Photo by Todd Cooper

Canna Banking for Canna Business

Even legal hemp hits roadblocks in banking

The 2018 Farm Bill saw the feds finally make a distinction between the cannabis that gets you high and the cannabis that is useful as an industrial material.

Hemp, as that industrial material is called, is defined by the federal government as cannabis not exceeding 0.3 percent THC on a dry weight basis. It is no longer considered a controlled substance.

Because of this development, it stands to reason that hemp-related businesses might have an easier time securing business accounts with banks and credit unions.

However, this wasn’t the case when Trust Hemp Cooperation owner Karen Cross and business partner James Breech recently attempted to open a business account with Oregon Community Credit Union (OCCU) and were denied because the business name contains the word “hemp,” they say.

Breech says they have since found a willing credit union, but are still sore about the situation.

“OCCU told us that if the account says ‘hemp,’ then you’re out. If it just says ‘natural fibers,’ we are OK,” says Breech, who also notes that one of the credit union’s primary concerns was the risk of the commingling of THC-saturated cannabis with hemp, and that wading through compliance issues with the account is not  cost effective.

OCCU is unable to comment on specific member accounts, says Heather Billing, the credit union’s director of communications. She deferred to the Northwest Credit Union Association (NWCUA) — a credit union trade association — for questions regarding “canna businesses.”

According to Lynn Heider, NWCUA vice president of communications and public affairs, when it comes to canna businesses and hemp, “hemp is a related industry.” When one of the association’s member credit unions decides not to serve canna businesses, it is not taking a “for or against” position. It is just making the decision that its members would not benefit when the majority of the members do not need those particular services.

“The compliance burden of doing business with canna businesses is time-consuming and significant,” Heider says. She adds, however, that some of the NWCUA’s member credit unions do serve canna businesses, including Marion and Polk Schools (MAPS) Credit Union in Salem.

Compliance includes filing regular suspicious-activity reports with the United States Treasury’s Financial Crimes Enforcement Network regarding potentially suspicious cash transactions, something a cash-heavy cannabis industry will find banking institutions hesitant to deal with.

“For every 40 canna business accounts, one of our credit unions would need to hire one full-time compliance officer,” Heider says.

In addition to being held accountable to the feds, some credit unions — such as OCCU — are chartered by the state of Oregon rather than the federal government, and operate under a somewhat different rule-set.

“Providing services to marijuana-related businesses is a business decision for a credit union,” says National Credit Union Administration spokesperson John Fairbanks, who adds that credit unions are expected to be familiar with the Bank Secrecy Act — a federal law passed in 1970 that obliges banks and credit unions to assist the United States government in rooting out the abuse of financial institutions by people involved in criminal activity.

This credit union-cannabis situation takes place with the stage potentially set for the normalization of cannabis at the federal level with a trio of bills, known as “The Path to Marijuana Reform,” introduced in Congress by Sen. Ron Wyden and Rep. Earl Blumenauer.

If enacted, these bills will “preserve the integrity of state marijuana laws and provide a path for responsible federal legalization and regulation of the marijuana industry.” They will also bring forth favorable tax measures for legal marijuana businesses, as well as shrinking the gap between state and federal marijuana laws, according to a Wyden press release.