AUSTIN, Texas—In states that have legalized the use of marijuana – medical, adult recreational or both – credit unions that insist they will not bank cannabis companies actually have more questions to answer than those who have decided to offer services to America’s fastest-growing agricultural industry.

That is what Brian Knight, EVP and general counsel for the National Association of State Credit Union Supervisors told attendees of a Tuesday breakout session at the CFO Council conference here.

“Every one of you needs to think about what you are going to do in this space – which I see you have started by showing up for this session,” he said. “If you say you will not bank cannabis, what does that mean? Clearly you won’t serve growers or sellers, but what about ancillary businesses? What about the landlord who owns store space where there is a dispensary – what to do with his money? What about the employees of a dispensary? Can they be members?”

Brian Knight, EVP and general counsel for the National Association of State Credit Union Supervisors. Knight discussed marijuana banking during the 2018 CUNA CFO Council conference in Austin, Texas.
Brian Knight, EVP and general counsel for the National Association of State Credit Union Supervisors. Knight discussed marijuana banking during the 2018 CUNA CFO Council conference.


Knight noted one easily could keep following this path of association, even to the stores where dispensary employees get their lunch, or the accountants and lawyers who offer services to cannabusinesses. “What about your existing members who enter the marijuana business? Are you going to kick them out? Can you kick them out?”

The U.S. government still considers cannabis/marijuana a Schedule I controlled substance that has no medicinal benefit and is even more dangerous than cocaine. However, in recent years more than half of the states have legalized some form of cannabis usage, creating a conflict between federal law and state law.

Knight noted the position of NASCUS is to issue a formal letter asking lawmakers in Washington to resolve what it considers an “untenable situation.”

At last count, some 400 financial institutions have stepped up to offer banking services to cannabusinesses. So why would credit unions get involved in this space? Knight said according to the CUs he has talked to the reasons range from wanting to serve their communities regardless of type of business, to improve public safety by getting large amounts of cash off the streets, because they support legalization and…to make money. Good money.

The fees institutions can charge a state-licensed marijuana-related business start at $400 per account per month, up to about $1,200 per month. In some cases, involving large operations, it can be $5,000 per month. The average dispensary has a dozen accounts.

Knight listed the twists and turns of the legal process in the past four years as the Department of Justice, FinCEN, Congress and state governments have attempted to craft policy as the American public increasingly supports legalization. In March, the Rohrabacher/Blumenauer Amendment was added to omnibus spending bill. This prohibits the DOJ from using appropriated funds to prosecuting legal medical marijuana operations in states that have legalized MMJ.

“It is still illegal under federal law, so I cannot tell you you will be safe, but 400 of your peers have gone down this road,” he said. “It is possible there will be further guidance relating to financial services as soon as June. No financial institutions have yet been prosecuted if they were following all the rules.”

Subscribe Now

Authoritative analysis and perspective for every segment of the credit union industry

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.