By Ray Birch
ARVADA, Colo.–Partner Colorado Credit Union hopes that its new CUSO, created to sell and distribute the CU’s internal cannabis banking program, will someday establish a foothold for marijuana business banking in every state that legalizes the sale of pot.
As CUToday.info reported, Partner Colorado recently created Safe Harbor Services, LLC. to more formally offer to other credit unions a service in which it has built an expertise. Matthew Cochran has been named president. Sundie Seefried, Partner Colorado’s CEO, will remain at the helm of the 32,000-member credit union and its Safe Harbor Private Banking internal division, which serves legal pot businesses in this state.
“The issue is we are a $350-million credit union whose internal marijuana business banking division is reaching capacity,” Seefried told CUToday.info. “We can only bank so much of Colorado’s marijuana business—and at $80-$85 million in monthly business, we are going to hit a billion dollars annually. I am at my comfort level limit with how many employees I can hire at risk.”
As CUToday.info also recently reported, Safe Harbor Services has seen a surge in deposits recently, approaching $100 million each month. In addition, the CUSO has also now partnered with another company to offer payment services to cannabis businesses in Hawaii, as CUToday.info reported here.
Relaxed Laws
While numerous states have relaxed laws around marijuana, the federal government has not, which has kept many financial institutions out of the business.
Sundee Seefried
Seefried, who has written a book on providing financial services to the marijuana industry, explained that her concerns center not just on risk, but resources, as well, noting that if a federal fine were ever levied on the CU that its pot business division would be at risk of being closed, and employees could lose their jobs.
“There simply is no way to take this program nationally without creating a CUSO,” said Seefried.
When Safe Harbor Private Banking was introduced in 2015, Seefried spoke of the possibility of taking the program nationally, selling the plans for a proven, sound, compliant marijuana banking program to banks and CUs, and providing support services.
“But, internally, we don’t have the resources,” she said. “So we created our CUSO, we are 51% owner, and we hired a president to take care of it on our behalf.”
Partner Colorado did not create a brand new CUSO. It simply reactivated its Eagle Legacy Services CUSO that was dormant and renamed it.
What has created the need for the CUSO, said Seefried, is the growing interest from banks and credit unions in possibly serving the marijuana industry. Seefried said that since Safe Harbor Private Banking has proven it can bank this business—which despite many states legalizing the sale of pot remains a federal offense—financial institutions are feeling more confident about placing their toes into these waters.
Seefried said that the interest from FIs in modeling Safe Harbor Private Banking has turned 180 degrees since Partner Colorado launched its marijuana banking program.
“Those were darker days,” said Seefried. “No one wanted to talk to us back then. Now our phone is ringing quite bit. Banks and credit unions are interested in a marijuana banking program that is running successfully, is very complaint, thorough, and is not getting fined. You can serve the marijuana industry as long as you do it right—you are doing a community service in getting cash off the streets, and it is very profitable.”
Partner Colorado serves 135 marijuana businesses across the state.
The official, national launch for the CUSO will take place at the Marijuana Business Conference, Nov. 14-17, in Las Vegas. Ahead of that, the CUSO has five pilot programs at banks and CUs underway today.
“The CUSO will offer a turnkey program to financial institutions, and we will also take some of the detailed, labor-intensive and very critical work that drives success for a marijuana banking program off their hands by centralizing it at the CUSO,” Seefried said.
'Extremely Precise'
Seefried explained that with the credit union’s internal pot banking program, Partner Colorado has had to be extremely precise and detailed in its work, and regularly grow its knowledge as the pot banking business evolves.
“We continue to study and learn this industry and its associated and emerging risks, and we mitigate those risks to meet regulatory guidelines,” said Seefried. “We now have 11 dedicated full-time management-level BSA officers working inside the credit union’s own program, serving our 135 clients in this state. And their jobs are at risk until all this gets normalized across the country.”
Seefried said that creating a CUSO to take the program nationally in part is a step to protect the CU.
“The big question is how do you price the risk of potential prosecution,” said Seefried. “You can’t price that in. Deutsche Bank was recently fined $41 million because of its BSA program. If the federal government hit us with a $41-million fine . . .”