Skip to Main Content
 
Thought Leadership

Cannabis Law Now Podcast: Cannabis Banking from the Inside: An Interview with Salal Credit Union

 

Published:

February 20, 2024

Related Industry:

Food Systems 

Related Service:

Cannabis 
 
Podcast

    

Due to current federal law, cannabis businesses notoriously cannot access financial institutions, even just for depository accounts. In 2014, the Financial Crimes Enforcement Network (FinCEN) released guidelines that opened the door for financial institutions to provide banking services to cannabis businesses as long as strict “know your customer” standards are followed. Those FinCEN guidelines are still valid today, and they represent the only method through which financial institutions can validly bank cannabis businesses, but they’re no picnic to follow for either financial institutions or cannabis industry customers.

In this episode, Husch Blackwell's Hilary Bricken interviews Brett Ballman and Karen Petrick of Salal Credit Union as they take listeners through the ins and outs of cannabis banking under the FinCEN guidelines and also discuss how certain states differ from others in their approach to cannabis banking. Brett and Karen also explore how federal reform will impact their cannabis industry banking customers and what they see on the horizon for the cannabis banking industry.

Read the Transcript

This transcript has been auto-generated and may contain technological errors.
1
00:00:09,160 --> 00:00:13,519
welcome I'm your host Hillary Bricken and

