CHARLESTON, W.V.-One credit union is among five financial institutions that have submitted bids to provide banking services for West Virginia’s medical cannabis program.
Element FCU was selected by the state, along with Paul Fairbanks IFEB, MVB Financial, DMTLP and JPMorgan to potentially provide financial services.
A spokesperson for Treasurer John Perdue said there is no timeline for selection and that evaluations begin next week, according to the Gazette Mail.
Perdue had announced in March 2018 that financial services providers in the state had earlier indicated they were not interested in processing any sales, fees, licenses or taxes under the program, as it conflicted with federal law, which considers cannabis illegal.
How Program Would Work
Under the West Virginia program, dispensaries are to be taxed at 10% of their gross receipts. Permits to operate as a grower/processor cost $50,000. Permits to operate as a dispensary cost $10,000 per location. The program caps permits at 10 growers (with two locations per permit), 10 processors and 100 dispensaries, the Gazette Mail reported.
The report said Perdue, House Speaker Roger Hanshaw, and West Virginia Attorney General Patrick Morrisey produced an advisory opinion on the medical cannabis program that found that while any medical marijuana business is likely operating in violation of federal law, there’s no evidence of any federal enforcement actions taken against the industry. Likewise, several “safe harbors” exist for businesses operating legally under state laws.
State lawmakers used the opinion to support legislation that allowed Perdue to bid out the banking contract, the Gazette Mail reported. “At the time, they emphasized the ability of a credit union to handle the program’s financial end,” it added.
Response from CUs
However, the Gazette Mail said Richard Shaffer, senior vice president of the West Virginia Credit Union League, offered a lukewarm outlook on the program from the industry. He said the league took a neutral position on the legislation, though he thinks the culture of West Virginia’s credit unions is too risk-averse to seek entry, the publication said.
“We have not advised any credit unions to get into that business,” the Gazette Mail quoted Shaffer as saying. “We have advised them on what the current laws are and provided them all the updates on what the various legal entities have said on it.”
It is estimated it could be another two to three years before any sort of program is in place.