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Now or never for pot banking?

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Conditions are as good as they’ve ever been for lawmakers to pass a bill that would allow financial institutions to serve legal marijuana businesses without fear of prosecution.

That was the word from Ryan Donovan, chief advocacy officer at the Credit Union National Association, speaking Wednesday morning in advance of a hearing in the House Financial Services Committee to discuss the SAFE Banking Act. The hearing comes as a growing number of credit unions elect to serve the legal marijuana industry despite the drug remaining illegal at the federal level. And amid a divided Congress, some have also suggested pot banking could be one of the few areas where lawmakers can come to a consensus.

While this is only the first hearing on the issue, Donovan said it could generate momentum despite partisan divisions in Congress. But, he said, progress may not come quickly.

“You have to have interest from both parties and a vehicle for something like this to ride on,” he said during a conference call Wednesday morning. “That might be easier to see once we get past the shutdown threat and get into more of a normal legislative environment. The chances [of making progress on the issue] have really been enhanced over the last few months and they’re as good as they’ve ever been.”

Rachel Pross, chief risk officer at Salem, Ore.-based MAPS Credit Union, is scheduled to testify today on behalf of CUNA, and hers is the only CU in the Evergreen State offering banking access to legal cannabis businesses. Her written testimony emphasized that when MAPS got into pot banking five years ago its goals were twofold: to serve the underserved and keep cash off the streets by providing marijuana businesses access to mainstream financial services.

“There’s not a much better example of an underserved industry than the cannabis industry,” she said during Wednesday morning’s conference call.

Pross’s testimony notes that cash-only businesses such as legal weed dispensaries tend to be more vulnerable to crime, and she cited a 2015 study from the Public Policy Institute at the Wharton School of Business which found that approximately half of all dispensaries without access to financial services were a victim of theft – anywhere from $20,000 to $50,000 in a single incident, she stated.

MAPS today provides banking service to 500 licensed cannabis businesses, which Pross said makes its program “one of the largest in the United States.”

The $750 million-asset institution filed more than 13,500 reports related to cannabis in the last two years alone, and about 90 percent of the suspicious activity reports MAPS submits to regulators relate to pot banking, she added during the conference call. The credit union has taken in about $500 million in cash deposits since 2017, though after paying operational costs and other expenses for the credit union, the running balance of all cannabis-related accounts totals about $35 million.

Pross was expected to tell lawmakers that though MAPS does not hold an official position regarding cannabis legalization, her credit union acknowledges "that the voters of Oregon have already spoken" on the issue. The legalization of recreational marijuana was on the state’s 2014 ballot and was passed with approximately 56 percent of the state's vote.

"We strongly believe that financial institutions should be permitted to lawfully serve businesses that engage in activities that are authorized under their state laws, even when such activity may be inconsistent with federal law. For that reason, credit unions will continue to support the SAFE Banking Act," she said.

Some observers have suggested credit unions’ best opportunity to serve the legal weed industry is now, before DOJ and other agencies provide clarity on the issue, but Pross pushed back on the assumption that CUs might lose their competitive advantage once the market opens up.

“I don’t see the SAFE Banking Act opening up a free-for-all for credit unions and big banks,” she said, noting that there will still be rigid requirements for FIs. “This is an industry that’s maturing and credit unions have stepped up to the plate and rally stuck their necks out to be able to serve this industry. Loyalty goes a long way, and we at MAPS have been doing this for five years. If it opened up to large banks someday, we believe our members would stay at MAPS because we’ve been in it with them from the very beginning.”

Aaron Passman contributed to this report.

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