2
00:00:11,400 --> 00:00:15,639
this is the Cannabis law Now podcast

3
00:00:13,519 --> 00:00:17,400
where we regularly discuss issues

4
00:00:15,639 --> 00:00:19,439
related to the Cannabis industry

5
00:00:17,400 --> 00:00:22,119
including investment day-to-day

6
00:00:19,439 --> 00:00:24,160
operational issues and potential reform

7
00:00:22,119 --> 00:00:26,039
on the horizon that will impact all

8
00:00:24,160 --> 00:00:27,960
cannabis businesses and investors in the

9
00:00:26,039 --> 00:00:30,439
United

10
00:00:27,960 --> 00:00:32,640
States well today on the podcast we have

11
00:00:30,439 --> 00:00:35,160
a very special treat um we have Brett

12
00:00:32,640 --> 00:00:36,920
Balman and Karen petrick from salal

13
00:00:35,160 --> 00:00:39,280
credit union and the reason why this is

14
00:00:36,920 --> 00:00:41,640
special is because it is few and far

15
00:00:39,280 --> 00:00:43,840
between to see financial institutions

16
00:00:41,640 --> 00:00:45,440
participating in the Cannabis industry

17
00:00:43,840 --> 00:00:47,520
despite the fact that the overwhelming

18
00:00:45,440 --> 00:00:50,640
majority of states have some form of

19
00:00:47,520 --> 00:00:52,199
legal reform and Licensing and the extra

20
00:00:50,640 --> 00:00:55,079
trick here is that financial

21
00:00:52,199 --> 00:00:57,559
institutions get to participate because

22
00:00:55,079 --> 00:00:59,000
of an enforcement memo that was issued

23
00:00:57,559 --> 00:01:02,199
by the financial crimes enforcement

24
00:00:59,000 --> 00:01:04,000
Network back in 2014 and I wanted to

25
00:01:02,199 --> 00:01:05,479
bring Brett and Karen onto the podcast

26
00:01:04,000 --> 00:01:07,360
to talk about the ins and outs of

27
00:01:05,479 --> 00:01:09,840
cannabis banking because we so rarely

28
00:01:07,360 --> 00:01:12,320
get to hear about the logistics of how

29
00:01:09,840 --> 00:01:14,360
this is done in such a way to avoid

30
00:01:12,320 --> 00:01:15,720
Federal scrutiny but also run a business

31
00:01:14,360 --> 00:01:17,560
at the end of the day and I think

32
00:01:15,720 --> 00:01:19,720
there's a big misconception out there

33
00:01:17,560 --> 00:01:22,759
with cannabis companies regarding the

34
00:01:19,720 --> 00:01:25,040
level of diligence that must be done so

35
00:01:22,759 --> 00:01:27,280
that the financial institution can even

36
00:01:25,040 --> 00:01:30,079
undertake things like depository

37
00:01:27,280 --> 00:01:33,159
accounts so Brett Karen welcome to the

38
00:01:30,079 --> 00:01:34,880
show Hello thank you Hillary hi okay so

39
00:01:33,159 --> 00:01:36,640
let's just get into these questions this

40
00:01:34,880 --> 00:01:39,200
is a conversational podcast I'm just

41
00:01:36,640 --> 00:01:41,159
here to facilitate where this goes why

42
00:01:39,200 --> 00:01:42,799
in the heck did salal pursue this in the

43
00:01:41,159 --> 00:01:45,479
first place because it's not like this

44
00:01:42,799 --> 00:01:48,119
is easy to do in fact it's wildly

45
00:01:45,479 --> 00:01:50,040
complicated so why why do this at all I

46
00:01:48,119 --> 00:01:52,680
can take that one so the conversations

47
00:01:50,040 --> 00:01:54,840
really started uh for us back in 2012

48
00:01:52,680 --> 00:01:57,320
when Washington voters passed initiative

49
00:01:54,840 --> 00:02:00,039
502 which legalized Rec recreational

50
00:01:57,320 --> 00:02:01,439
Cannabis here in Washington we knew that

51
00:02:00,039 --> 00:02:03,680
this was going to be an underserved

52
00:02:01,439 --> 00:02:05,640
market so we be began conversations

53
00:02:03,680 --> 00:02:07,240
internally working with our board

54
00:02:05,640 --> 00:02:08,840
working with our Regulators to figure

55
00:02:07,240 --> 00:02:10,599
out if this was something that we wanted

56
00:02:08,840 --> 00:02:12,239
to pursue when the decision was made

57
00:02:10,599 --> 00:02:13,959
that we did want to move forward Public

58
00:02:12,239 --> 00:02:15,879
Safety was by far the number one

59
00:02:13,959 --> 00:02:16,959
priority for us um that was something

60
00:02:15,879 --> 00:02:18,560
that we wanted to make sure that we

61
00:02:16,959 --> 00:02:19,760
could mitigate the risk and offer the

62
00:02:18,560 --> 00:02:21,760
products and services to these

63
00:02:19,760 --> 00:02:23,360
businesses to help accommodate them

64
00:02:21,760 --> 00:02:25,239
knowing that this was potentially going

65
00:02:23,360 --> 00:02:26,519
to impact their local communities and

66
00:02:25,239 --> 00:02:28,200
everything like that because a lot of

67
00:02:26,519 --> 00:02:30,200
these businesses they were operating in

68
00:02:28,200 --> 00:02:32,160
all cash and so you know how do we

69
00:02:30,200 --> 00:02:34,120
figure that out how do we both protect

70
00:02:32,160 --> 00:02:36,560
the credit union the community and our

71
00:02:34,120 --> 00:02:38,760
members so public first uh Public Safety

72
00:02:36,560 --> 00:02:40,680
was by far the number one on our list

73
00:02:38,760 --> 00:02:41,959
and then secondarily it was just making

74
00:02:40,680 --> 00:02:44,480
sure that we were helping State

75
00:02:41,959 --> 00:02:46,239
regulated businesses get the banking

76
00:02:44,480 --> 00:02:48,159
products and services that they needed

77
00:02:46,239 --> 00:02:50,680
you know think about paying an employee

78
00:02:48,159 --> 00:02:52,120
via direct deposit a paying their vendor

79
00:02:50,680 --> 00:02:53,560
electronically paying their taxes

80
00:02:52,120 --> 00:02:55,000
electronically you know that was

81
00:02:53,560 --> 00:02:56,800
something that was very important to us

82
00:02:55,000 --> 00:02:58,599
so those were the two primary reasons we

83
00:02:56,800 --> 00:03:00,720
really got into this and we should take

84
00:02:58,599 --> 00:03:02,440
it I think a step back back and remind

85
00:03:00,720 --> 00:03:04,519
the audience in case you're a first-time

86
00:03:02,440 --> 00:03:06,680
listener cannabis businesses generally

87
00:03:04,519 --> 00:03:08,400
cannot access financial institutions

88
00:03:06,680 --> 00:03:10,319
because cannabis is a schedule one

89
00:03:08,400 --> 00:03:12,280
controlled substance which means it is

90
00:03:10,319 --> 00:03:13,840
illegal as far as the federal government

91
00:03:12,280 --> 00:03:15,319
