By Omar Sacirbey
Sundie Seefried was ready to retire as CEO of a Colorado credit union when some lawyer friends asked why she couldn’t bank their marijuana business clients.
Good question, she thought. Seefried met with bankers, lawyers and cannabis business owners. What she learned scared her out of retiring.
Bankers, in short, were telling MJ companies to break the law, Seefried said, inspiring her to postpone retirement and work with cannabis businesses.
Seefried, CEO of Partner Colorado Credit Union, launched her institution’s marijuana banking program in 2014. Today it counts about 85 clients. She recently published a book about MJ banking: “Navigating Safe Harbor: Cannabis Banking in a Time of Uncertainty.”
“Don’t leave your banker guessing,” she said.
What made you want to get into cannabis banking?
When I sat down to talk with marijuana businesses it was clear they had learned things they’re not supposed to know. Bankers had taught them how to do things that were criminal. I thought, ‘The banking industry is trying to make criminals out of an industry that is trying to legitimize itself, and I’m a part of that banking industry and I’m ashamed.’
What I didn’t know was how much work it was going to be.
How did you establish your cannabis banking system?
I have 35 years of banking experience with regulators and auditors, and know exactly how the rules and regulations play out. You first must have a good knowledge of how to work within guidelines. Once you really study those guidelines and put all that knowledge and experience together, you start to see there’s a path. You can mitigate that risk, and you keep making it up as you see what the risks are the government is worried about.
Then you create systems. I had all my conceptual mitigation strategies done before I hit the road. But I did not know the cannabis industry. They’ve been under the radar for so long that nobody knew their business. To bank the cannabis business – and meet (regulatory) guidelines – you have to understand the business model, you have to know the owners, you have to understand their money, and you don’t have a lot to go on.
What must a marijuana-touching business do to be an attractive client for a bank?
In our interviews we have to hear that compliance is a priority and whether company officials understand how licenses work, how the regulatory environment works, and how to train employees. If I know you have 10 compliance officers, I know you’re protecting the business. If you’re protecting the business, you’re protecting me, the bank.
The second thing I look for is staff knowledge, the ability to run a business, and the ability to understand what we need to do to be compliant with regulations. That boils down to the source of funds. The biggest issue is money laundering coming out of the black market. So how do you account for that money? Where does it come from? What’s it being used for? They must be willing to prove the source of funds. You can’t let any ill-gotten dollars go through your bank.
The third important thing is transparency. Say someone says, ‘I don’t want to provide you those documents.’ Then you probably don’t want to bank with me.
How aware are marijuana business owners of what they need to do to be compliant?
The majority know it. The reason they know it is because the cannabis industry is so highly regulated. They get the fact that we’re so highly regulated. If (a regulator) were to come in and scrutinize the account, my bankers would be the first ones to stand in front of that money and say, ‘That’s legitimate money, let me show you.’ You want your bank to have everything to be able to say, ‘We know this business and we know their money.’ Don’t leave your banker guessing.
What are the main questions a marijuana business should expect to answer if a banker comes in?
How do you monitor for employee theft and what do you do when you find it? How do you prevent product from getting out the back door? How are you locking that down so you have no leakage of product? How are you monitoring your licenses on a regular basis? How do you make sure that you’re doing business only with people who are compliant? How are you protecting yourself? If you can’t protect yourself, you can’t protect us.
Are bankers becoming more comfortable with banking marijuana?
People don’t want to talk about it. These are conservative bankers who are not interested in putting themselves at risk.
We started a (marijuana-related) roundtable of credit unions with about 10 members. We meet quarterly and are mostly trying to provide education nationally and open the doors for the conversation.
One national credit union association wants to highlight this on their agenda at their next national conference. They want to lead rather than wait for their credit unions to drag them along. That’s really great.
And it’s changing. The baby boomers are retiring, and that next generation is coming in. So now you might have CEOs more willing to take a risk.
Will the elections have an impact?
Anybody who’s looking at marijuana banking is on hold til November. But after, I think there’s going to be a rush to action. I truly believe we are at the tipping point of banking.
This interview has been edited for length and clarity.
Omar Sacirbey can be reached at firstname.lastname@example.org