I've been looking at the cannabis banking issue all wrong. I needed Sundie Seefried to show me the way.
From what I've found Sundie appears to be one smart lady with a lot of experience and common sense. Some may say she is taking huge risk, but from another perspective she is actually trying to mitigate some serious risks to all Coloradans. Lawmakers are the ones making society riskier for everyone else by not allowing cannabis cash into the banking system. Many banks are banking cannabis businesses without knowing it, or willfully looking the other way, both of which are big problems. The following is from Sundie's Amazon author profile:
Sundie Seefried is CEO and president of Partner Colorado Credit Union located in Denver, Colorado. She has served in the credit union industry since 1983 and as CEO since 2001. She holds a bachelor's in business management from the University of Maryland and an MBA in finance from Regis University.
At Partner Colorado, Seefried has focused on establishing a culture of service and sales excellence. Under her leadership, and with the support of the board and the staff, Partner Colorado was named to a top-10 list of Best Places to Work in Denver for eight consecutive years, from 2005 to 2012.
Poised to retire in 2014, Seefried instead embarked on what has been the biggest challenge of her eventful career: designing and building a full-scope cannabis-banking program. The program she devised, tested and launched has not only withstood the scrutiny of federal and state regulators, it has succeeded financially.
Just as important, by banking an industry that once had little choice but to execute all its transactions in cash, Seefried and her Partner Colorado team have made communities all over the state safer.
I've got her book on the way. Having worked in banking and cannabis, this is just about the most excited I've ever been to receive a book in the mail. I can't wait. The program Safe Harbor Private Banking appears to be licensing to other credit unions could be the basis for a whole new consultancy for cannabis bankers.
I found these articles below while doing research and they led me to Sundie, who made it crystal clear that credit unions could very well be our saviors. And it's easy to get tons of data and information on credit unions and banks given the regulatory regime.
Here here! Forget all that negativity out there about cannabis banking! We've got community focused credit unions to the rescue! I've heard of some in other states as well like Maps CU and Salal CU!
Below are some choice phrases from these two articles, none of the following is my content:
"At the start of the year Partner Colorado CU introduced its marijuana banking program, a new business platform serving the pot industry in this state, and a program the CU plans to offer to FIs across the country.
The initiative’s developer, CEO Sundie Seefried, said the program markedly shortens the lengthy learning curve FIs face in serving the pot industry, reduces the FI’s risk exposure, and outlines how to effectively serve this business to generate income. Partner Colorado expects to make $300,000 in the second year of the program.
But most important to the credit union, and the reason why the $287-million CU began serving pot businesses, is that a lot of money is being taken off the streets. Since the program began, $55 million in deposits have rolled in.
She said the businesses convert the cash into money orders to pay electric bills and other overhead expenses, including costs for maintaining their own homes. And if they are fortunate to have an account at a financial institution, Seefried said they will convert the cash into money orders that are just under $10,000 to avoid a BSA report and potentially being kicked out of the FI.
“When I learned this, I said, ‘Oh my god. By these businesses not being openly served by financial institutions we are making criminals of them,’” said Seefried. “We are teaching them how to structure deposits, which is illegal. That’s horrible. Here is a legitimate industry that the people of Colorado have voted in and we won’t give them banking services. Instead we throw them into the gray area of banking, have them hiding money.”
The marijuana banking program is what the CU is calling the effort internally. To the public the program is known as Safe Harbor Private Banking, a business name the CU has rights to on a national level.
Much of what Safe Harbor Private Banking will share with other FIs who buy the program is intellectual capital acquired by Seefried and the new CU division’s staff. Seefried did not say how much the program would cost and when it might be available.
“The program takes all the information we have gathered in terms of learning the marijuana industry, and offers a system of forms and processes that allow the financial institution to accurately monitor the money flow from these businesses,” said Seefried, noting that of the $55 million the CU has taken in to date, much if it has flowed back out. “We have a real robust post-account-opening monitoring system that we have created that does everything from look at deposits and withdrawals, to actual product being grown on site, and monitors that every month. That is the key here, accurately following the flow of the product and money. I promised my board that we would develop a program to keep the credit union safe, the clients safe, and me safe—out of harm’s way from prosecution.”
“I knew all the regulations and the mitigating strategies, but what I did not know was the marijuana business,” said Seefried. “It was like entering unbelievable new territory for me. And I had to learn this industry because FinCEN requires you to know enough about each business to monitor it. This is labor intensive. FinCEN requires that you know the business, the owners and the money—and you can’t leave that to a computer.”
It took Seefried getting out of the office to personally see what a grow farm is, a dispensary, a hemp farm and other aspects of the industry to get an understanding of the business. “You have to know which has more risk—a grow house or a dispensary, or a hemp farm or marijuana farm. You won’t know that until you visit with and interact with these businesses long enough to gain the proper perspective.”
Long term, Partner Colorado wants to separate the pot business from the CU, creating a separate charter for Safe Harbor Private Banking—and it is not excluding a bank charter.
“Banking this business requires substantial expertise and focus, and by separating it into its own entity, we can increase our efficiencies in the long run,” said Seefried.
And,
Credit Unions Need to Get Stoked for Pot Banking Business
"Seefried told the crowd that beyond just serving a legal, fully regulated industry, there are a number of classic credit union reasons to enter the marijuana banking field. Not only is it a relevant industry, but there is a significant community safety element involved.
If legal marijuana businesses — which operate exclusively in cash — don't have someplace to put their money, that means that business owners are carrying backpacks of cash around town, including to businesses such as Walmart and grocery stores where they can get money orders. That creates the danger of potential robbery or other crimes in areas where children and community members are present, and Seefried said her CU has taken $50 million in cash off the street so far this year.
But the biggest reason to serve these businesses, she said, is a no-brainer: credit unions have a mission to serve the un-banked and the underserved.
"I wonder if credit unions aren't missing an opportunity to do something nobody else wants to do and do it right," she suggested. "We have been chartered to serve the underserved and unbanked, and there's certainly an opportunity here in this market."
And, she added, it could be a gateway to grow membership for personal banking, too.
"We've heard our clients say on several occasions 'I didn't know what a credit union is, but if this is what a credit union is, I really like credit unions,'" Seefried said. Since beginning to offer pot banking services, Partner Colorado has also begun to slowly add owners and employees as members."
Disclosure: I have no economic interest in any firm mentioned in this post.