is concerned and that obviously may

92
00:03:13,840 --> 00:03:17,920
change we may talk about that a little

93
00:03:15,319 --> 00:03:20,599
bit today but maybe not but that is why

94
00:03:17,920 --> 00:03:22,239
they tend to operate in an allash basis

95
00:03:20,599 --> 00:03:23,959
because it is a violation of the bank

96
00:03:22,239 --> 00:03:26,200
secrecy act and a slew of other

97
00:03:23,959 --> 00:03:28,959
regulations and laws on the banking side

98
00:03:26,200 --> 00:03:30,959
ferally that prevent these Banks of all

99
00:03:28,959 --> 00:03:32,760
sizes and credit unions of all sizes

100
00:03:30,959 --> 00:03:35,480
from directly participating in the

101
00:03:32,760 --> 00:03:37,239
industry until we get the finsen

102
00:03:35,480 --> 00:03:39,080
guidelines and finsen again is an

103
00:03:37,239 --> 00:03:40,879
acronym for the financial crimes

104
00:03:39,080 --> 00:03:43,159
enforcement Network it basically

105
00:03:40,879 --> 00:03:45,599
oversees enforcement of the BSA and

106
00:03:43,159 --> 00:03:47,640
other banking laws and regulations and

107
00:03:45,599 --> 00:03:50,599
it came out with a memo and it's part of

108
00:03:47,640 --> 00:03:53,200
the Department of Treasury in 2014 so

109
00:03:50,599 --> 00:03:55,120
Brett and Karen what are the finsen

110
00:03:53,200 --> 00:03:57,439
guidelines from the perspective of the

111
00:03:55,120 --> 00:03:59,120
financial institution yeah yeah I mean

112
00:03:57,439 --> 00:04:00,720
you covered a lot of it uh kind of in

113
00:03:59,120 --> 00:04:02,640
your intro there but yeah at a very high

114
00:04:00,720 --> 00:04:04,879
level the finsight Goins like you said

115
00:04:02,640 --> 00:04:06,879
were issued on February 14th 2014 almost

116
00:04:04,879 --> 00:04:09,319
a decade ago kind of crazy to think

117
00:04:06,879 --> 00:04:11,159
about really it was to also help address

118
00:04:09,319 --> 00:04:13,040
the increasing number of states that

119
00:04:11,159 --> 00:04:15,439
were legalizing both recreational

120
00:04:13,040 --> 00:04:17,079
medical cannabis across the country you

121
00:04:15,439 --> 00:04:19,479
know those guidelines kind of set the

122
00:04:17,079 --> 00:04:21,160
framework for our financial institution

123
00:04:19,479 --> 00:04:23,199
if they were to get into banking

124
00:04:21,160 --> 00:04:25,240
cannabis related businesses hey here's

125
00:04:23,199 --> 00:04:27,479
how you basically need to do this how do

126
00:04:25,240 --> 00:04:29,400
you comply with bank secrecy act as you

127
00:04:27,479 --> 00:04:31,720
had mentioned earlier and basically kind

128
00:04:29,400 --> 00:04:33,360
of sets the stage for you know what

129
00:04:31,720 --> 00:04:35,680
suspicious activity reporting do we need

130
00:04:33,360 --> 00:04:37,400
to do currency transaction reporting and

131
00:04:35,680 --> 00:04:39,240
then it lays out a bunch of red flags

132
00:04:37,400 --> 00:04:41,000
for a financial institution to look at

133
00:04:39,240 --> 00:04:43,000
to address any you know monitoring

134
00:04:41,000 --> 00:04:44,400
issues or anything like that so you know

135
00:04:43,000 --> 00:04:46,720
at a very high level that's what the

136
00:04:44,400 --> 00:04:47,919
finsen guidelines are to us but that you

137
00:04:46,720 --> 00:04:49,639
know kind of getting back to the first

138
00:04:47,919 --> 00:04:51,199
question that was really the driver

139
00:04:49,639 --> 00:04:53,160
behind you know when I said when we

140
00:04:51,199 --> 00:04:55,400
decided to move forward that was the

141
00:04:53,160 --> 00:04:57,800
number one driver behind that which was

142
00:04:55,400 --> 00:05:00,440
this guidance issued by finen and we

143
00:04:57,800 --> 00:05:02,080
should mention that that guy idence was

144
00:05:00,440 --> 00:05:04,520
was issued on the back of a Department

145
00:05:02,080 --> 00:05:06,880
of Justice enforcement memo called the

146
00:05:04,520 --> 00:05:08,240
coal memo which we all know about at

147
00:05:06,880 --> 00:05:10,520
this point it's been rescinded but it

148
00:05:08,240 --> 00:05:11,960
was kind of a Guiding Light I think for

149
00:05:10,520 --> 00:05:13,520
States when they were making their

150
00:05:11,960 --> 00:05:15,759
regulations and when they were

151
00:05:13,520 --> 00:05:17,280
determining how aggressive to be namely

152
00:05:15,759 --> 00:05:19,160
Colorado and Washington when they were

153
00:05:17,280 --> 00:05:22,360
setting up their cannabis program so

154
00:05:19,160 --> 00:05:25,800
Brett and Karen those guidelines rely

155
00:05:22,360 --> 00:05:29,080
heavily on the COO don't they correct

156
00:05:25,800 --> 00:05:30,080
and even though the COO was vaporized by

157
00:05:29,080 --> 00:05:32,400
Jeff

158
00:05:30,080 --> 00:05:33,880
when Trump was president has that

159
00:05:32,400 --> 00:05:36,160
changed how you do business under the

160
00:05:33,880 --> 00:05:37,960
guidelines at all no I I mean in a lot

161
00:05:36,160 --> 00:05:39,360
of our documentation and Karen you can

162
00:05:37,960 --> 00:05:41,199
jump here and here too a lot of our

163
00:05:39,360 --> 00:05:43,960
documentation basically just changed

164
00:05:41,199 --> 00:05:45,840
from Co memo to rescinded Co memo but at

165
00:05:43,960 --> 00:05:47,639
the end of the day that was still a

166
00:05:45,840 --> 00:05:50,160
guiding principle for our framework for

167
00:05:47,639 --> 00:05:51,960
banking uh cannabis related businesses I

168
00:05:50,160 --> 00:05:53,880
mean they didn't resend the guidance or

169
00:05:51,960 --> 00:05:55,560
amend the guidance at all so as long as

170
00:05:53,880 --> 00:05:58,000
that guidance remains in place that's

171
00:05:55,560 --> 00:06:00,560
how we're going to you know operate a

172
00:05:58,000 --> 00:06:03,400
program right and for listeners what

173
00:06:00,560 --> 00:06:05,880
Karen means is treasury did not resend

174
00:06:03,400 --> 00:06:08,520
the finsen guidelines but all of the doj

175
00:06:05,880 --> 00:06:09,919
memos on cannabis they got vaporized by

176
00:06:08,520 --> 00:06:11,840
Jeff sessions which I think is an

177
00:06:09,919 --> 00:06:14,000
important point in that treasury is

178
00:06:11,840 --> 00:06:16,319
behind this right they want to track

179
