overall are not making a profit (either breaking even or losing money), 62.5% of female-run businesses are not turning a profit and 67.8% of BIPOC businesses are not turning a profit. 
  • Lack of banking, market volatility, and state & federal taxation are the key issues facing cannabis operators. 
    • 72% of respondents stated that access to banking and other financial services was the top issue facing them.
    • Smaller operators are struggling by being pulled in two different directions. On one side is the competition from the illicit market that competes for the same customers as the smaller operators and the other side is the ever presence of big businesses looking to consolidate the market.
    • Taxation is an issue that impacts all businesses regardless of size. Cannabis operators run the risk of being taxed out of business. State policymakers are focused on state issues without considering the impact of federal policy and federal policymakers are not considering the state policy. This lack of a unified tax policy is creating strain on business operators. 
  • The concerns of the industry are weighing heavier on the minds of operators than are the successes, and this is impacting industry sentiment.
    • Business owners are quite proud of their accomplishments over the past year, from increasing opportunities for women and minorities, to doing more for their workers and educating an ever-increasing clientele.
    • Despite this success though, cannabis operators’ concerns far outweigh their feeling of success and this is impacting the overall sentiment.
    • The word cloud on the successes tells a compelling story.

We are very excited that we have now established a baseline of new data that reflects operator sentiment and business conditions. This can help support the narratives with data when having policy discussions at the state and federal levels and to help shape strategy for operators in this space.

“We are delighted on how this initial survey turned out and look forward to surveying the cannabis landscape regularly in the future. We really appreciate the support we received from leading national cannabis organizations such as NCIA.” – Beau Whitney

Legal and Banking Committee: White Paper – Financial Institutions

By Dana Chaves, Ms. Mary Staffing/Hybrid Payroll
Vice Chair of NCIA’s Legal and Banking Committee

During our inaugural meeting in Oakland California in June of 2017, the Legal and Banking Committee discussed the impending issues impacting the cannabis industry. It was decided that the biggest issue that needed immediate attention was of course banking and the inability for businesses in the cannabis space to obtain and maintain a checking account in order to pay taxes, bills and more importantly payroll for employees.

As a group we decided that writing a white paper and subsequently a supporting PowerPoint slide deck to present to financial institutions, executives and board members in a lunch-and-learn environment would be the most effective way to educate not only financial institutions but also state regulatory agencies as well on how to work together on the best practices for mitigating risks surrounding the Bank Secrecy Act and resources needed for compliance.

It is the hope of the LBC Committee to assist financial Institutions in a nationwide effort to begin the process of protecting the communities where marijuana is legal and by legitimizing the industry by allowing banking and lending services to both business owners and their employees.

Read the white paper, “Investigating the Role of Financial Institutions in the Legal Cannabis Industry” -produced by NCIA’s Legal and Banking Committee.

Click here to read the report

 

Member Spotlight: Hypur

For December’s member spotlight, we zoom in on Arizona-based Hypur, an NCIA member business who is committed to “innovation with purpose” by providing solutions for one of our industry’s major hurdles: financial compliance. Navigating the various layers of regulations with mastery is an important aspect of being transparent, legitimate, and compliant, and is an essential cornerstone of NCIA’s mission and values. 

hypur_logo_fullcolor600Cannabis Industry Sectors:

Software Technology, Compliance, Financial Services

NCIA Member Since:

2015

What technology solutions does Hypur provide?

Our solution is a technology platform that provides unprecedented transparency and accountability for banks and regulators, and legitimacy, safety, and convenience for businesses and their customers. With many banks and credit unions wanting to bank these booming industries, and government bodies wanting banking services available to them, we knew the demand for our platform would be robust. Hypur represents the future of commerce for cash-intensive businesses and high-risk challenging industries. Hypur’s technology provides financial institutions with a state-of-the-art compliance platform that enables them to profitably bank these businesses – revolutionizing the businesses and the communities they operate in.

What kind of banking and payment solutions does Hypur provide?

Hypur Mobile AppThe Hypur payment network is available to clients of our financial institutions. It gives retail locations the ability to accept cashless payments from their consumers via their mobile devices. Additionally, businesses that have accounts at Hypur partner financial institutions have the ability to conduct business-to-business transfers electronically without cash.

Can you give us some insight into the unique regulations that affect cannabis business owners in your sector?

Hypur serves financial institutions, which must comply with FinCEN guidance and all BSA/AML laws that govern their institutions. They must also comply with regulatory expectations from the FDIC (Federal Deposit Insurance Corporation), OCC (Office of the Comptroller of the Currency), or NCUA (National Credit Union Association).

Why did you join NCIA?

Hypur always seeks to support leading organizations that intersect with industries of interest. We have taken note of the many important ways that NCIA is advocating for fairness, education, and awareness for the legal cannabis market, and are delighted to be a part of the NCIA community.

Contact Hypur:
Website
Twitter

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