CARSON CITY, Nev.—An amendment before Nevada’s governor may pave the way for medical marijuana companies in this state to gain access to the banking system.
The amendment to a bill on the desk of Gov. Brian Sandoval calls for the creation of new savings and loan institutions that could potentially solve many banking issues for Nevada cannabis dispensaries, growers and related businesses, the Marijuana Business Daily reported. Medical marijuana sales are legal in Nevada.
The amendment, part of a mortgage lending bill, would change the rules so savings and loan companies wouldn’t have to obtain insurance from the FDIC and would be allowed to seek deposit insurance from private insurers, the Marijuana Business Daily reported. The legislation would also remove a provision from state law that limits the operation of thrifts to those that received a license prior to 1997, said Sen. Patricia Farley (R-District 8), a co-sponsor of the amendment.
Private deposit insurance is already permitted in Nevada, where American Share Insurance, Dublin, Ohio, provides coverage to some CUs.
Marijuana businesses across the country face the difficult problem of gaining access to banks and credit unions, and to the payments chain, due to concerns over risks associated with the pot trade. Regulators, even in states where cannabis is legal, have frowned upon banks and credit unions working with the cannabis industry due to the fact marijuana is illegal on the federal level. Outside of a handful of banks and credit unions openly serving the marijuana industry, often pot dispensaries get an FI account, and within less than a year are asked to leave.
A credit union in Colorado, The Fourth Corner CU, has been chartered to serve marijuana businesses in that state, but has yet to open its doors because it has not received approval from NCUA for share insurance coverage. Some analysts think that The Fourth Corner—which had hoped to open for business in January—will never gain share insurance coverage and therefore never open for business.
Sandoval has 10 days, not including Sundays, from the end of the legislative session to sign the bill. If he doesn’t, it passes into law without his signature. The current session ended last week.
Currently, there are no thrifts open in the state, according to Farley, who told the Marijuana Business Daily she has heard from at least two companies that want to start savings and loan companies.
Thrifts could potentially become the go-to financial institutions for cannabis companies – and if the experiment works in Nevada, other states might adopt similar legislation, sources indicated.
“It’s a logical way for the cannabis industry to find a way work with the banking system,” said William Drevant.
Drevant heads a new Illinois-based company, VertePay, which is offering a closed-loop payments system to cannabis businesses to help eliminate their need to handle large amounts of cash.
Despite the bill, a hurdle still remains for FIs wanting to serve the marijuana industry—working out an agreement with the U.S. Federal Reserve so it will take cash deposits from these businesses, an obstacle also facing The Fourth Corner CU.