00:06:14,000 --> 00:06:18,000
these dollars they want accountability

180
00:06:16,319 --> 00:06:19,720
they want Public Safety and that's

181
00:06:18,000 --> 00:06:21,360
probably a good thing for all of us and

182
00:06:19,720 --> 00:06:23,199
Karen maybe I'll direct this question to

183
00:06:21,360 --> 00:06:26,080
you unless Brett wants it how hard is it

184
00:06:23,199 --> 00:06:27,880
to comply with the finsen guidelines

185
00:06:26,080 --> 00:06:30,280
it's really Common Sense guidelines

186
00:06:27,880 --> 00:06:32,080
there's really not a lot in there that's

187
00:06:30,280 --> 00:06:33,599
really specific to cannabis I mean

188
00:06:32,080 --> 00:06:35,800
they're just common sense guidelines so

189
00:06:33,599 --> 00:06:37,440
it's not really that hard to comply the

190
00:06:35,800 --> 00:06:39,080
problem is the Staffing and the extra

191
00:06:37,440 --> 00:06:40,440
due diligence that we have to do that's

192
00:06:39,080 --> 00:06:42,560
where the burden is you know we need a

193
00:06:40,440 --> 00:06:44,000
lot more people and a lot more time to

194
00:06:42,560 --> 00:06:46,160
look at these accounts and really dig

195
00:06:44,000 --> 00:06:47,599
into the activity and the ownership and

196
00:06:46,160 --> 00:06:50,800
understand the the complexities of some

197
00:06:47,599 --> 00:06:52,919
of the crazy ownership schemes that we

198
00:06:50,800 --> 00:06:54,960
see and that's where the that's where

199
00:06:52,919 --> 00:06:57,280
the complexity is it's just you know the

200
00:06:54,960 --> 00:06:59,360
time that it takes to do that you can't

201
00:06:57,280 --> 00:07:01,240
apply that the same necessary

202
00:06:59,360 --> 00:07:02,879
necessarily just the same automated

203
00:07:01,240 --> 00:07:05,440
monitoring that you do for every other

204
00:07:02,879 --> 00:07:07,560
account to the to the Cannabis industry

205
00:07:05,440 --> 00:07:09,960
and that automated monitoring that you

206
00:07:07,560 --> 00:07:12,039
mention common term of Art and banking

207
00:07:09,960 --> 00:07:13,800
right know your customer and this is

208
00:07:12,039 --> 00:07:15,360
this initial diligence that we all go

209
00:07:13,800 --> 00:07:17,720
through whether we know it or not when

210
00:07:15,360 --> 00:07:19,960
we open accounts make deposits withdraw

211
00:07:17,720 --> 00:07:22,720
money and to me the finson guidelines

212
00:07:19,960 --> 00:07:24,599
are know your customer due diligence

213
00:07:22,720 --> 00:07:26,080
kind of on steroids if I could put it

214
00:07:24,599 --> 00:07:27,840
like that because of the federally

215
00:07:26,080 --> 00:07:31,000
illegal nature of the businesses it's a

216
00:07:27,840 --> 00:07:34,160
little more invasive did salal have to

217
00:07:31,000 --> 00:07:36,000
revise and reform its kyc policies with

218
00:07:34,160 --> 00:07:39,520
these customers I don't know that we had

219
00:07:36,000 --> 00:07:41,520
to revise the kyc policy per se I mean

220
00:07:39,520 --> 00:07:42,919
we didn't have we had some business

221
00:07:41,520 --> 00:07:44,680
accounts we had a business account

222
00:07:42,919 --> 00:07:46,479
portfolio before we started banking

223
00:07:44,680 --> 00:07:48,680
cannabis but we really built our

224
00:07:46,479 --> 00:07:50,080
department around the Cannabis industry

225
00:07:48,680 --> 00:07:52,199
so all of that was sort of baked in

226
00:07:50,080 --> 00:07:54,639
right from the start I think the biggest

227
00:07:52,199 --> 00:07:57,360
change that it might have brought Upon

228
00:07:54,639 --> 00:07:59,479
Us was maybe Expediting a move away from

229
00:07:57,360 --> 00:08:01,520
manually monitoring or onboarding these

230
00:07:59,479 --> 00:08:04,120
accounts to more automated approach

231
00:08:01,520 --> 00:08:05,440
bringing in new systems that way to help

232
00:08:04,120 --> 00:08:06,720
satisfy The Regulators that we were

233
00:08:05,440 --> 00:08:08,440
doing everything that we could to

234
00:08:06,720 --> 00:08:10,319
monitor for those red flags if we're

235
00:08:08,440 --> 00:08:11,639
going to diversify out of the Cannabis

236
00:08:10,319 --> 00:08:14,280
industry then we would have to actually

237
00:08:11,639 --> 00:08:16,440
make some more changes you know we can't

238
00:08:14,280 --> 00:08:18,759
apply the same standard to your everyday

239
00:08:16,440 --> 00:08:21,560
Mom and Pop Shop so right and you

240
00:08:18,759 --> 00:08:23,360
referenced the red flags in the finsen

241
00:08:21,560 --> 00:08:26,039
guidelines off the top of your head do

242
00:08:23,360 --> 00:08:28,120
you know the big ticket red flags that

243
00:08:26,039 --> 00:08:30,000
treasury is looking for that salal must

244
00:08:28,120 --> 00:08:33,039
look for under the guy lines just to

245
00:08:30,000 --> 00:08:35,320
remind our listeners well that's a quiz

246
00:08:33,039 --> 00:08:38,000
right

247
00:08:35,320 --> 00:08:40,399
there if you don't it's a it's okay I

248
00:08:38,000 --> 00:08:42,959
remember a couple of them things like if

249
00:08:40,399 --> 00:08:45,839
you see a management company think twice

250
00:08:42,959 --> 00:08:47,160
check on the social media of the actual

251
00:08:45,839 --> 00:08:49,279
cannabis company to make sure that

252
00:08:47,160 --> 00:08:51,040
they're not breaking the rules and I

253
00:08:49,279 --> 00:08:53,160
think a lot of people when these

254
00:08:51,040 --> 00:08:55,200
guidelines came out everybody was quite

255
00:08:53,160 --> 00:08:57,640
thankful because it meant access to

256
00:08:55,200 --> 00:08:59,360
banking for obvious reasons but it also

257
00:08:57,640 --> 00:09:01,680
kind of flagged that Financial

258
00:08:59,360 --> 00:09:03,560
institutions were going to be droned

259
00:09:01,680 --> 00:09:05,600
into doing the work of the feds

260
00:09:03,560 --> 00:09:08,120
regarding kind of peing into these

261
00:09:05,600 --> 00:09:11,279
businesses and to that end how does the

262
00:09:08,120 --> 00:09:12,760
typical cannabis comp company react to

263
00:09:11,279 --> 00:09:14,680
the diligence when you send it to them

264
00:09:12,760 --> 00:09:15,959
this answer I'm dying to know because I

265
00:09:14,680 --> 00:09:18,320
get clients that come to me and they say

266
00:09:15,959 --> 00:09:20,000
