Gardner-based credit union to service recreational marijuana companies
By
Cyrus Moulton
Telegram & Gazette Staff
Posted Sep 14, 2018 at 7:47 PM
Updated Sep 15, 2018 at 6:09 AM
GARDNER - GFA Federal Credit Union has become the first financial
institution in the state to serve recreational marijuana companies, a
move that marijuana advocates and legislators hailed for increasing
public safety by enabling customers and businesses to eschew cash and
use plastic for pot.
“The decision by GFA Federal Credit Union and Safe Harbor of Massachusetts to support legal cannabis businesses will make for a more stable adult-use industry with increased public safety for everyone in the Commonwealth, which remains the Commission’s top priority,” said Cannabis Control Commission Chairman Steven J. Hoffman in a prepared statement. Safe Harbor of Massachusetts is a new subsidiary of Safe Harbor, a Colorado-based cannabis banking program.
“After working for many months to make sure banks and credit unions understood our security regulations, including the mandatory seed-to-sale tracking protocols,” Mr. Hoffman continued, “we are delighted that this group has taken the lead on providing banking services in our state.”
Finding financial institutions willing to back marijuana businesses has been tricky, as many banks and credit unions have calculated it’s legally and financially risky to serve the nascent industry while marijuana remains federally illegal. Century Bank of Medford, for instance, is currently the only financial institution that offers checking accounts and other banking options to the state’s medical marijuana industry, serving the majority of the state’s medical marijuana dispensaries.
But until now there’s been nobody to serve recreational marijuana companies.
GFA is the first to fill that role, offering basic services such as cash management, checking accounts, payroll, and bill payments. The credit union, founded in 1938 by French-Canadian immigrants denied local banking options, will begin accepting marijuana clients by Oct. 1.
GFA CEO Tina Sbrega said the credit union, which reports assets of $506 million, evaluated the federal banking guidelines and determined it could offer the service while following those guidelines “very, very carefully.”
“It’s not for the faint of heart,” Ms. Sbrega said. “I think larger financial institutions will shy away because it’s so labor intensive. But I think that community banks and credit unions will continue to look to serve the industry not only for public safety, but also to expand their business.”
The decision means that recreational marijuana companies will not have to deal exclusively in cash, which experts say is a public safety issue because of a risk of robbery.
“It’s a billion dollar industry dealing only in cash, with businesses
stockpiling it in facilities, warehouses and homes,” Ms. Sbrega said.
“These businesses are prone to robberies, as are employees... That is
putting people at harm’s way in a significant way.”
Banking also legitimizes the industry, Ms. Sbrega said.
“This allows cannabis businesses to operate as an everyday, regular business,” Ms. Sbrega continued.
The credit union, however, won’t be offering loans to marijuana businesses, planning to evaluate that in the future.
“That’s a different animal,” Ms. Sbrega said.
The credit union will also initially only accept 15 to 20 cannabis clients.
“It’s so we can learn together,” Ms. Sbrega said, noting that she expects “lots of audits” and lots of scrutiny. “Once we have a better comfort level, and understand the industry and the nuances ... we will move forward at a faster pace.”
Nevertheless, marijuana advocates applauded the credit union.
“It’s very good news for the cannabis industry,” said Jim Borghesani, who served as spokesman of the legalization ballot initiative and now acts as a consultant to marijuana businesses.
Mr. Borghesani said that unequal access to banking - whether in the form of payroll services, ability to use debit cards, or construction loans - is “one of the glaring weaknesses of the cannabis system.”
“Every time a financial institutions offers products, it’s just another step up for the industry and for the legalization movement in general,” Mr. Borghesani said.
Adam Fine, a partner at the Colorado law firm Vicente Sederberg, which specializes in marijuana law, agreed.
“It’s a great development to see banks that have looked at the issue and are willing to participate,”
Mr. Fine said. He noted that banking adds a more rigorous regulatory aspect to the industry, as banks track where money comes from, where it goes, and how it is being used.
“I think that the more banks look at the issue, the more they will be comfortable and see it as a business opportunity, an economic opportunity to service a growing industry,” he said.
“The decision by GFA Federal Credit Union and Safe Harbor of Massachusetts to support legal cannabis businesses will make for a more stable adult-use industry with increased public safety for everyone in the Commonwealth, which remains the Commission’s top priority,” said Cannabis Control Commission Chairman Steven J. Hoffman in a prepared statement. Safe Harbor of Massachusetts is a new subsidiary of Safe Harbor, a Colorado-based cannabis banking program.
“After working for many months to make sure banks and credit unions understood our security regulations, including the mandatory seed-to-sale tracking protocols,” Mr. Hoffman continued, “we are delighted that this group has taken the lead on providing banking services in our state.”
Finding financial institutions willing to back marijuana businesses has been tricky, as many banks and credit unions have calculated it’s legally and financially risky to serve the nascent industry while marijuana remains federally illegal. Century Bank of Medford, for instance, is currently the only financial institution that offers checking accounts and other banking options to the state’s medical marijuana industry, serving the majority of the state’s medical marijuana dispensaries.
But until now there’s been nobody to serve recreational marijuana companies.
GFA is the first to fill that role, offering basic services such as cash management, checking accounts, payroll, and bill payments. The credit union, founded in 1938 by French-Canadian immigrants denied local banking options, will begin accepting marijuana clients by Oct. 1.
GFA CEO Tina Sbrega said the credit union, which reports assets of $506 million, evaluated the federal banking guidelines and determined it could offer the service while following those guidelines “very, very carefully.”
“It’s not for the faint of heart,” Ms. Sbrega said. “I think larger financial institutions will shy away because it’s so labor intensive. But I think that community banks and credit unions will continue to look to serve the industry not only for public safety, but also to expand their business.”
The decision means that recreational marijuana companies will not have to deal exclusively in cash, which experts say is a public safety issue because of a risk of robbery.
Banking also legitimizes the industry, Ms. Sbrega said.
“This allows cannabis businesses to operate as an everyday, regular business,” Ms. Sbrega continued.
The credit union, however, won’t be offering loans to marijuana businesses, planning to evaluate that in the future.
“That’s a different animal,” Ms. Sbrega said.
The credit union will also initially only accept 15 to 20 cannabis clients.
“It’s so we can learn together,” Ms. Sbrega said, noting that she expects “lots of audits” and lots of scrutiny. “Once we have a better comfort level, and understand the industry and the nuances ... we will move forward at a faster pace.”
“It’s very good news for the cannabis industry,” said Jim Borghesani, who served as spokesman of the legalization ballot initiative and now acts as a consultant to marijuana businesses.
Mr. Borghesani said that unequal access to banking - whether in the form of payroll services, ability to use debit cards, or construction loans - is “one of the glaring weaknesses of the cannabis system.”
“Every time a financial institutions offers products, it’s just another step up for the industry and for the legalization movement in general,” Mr. Borghesani said.
Adam Fine, a partner at the Colorado law firm Vicente Sederberg, which specializes in marijuana law, agreed.
“It’s a great development to see banks that have looked at the issue and are willing to participate,”
Mr. Fine said. He noted that banking adds a more rigorous regulatory aspect to the industry, as banks track where money comes from, where it goes, and how it is being used.
“I think that the more banks look at the issue, the more they will be comfortable and see it as a business opportunity, an economic opportunity to service a growing industry,” he said.
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