The Marijuana Industry Has Only A Few Banking Options In New Mexico Local News


The Verdes Foundation, one of New Mexico’s largest medical cannabis companies, is set to open its first store in Santa Fe – a dispensary in downtown Shelby Street – in late November. He plans to have another new store in the city in 2022, when the state launches the legal sale of recreational cannabis.

The company, which now operates in Albuquerque and Rio Rancho, will not finance these expansions with bank loans.

“We are self-capitalizing our growth,” said Rachael Speegle, CEO of Verdes. “We don’t borrow money.

This is because no traditional bank or credit union in New Mexico lends to cannabis companies.

Only two – Southwest Capital Bank and US Eagle Federal Credit Union – openly accept industry account deposits. The two plan to loan cannabis in the future, senior officials said.

The New Mexico Finance Authority also wants to create a $ 5 million loan fund for cannabis microenterprise operators, but the proposal was stalled in mid-October.

So far, 36 states have legalized medical cannabis and 18 have approved adult recreational marijuana, with sales in New Mexico set to begin in April. A push to legalize cannabis at the federal level has also gathered momentum. Yet the banking industry has been reluctant to serve cannabis companies.

Marijuana banking expert Becky Postar said she didn’t think even federal legalization would spur banks into the game of marijuana en masse.

“Even though it’s legalized, it’s still a high-risk client,” said Postar, chief operating officer at HD Compliance, a cannabis-focused consultancy for financial institutions. “The cannabis industry will always experience a banking shortage. It is considered a high risk of money laundering.

Banks must submit suspicious activity reports to the US Treasury’s Financial Crimes Enforcement Network to prevent money laundering in the areas of drugs, sex and terrorism. As of June 30, 518 banks and 188 credit unions nationwide that filed the reports had provided banking services to businesses related to marijuana.

The federal government does not warn banks against serving cannabis companies or threaten sanctions, Postar said, and nothing is written prohibiting banks from working with the industry. “Banks that practice enhanced due diligence and proper surveillance reports are not urged to leave the cannabis industry,” she added.

US Eagle and Southwest Capital both have separate operations in place with expertise in managing accounts for cannabis companies. US Eagle has launched a division called Aery Group and Southwest Capital has outsourced the work to HD Compliance.

Postar said HD Compliance helps Southwest Capital write risk assessment policies, train staff and board members, monitor cannabis companies, monitor accounts and create reports.

Southwest Capital and US Eagle charge higher fees for deposits to cannabis accounts to cover any additional regulatory expenses.

“There are risks involved,” said Patty Lindley, director of compliance and quality at US Eagle. “… We looked at the risk and how we can mitigate it.”

This comes with additional costs.

“All of Aery Group employees are Bank Security Act Certified Agents,” Lindley said, “and we have a Certified Anti-Money Laundering Specialist.… We have an agreement with a courier to provide assistance. money. “

Southwest Capital has around 100 cannabis customers, a mix of those who “touch the plant” and those who support the industry. Talbert said about 5% of the bank’s deposits came from the cannabis industry. US Eagle, which began serving cannabis-related businesses two years ago, has 50 to 60 customers. Less than 1% of its deposits come from industry, said CEO Marsha Majors.

Lindley and Majors said the credit union is planning lending options for cannabis companies.

“We’re definitely looking at what this can and should be,” said Majors. “Leisure will develop business. “

Southwest Capital CEO Lonnie Talbert said the bank was also preparing for cannabis loans.

The Verdes Foundation, which started operating in 2010, began working with Southwest Capital six years ago. Before that, the company had to improvise to avoid putting money under mattresses, Speegle said.

“We had personal bank accounts at three different banks and could only make deposits of less than $ 5,000 per day at each bank,” she recalls.

If the bank loan had been an option, Verdes might have expanded cultivation in 2016, she said, noting that cannabis growers now need to increase their supply to ensure there is enough for them. the 124,000 patients enrolled in New Mexico’s medical cannabis program as the new recreational market becomes underway.

“We plan to increase cannabis cultivation by 40% over 16 months to protect the medical cannabis program,” said Speegle.

Bank loans, she added, would have allowed the business “to grow without diluting medical resources. This allows us to grow at a pace suited to demand. It would be a game-changer.”

Southwest Capital Bank is a pioneer in banking with the cannabis industry. Bank owner Greg Levenson met with growers and sellers of medical marijuana in 2014, just as Talbert joined us.

Talbert did not know at the time that the cannabis bank would become an essential part of his mandate. But he welcomed the opportunity.

“I have always seen myself as the non-normal banker,” he said. “Often you won’t be given the job to think outside the box. It is the ability to make a difference in an industry.

The rationale was simple, he said: go where no New Mexico bank and very few banks across the country have gone before.

“Our philosophy as a bank is CARE: community, responsibility, relationships, entrepreneurship,” said Talbert. “This cannabis program is all about entrepreneurship.”

It’s also about serving a legitimate business sector, Postar said.

“The main reason the banks I talk to do this is because they serve their community. There was a need. They had clients in the industry who wanted banking services, ”she said.

“We felt a growing legitimate business need for banking services,” said Majors, who was a keynote speaker in mid-October at the inaugural Credit Union Cannabiz conference in Las Vegas, Nevada. “When we launched our programs, we recognized a great need. We recognize that they have the right to have services.

The goal for many in the cannabis industry is for the state’s burgeoning market to be seen as a traditional industry rather than a black market – and they say banking services, including loans, are essential for achieve it.

“We want to prevent people from going to street drug dealers,” Speegle said. “I am optimistic that I will have secure access to capital that will allow us to grow at an organic rate. “


Michael J. Birnbaum

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