I cannot believe the bank is asking for

267
00:09:18,320 --> 00:09:22,480
these things and I'm thinking well it's

268
00:09:20,000 --> 00:09:24,360
not because they want to they have to to

269
00:09:22,480 --> 00:09:26,120
comply with these finson guidelines but

270
00:09:24,360 --> 00:09:28,760
what's the typical reaction that you

271
00:09:26,120 --> 00:09:30,160
guys see I mean it's a mix obviously I

272
00:09:28,760 --> 00:09:31,680
think some folks are just happy to have

273
00:09:30,160 --> 00:09:33,600
an account they want to give us whatever

274
00:09:31,680 --> 00:09:36,120
we need because they desperately want to

275
00:09:33,600 --> 00:09:37,920
be able to bank and that's great others

276
00:09:36,120 --> 00:09:39,360
are Savvy they understand they're in a

277
00:09:37,920 --> 00:09:41,160
atypical industry and that there's

278
00:09:39,360 --> 00:09:42,680
atypical requirements to open an account

279
00:09:41,160 --> 00:09:44,440
so they're you know prepared and ready

280
00:09:42,680 --> 00:09:46,600
to do that you know others are a little

281
00:09:44,440 --> 00:09:48,600
less patient we get some push back I

282
00:09:46,600 --> 00:09:51,279
don't personally find our requirements

283
00:09:48,600 --> 00:09:52,920
very onerous but it's all in how we

284
00:09:51,279 --> 00:09:55,200
prepare that message how we prepare that

285
00:09:52,920 --> 00:09:57,000
customer at the start of the application

286
00:09:55,200 --> 00:09:59,120
process if they know what we need ahead

287
00:09:57,000 --> 00:10:00,160
of time they're comfortable with that

288
00:09:59,120 --> 00:10:01,560
they can make the decision to move

289
00:10:00,160 --> 00:10:03,120
forward with the application and that

290
00:10:01,560 --> 00:10:04,399
can actually go very smoothly if they

291
00:10:03,120 --> 00:10:06,160
have all their eyes dotted and their

292
00:10:04,399 --> 00:10:08,480
te's crossed and their documentation and

293
00:10:06,160 --> 00:10:10,399
we can really understand their business

294
00:10:08,480 --> 00:10:12,040
it's it's a real mix you know there's

295
00:10:10,399 --> 00:10:13,519
folks that we've banged for a long time

296
00:10:12,040 --> 00:10:15,680
who we're more comfortable with maybe we

297
00:10:13,519 --> 00:10:17,880
can accommodate a little bit better or

298
00:10:15,680 --> 00:10:19,519
others that we brand new to and they're

299
00:10:17,880 --> 00:10:21,399
very complex and we need a lot more

300
00:10:19,519 --> 00:10:24,000
information than maybe their neighbor

301
00:10:21,399 --> 00:10:26,360
it's really Case by case too so you know

302
00:10:24,000 --> 00:10:27,880
it's a it's a big mix and just to kind

303
00:10:26,360 --> 00:10:29,240
of Take Along to that I think Karen hit

304
00:10:27,880 --> 00:10:31,320
the biggest part there setting

305
00:10:29,240 --> 00:10:33,040
expectation up front you know we really

306
00:10:31,320 --> 00:10:34,839
try to Train everybody especially on the

307
00:10:33,040 --> 00:10:36,800
front line that when you're onboarding a

308
00:10:34,839 --> 00:10:39,040
new account you have to set that

309
00:10:36,800 --> 00:10:40,360
expectation you have to set the

310
00:10:39,040 --> 00:10:42,040
understanding that hey we're going to be

311
00:10:40,360 --> 00:10:43,680
asking questions that if you've owned

312
00:10:42,040 --> 00:10:45,360
another business outside of cannabis

313
00:10:43,680 --> 00:10:47,760
it's not going to be that typical

314
00:10:45,360 --> 00:10:50,120
question and that's just part of our due

315
00:10:47,760 --> 00:10:52,279
diligence to again you know kind of the

316
00:10:50,120 --> 00:10:54,680
overarching theme Here is to comply with

317
00:10:52,279 --> 00:10:56,440
bank secrecy act Fin and guidelines you

318
00:10:54,680 --> 00:10:58,480
know everything like that because if we

319
00:10:56,440 --> 00:11:00,399
don't protect our program then we can't

320
00:10:58,480 --> 00:11:02,200
offer it you know globally to our

321
00:11:00,399 --> 00:11:03,519
members and then any referrals that come

322
00:11:02,200 --> 00:11:05,320
or anything like that so we're just

323
00:11:03,519 --> 00:11:07,240
trying to protect everybody here in the

324
00:11:05,320 --> 00:11:09,519
ecosystem but setting that expectation

325
00:11:07,240 --> 00:11:11,440
UPF front 100% is the biggest thing for

326
00:11:09,519 --> 00:11:12,920
us and I I think people need to

327
00:11:11,440 --> 00:11:14,880
understand that it goes beyond just that

328
00:11:12,920 --> 00:11:16,519
initial due diligence right you know you

329
00:11:14,880 --> 00:11:17,920
got your account approved it's open

330
00:11:16,519 --> 00:11:19,720
you're doing your payroll you're sending

331
00:11:17,920 --> 00:11:21,160
your checks out in the mail whatever do

332
00:11:19,720 --> 00:11:23,000
people still do that I don't know the

333
00:11:21,160 --> 00:11:25,360
main point is you know down the line

334
00:11:23,000 --> 00:11:26,839
we're going to have continued questions

335
00:11:25,360 --> 00:11:28,519
about what's happening in your account

336
00:11:26,839 --> 00:11:30,639
we may ask for documentation or the

337
00:11:28,519 --> 00:11:32,720
purpose of transaction that we might not

338
00:11:30,639 --> 00:11:34,120
do on another account or a more typical

339
00:11:32,720 --> 00:11:36,120
business account and if you're not

340
00:11:34,120 --> 00:11:38,040
upfront if you're trying to you know

341
00:11:36,120 --> 00:11:39,720
avoid answering questions you're just

342
00:11:38,040 --> 00:11:41,760
going to make it more difficult for us

343
00:11:39,720 --> 00:11:44,040
to continue banking you so people need

344
00:11:41,760 --> 00:11:46,360
to understand that it's an ongoing

345
00:11:44,040 --> 00:11:49,360
process through the life of the account

346
00:11:46,360 --> 00:11:52,120
until maybe something changes ferally

347
00:11:49,360 --> 00:11:54,639
and what still surprises me is that I

348
00:11:52,120 --> 00:11:56,440
mean we got 38 states with some kind of

349
00:11:54,639 --> 00:11:58,600
Reform some kind of Licensing and

350
00:11:56,440 --> 00:11:59,639
oversight system yet I still when I'm in

351
00:11:58,600 --> 00:12:01,120
deal

352
00:11:59,639 --> 00:12:02,839
and we start to delve into Financial

353
00:12:01,120 --> 00:12:04,920
diligence I see cannabis companies that

354
00:12:02,839 --> 00:12:07,839
are banking with Bank of America or

355
00:12:04,920 --> 00:12:10,240
Wells Fargo or financial institutions

356
00:12:07,839 --> 00:12:11,519
that I know are not subscribing to the

357
00:12:10,240 --> 00:12:13,199
guidelines because the guidelines are

358
00:12:11,519 --> 00:12:14,920
not mandatory they're elective if you

359
00:12:13,199 --> 00:12:16,760
want to serve the industry you should

360
00:12:14,920 --> 00:12:19,920
follow this I don't know why those

361
00:12:16,760 --> 00:12:21,760
cannabis companies choose to go that

362
00:12:19,920 --> 00:12:24,360
route when they've got Outlets like

363
00:12:21,760 --> 00:12:26,440
solal and others now that are providing

364
00:12:24,360 --> 00:12:28,120
these particular services and to me as

365
00:12:26,440 --> 00:12:30,519
the lawyer I'm thinking you're actually

366
00:12:28,120 --> 00:12:32,600
creating more Problems by not going to a

367
00:12:30,519 --> 00:12:34,120
financial institution that's following

368
00:12:32,600 --> 00:12:37,279
these guidelines do you guys agree with

369
00:12:34,120 --> 00:12:40,079
that yeah yeah 100% I I think a lot of

370
00:12:37,279 --> 00:12:42,240
it might just be an educational piece uh

371
00:12:40,079 --> 00:12:43,839
I've banked with Bank of America for 30

372
00:12:42,240 --> 00:12:46,639
years so I'm just going to roll the dice

373
00:12:43,839 --> 00:12:48,519
I don't know who else to go to uh you

374
00:12:46,639 --> 00:12:50,680
know I mean oftentimes I mean it's

375
00:12:48,519 --> 00:12:52,680
pretty close-knit community so people

376
00:12:50,680 --> 00:12:54,920
talk and hopefully word is now getting

377
00:12:52,680 --> 00:12:57,040
out that there are options banking

378
00:12:54,920 --> 00:12:59,680
options that is out there but yeah we

379
00:12:57,040 --> 00:13:01,959
see all the time people moving from well

380
00:12:59,680 --> 00:13:03,760
Fargo Bank of America JP Morgan Chase

381
00:13:01,959 --> 00:13:05,519
you know the larger institutions that

382
00:13:03,760 --> 00:13:06,959
have made it very clear you know we

383
00:13:05,519 --> 00:13:09,199
don't want to be in this business right

384
00:13:06,959 --> 00:13:11,160
now so I think it's more or less an

385
00:13:09,199 --> 00:13:12,839
educational piece and just a you know a

386
00:13:11,160 --> 00:13:15,000
comfort level with those business owners

387
00:13:12,839 --> 00:13:16,680
like I've just always banked here so you

388
00:13:15,000 --> 00:13:19,120
know this is what I'm going to do yeah

389
00:13:16,680 --> 00:13:21,240
it could also be an issue of the path of

390
00:13:19,120 --> 00:13:23,000
least resistance where these companies

391
00:13:21,240 --> 00:13:24,920
do continue to set up management

392
00:13:23,000 --> 00:13:26,360
companies or they use personal banking

393
00:13:24,920 --> 00:13:29,160
because they don't want the headache and

394
00:13:26,360 --> 00:13:30,959
the expense of dealing with the finsa

395
00:13:29,160 --> 00:13:33,279
guidelines I've just always found that

396
00:13:30,959 --> 00:13:35,519
incredibly unwise and also in the

397
00:13:33,279 --> 00:13:37,240
diligence process if you see a cannabis

398
00:13:35,519 --> 00:13:38,440
business with an account at a financial

399
00:13:37,240 --> 00:13:40,040
institution that's following the

400
00:13:38,440 --> 00:13:42,000
guidelines as legal you think this is

401
00:13:40,040 --> 00:13:43,560
great this is a super compliant business

402
00:13:42,000 --> 00:13:45,199
they definitely know what they're doing

403
00:13:43,560 --> 00:13:47,160
the buyer is going to be very pleased

404
00:13:45,199 --> 00:13:49,160
right that this is on the up and up very

405
00:13:47,160 --> 00:13:52,279
transparent and there's almost this kind

406
00:13:49,160 --> 00:13:54,600
of Lucy but actual layer of protection

407
00:13:52,279 --> 00:13:56,440
um in banking with the finsen guidelines

408
00:13:54,600 --> 00:13:57,639
because all hands are on the table right

409
00:13:56,440 --> 00:13:59,320
nothing's being hidden and that's

410
00:13:57,639 --> 00:14:01,040
incredibly important transparency is

411
00:13:59,320 --> 00:14:03,279
hugely important everywhere but in this

412
00:14:01,040 --> 00:14:04,839
industry in particular so let's pivot a

413
00:14:03,279 --> 00:14:06,399
little bit because I think people get

414
00:14:04,839 --> 00:14:09,440
confused about what the finsen

415
00:14:06,399 --> 00:14:13,079
guidelines really speak to on the back

416
00:14:09,440 --> 00:14:15,800
of those guidelines is solal or are

417
00:14:13,079 --> 00:14:18,720
financial institutions able to lend and

418
00:14:15,800 --> 00:14:20,759
extend credit um because obviously that

419
00:14:18,720 --> 00:14:23,680
is a huge issue in the industry because

420
00:14:20,759 --> 00:14:25,800
of the federal illegality yeah and it's

421
00:14:23,680 --> 00:14:28,480
really on a caseby casee basis depending

422
00:14:25,800 --> 00:14:31,600
on the financial institution um so here

423
00:14:28,480 --> 00:14:34,120
at so we do uh lend but on a very

424
00:14:31,600 --> 00:14:36,079
limited basis typically it's reserved

425
00:14:34,120 --> 00:14:38,240
for our existing members where we have

426
00:14:36,079 --> 00:14:40,959
the the whole relationship including the

427
00:14:38,240 --> 00:14:42,040
deposit relationship um so we understand

428
00:14:40,959 --> 00:14:43,639
uh you know both the loan and the

429
00:14:42,040 --> 00:14:45,480
deposit side of things we're

430
00:14:43,639 --> 00:14:47,000
traditionally just uh commercial real

431
00:14:45,480 --> 00:14:49,079
estate and we do a little bit of

432
00:14:47,000 --> 00:14:50,639
equipment financing outside of that

433
00:14:49,079 --> 00:14:52,199
we've not been able to get comfortable

434
00:14:50,639 --> 00:14:54,040
it's not that it can't happen but for

435
00:14:52,199 --> 00:14:55,880
sloud it's kind of a risk appetite level

436
00:14:54,040 --> 00:14:58,160
at this point so like I said yes there

437
00:14:55,880 --> 00:15:00,079
is lending there are options but at

438
00:14:58,160 --> 00:15:02,199
least on a limited basis and we're

439
00:15:00,079 --> 00:15:04,320
traditional cash flow lenders and so for

440
00:15:02,199 --> 00:15:06,240
an industry that's just getting started

441
00:15:04,320 --> 00:15:08,279
often times it's hard to qualify these

442
00:15:06,240 --> 00:15:09,839
borrowers so you know over time as

443
00:15:08,279 --> 00:15:11,279
people get more profitable and more

444
00:15:09,839 --> 00:15:12,959
experienced you know that's where we're

445
00:15:11,279 --> 00:15:14,920
going to be able to come in but at least

446
00:15:12,959 --> 00:15:17,040
at this point it's been a little bit of

447
00:15:14,920 --> 00:15:18,880
a challenge in order to get that lending

448
00:15:17,040 --> 00:15:22,759
piece up and running but we will do it

449
00:15:18,880 --> 00:15:25,880
on a case-by Case basis okay and moving

450
00:15:22,759 --> 00:15:27,519
to kind of how life is under the finsen

451
00:15:25,880 --> 00:15:29,440
guidelines and I'm curious about this

452
00:15:27,519 --> 00:15:31,720
question because people ask me all the

453
00:15:29,440 --> 00:15:34,519
time what's the best state in which to

454
00:15:31,720 --> 00:15:37,000
operate where should I go get a license

455
00:15:34,519 --> 00:15:38,680
and my responses might surprise some

456
00:15:37,000 --> 00:15:40,079
people but I tend to swing with the co

457
00:15:38,680 --> 00:15:41,800
memo where I think you have the most

458
00:15:40,079 --> 00:15:43,680
protection in states that are the most

459
00:15:41,800 --> 00:15:45,680
regulated because again everything's

460
00:15:43,680 --> 00:15:46,920
kept honest it's super transparent your

461
00:15:45,680 --> 00:15:48,399
Feds are not going to show up in your

462
00:15:46,920 --> 00:15:50,240
backyard they're not doing that anyway

463
00:15:48,399 --> 00:15:51,959
but the chances of it plummet if you're

464
00:15:50,240 --> 00:15:55,120
in a highly regulated State quite

465
00:15:51,959 --> 00:15:58,040
obviously what is the most complicated

466
00:15:55,120 --> 00:16:00,880
state in which salal provides services

467
00:15:58,040 --> 00:16:03,680
and why is it complicated I mean I think

468
00:16:00,880 --> 00:16:06,240
California is tricky one they have

469
00:16:03,680 --> 00:16:08,800
approximately 4,228 different license

470
00:16:06,240 --> 00:16:11,680
types I exaggerate but not by much I

471
00:16:08,800 --> 00:16:13,959
mean there's just a lot going on

472
00:16:11,680 --> 00:16:15,759
regulatory wise that way that's

473
00:16:13,959 --> 00:16:17,319
difficult to maintain or understand

474
00:16:15,759 --> 00:16:19,680
really what the differences are between

475
00:16:17,319 --> 00:16:21,920
the two or between different licenses

476
00:16:19,680 --> 00:16:24,199
you know that market in particular is

477
00:16:21,920 --> 00:16:26,279
very you know you've got a lot of black

478
00:16:24,199 --> 00:16:28,040
market cannabis flowing through that

479
00:16:26,279 --> 00:16:30,759
market that makes it very difficult and

480
00:16:28,040 --> 00:16:33,199
challenging for well-intentioned and and

481
00:16:30,759 --> 00:16:35,120
law-abiding business owners to do a

482
00:16:33,199 --> 00:16:38,519
profitable business so there's a lot of

483
00:16:35,120 --> 00:16:41,040
skirting around rules or making very

484
00:16:38,519 --> 00:16:43,279
complex ownership changes or management

485
00:16:41,040 --> 00:16:45,319
structure changes to kind of get around

486
00:16:43,279 --> 00:16:47,000
some of the regulatory requirements or

487
00:16:45,319 --> 00:16:49,519
get around some of that black market

488
00:16:47,000 --> 00:16:51,759
infusion so it just there's a lot going

489
00:16:49,519 --> 00:16:54,120
on in California uh aside from it just

490
00:16:51,759 --> 00:16:56,240
being a very big Market it it can be a

491
00:16:54,120 --> 00:16:57,480
challenge for a number of ways but I

492
00:16:56,240 --> 00:17:00,839
mean that's probably the state where we

493
00:16:57,480 --> 00:17:05,199
found the most most confusing ownership

494
00:17:00,839 --> 00:17:09,199
and management Arrangements around ever

495
00:17:05,199 --> 00:17:11,039
I am I am not surprised um California is

496
00:17:09,199 --> 00:17:13,120
actually number one on my list for worst

497
00:17:11,039 --> 00:17:15,000
state in which to set up your cannabis

498
00:17:13,120 --> 00:17:16,959
business Oregon as a close second and

499
00:17:15,000 --> 00:17:18,919
that's because we have rules on the

500
00:17:16,959 --> 00:17:21,079
books there's seemingly little to no

501
00:17:18,919 --> 00:17:24,559
enforcement anyway and much of the

502
00:17:21,079 --> 00:17:26,559
ownership and beneficial owner Financial

503
00:17:24,559 --> 00:17:28,679
financial interest holder regulations

504
00:17:26,559 --> 00:17:30,000
are very amorphous compared to other

505
00:17:28,679 --> 00:17:32,160
states and I could see why that would

506
00:17:30,000 --> 00:17:34,360
make it difficult to run sufficient

507
00:17:32,160 --> 00:17:36,160
diligence under the guidelines yes I

508
00:17:34,360 --> 00:17:38,160
mean we're responsible to know our

509
00:17:36,160 --> 00:17:40,320
customer like you said I mean it's the

510
00:17:38,160 --> 00:17:42,080
prominent it's The Guiding Light of

511
00:17:40,320 --> 00:17:44,679
banking know your customer and that's

512
00:17:42,080 --> 00:17:46,960
really hard to do one when you can't be

513
00:17:44,679 --> 00:17:48,600
sure who all of those true parties of

514
00:17:46,960 --> 00:17:51,120
Interest are or when you can't

515
00:17:48,600 --> 00:17:52,880
necessarily rely on the regulatory body

516
00:17:51,120 --> 00:17:54,960
in the state to have done that due

517
00:17:52,880 --> 00:17:56,760
diligence as efficiently as we would

518
00:17:54,960 --> 00:17:58,000
like or that we see in other states you

519
00:17:56,760 --> 00:17:59,440
know other states are a little bit more

520
00:17:58,000 --> 00:18:00,640
transparent parent or we know that

521
00:17:59,440 --> 00:18:02,159
they're really digging into the

522
00:18:00,640 --> 00:18:03,960
backgrounds of these people we don't

523
00:18:02,159 --> 00:18:06,480
have that necessarily that same faith in

524
00:18:03,960 --> 00:18:08,400
California unfortunately that tension is

525
00:18:06,480 --> 00:18:09,880
very interesting to me because the

526
00:18:08,400 --> 00:18:11,559
access to financial institutions is a

527
00:18:09,880 --> 00:18:13,240
Lifeline for multiple reasons right it's

528
00:18:11,559 --> 00:18:15,360
not just Public Safety nobody can do

529
00:18:13,240 --> 00:18:16,880
payroll in cash it's nearly impossible

530
00:18:15,360 --> 00:18:19,039
and then of course personal liability

531
00:18:16,880 --> 00:18:21,320
for whatever you might take on yourself

532
00:18:19,039 --> 00:18:23,240
I know that states are incentivized to

533
00:18:21,320 --> 00:18:25,280
get licenses in because they promised

534
00:18:23,240 --> 00:18:26,640
voters there'd be lots of tax revenue

535
00:18:25,280 --> 00:18:28,440
you can't do that right without the

536
00:18:26,640 --> 00:18:30,600
bodies but certainly states are not

537
00:18:28,440 --> 00:18:32,440
created equal when it comes to barriers

538
00:18:30,600 --> 00:18:34,600
to entry and it's unfortunate because it

539
00:18:32,440 --> 00:18:36,960
impacts them these lenes on the

540
00:18:34,600 --> 00:18:39,559
day-to-day business operations but aside

541
00:18:36,960 --> 00:18:42,360
from California um let's talk about

542
00:18:39,559 --> 00:18:44,400
Federal moves right there's a lot going

543
00:18:42,360 --> 00:18:46,280
on right now and there are wild amounts

544
00:18:44,400 --> 00:18:48,559
of speculation seemingly from all parts

545
00:18:46,280 --> 00:18:50,200
of the industry about multiple things I

546
00:18:48,559 --> 00:18:52,200
typically ignore these things with good

547
00:18:50,200 --> 00:18:55,520
reason over 14 years of experience very

548
00:18:52,200 --> 00:18:57,480
little is legitimate safer Banking Act

549
00:18:55,520 --> 00:18:59,320
and I'm not going to go through what the

550
00:18:57,480 --> 00:19:00,919
acronym means but have you both seen The

551
00:18:59,320 --> 00:19:03,880
Walking Dead you ever seen episodes of

552
00:19:00,919 --> 00:19:06,000
The Walking Dead yes safer banking to me

553
00:19:03,880 --> 00:19:08,240
is like an extra in The Walking Dead it

554
00:19:06,000 --> 00:19:10,200
dies it comes back it dies it comes back

555
00:19:08,240 --> 00:19:11,960
and it's kind of like this political

556
00:19:10,200 --> 00:19:14,039
joke now it's an olive branch to the

557
00:19:11,960 --> 00:19:16,320
industry that never goes anywhere what's

558
00:19:14,039 --> 00:19:18,320
your take on it with that very kind of

559
00:19:16,320 --> 00:19:20,840
cavalier oversight being a little

560
00:19:18,320 --> 00:19:22,520
sardonic and what do you think its

561
00:19:20,840 --> 00:19:24,960
chances of passing are now that it's

562
00:19:22,520 --> 00:19:27,240
like on its seventh or eighth life cycle

563
00:19:24,960 --> 00:19:29,480
yeah I mean first and foremost salow

564
00:19:27,240 --> 00:19:31,440
Credit Union will support any

565
00:19:29,480 --> 00:19:33,400
legislation at the federal level that

566
00:19:31,440 --> 00:19:35,400
will help support the Cannabis industry

567
00:19:33,400 --> 00:19:38,520
I mean hands down whether it's safe

568
00:19:35,400 --> 00:19:41,640
Banking Act safer safest maybe is next I

569
00:19:38,520 --> 00:19:43,400
mean who who knows I think it would be

570
00:19:41,640 --> 00:19:44,760
great if safer Banking Act were to pass

571
00:19:43,400 --> 00:19:47,039
but it'll be interesting to see what

572
00:19:44,760 --> 00:19:48,880
other financial institutions do trying

573
00:19:47,039 --> 00:19:50,720
to get into this because as far as we're

574
00:19:48,880 --> 00:19:52,559
aware it doesn't alleviate a lot of the

575
00:19:50,720 --> 00:19:55,360
reporting requirements that we still

576
00:19:52,559 --> 00:19:57,720
have to do so I mean we suspect some

577
00:19:55,360 --> 00:19:59,840
people some financial institutions will

578
00:19:57,720 --> 00:20:01,760
start to get into this but how many you

579
00:19:59,840 --> 00:20:03,440
know it's really tough to say so in

580
00:20:01,760 --> 00:20:05,240
terms of you know I think you kind of

581
00:20:03,440 --> 00:20:07,039
hit on it earlier in terms of percentage

582
00:20:05,240 --> 00:20:08,440
of passing of the likelihood I I don't

583
00:20:07,039 --> 00:20:10,360
think there's much of a chance we've got

584
00:20:08,440 --> 00:20:11,919
an election year coming up which you

585
00:20:10,360 --> 00:20:13,520
know who knows how that's going to go we

586
00:20:11,919 --> 00:20:15,840
have a lot of geopolitical stuff going

587
00:20:13,520 --> 00:20:17,360
on outside of you know the United States

588
00:20:15,840 --> 00:20:19,159
so how is that going to factor in is

589
00:20:17,360 --> 00:20:21,080
Congress going to have time so I mean

590
00:20:19,159 --> 00:20:22,720
it's really anybody's guess but I think

591
00:20:21,080 --> 00:20:24,559
you know being in this for so long like

592
00:20:22,720 --> 00:20:26,039
you have me you start to get a somewhat

593
00:20:24,559 --> 00:20:28,200
of a negative attitude towards it

594
00:20:26,039 --> 00:20:29,880
unfortunately so you know we're not

595
00:20:28,200 --> 00:20:31,760
super optimistic at this point that

596
00:20:29,880 --> 00:20:33,919
anything is going to get pushed through

597
00:20:31,760 --> 00:20:36,880
this year and the other gorilla in the

598
00:20:33,919 --> 00:20:39,559
room that could swallow all of it anyway

599
00:20:36,880 --> 00:20:42,159
is the scuttlebutt around the DEA

600
00:20:39,559 --> 00:20:45,559
rescheduling cannabis into schedule 3

601
00:20:42,159 --> 00:20:47,440
which we know we've got a Department of

602
00:20:45,559 --> 00:20:50,080
Health and Human Services recommendation

603
00:20:47,440 --> 00:20:52,240
now all 250 pages of it with scientific

604
00:20:50,080 --> 00:20:54,760
and medical evidence supporting the move

605
00:20:52,240 --> 00:20:56,320
DEA has never gone against an HHS

606
00:20:54,760 --> 00:20:57,600
recommendation doesn't mean they

607
00:20:56,320 --> 00:20:59,600
couldn't or that they won't they have

608
00:20:57,600 --> 00:21:01,720
ultimate Authority but if cannabis moves

609
00:20:59,600 --> 00:21:03,400
to a schedule 3 it's off schedule one

610
00:21:01,720 --> 00:21:05,240
it's no longer federally legal

611
00:21:03,400 --> 00:21:08,799
technically it would be available on a

612
00:21:05,240 --> 00:21:11,679
prescription basis for cannaboid derived

613
00:21:08,799 --> 00:21:12,880
drugs and what that means is that nobody

614
00:21:11,679 --> 00:21:15,120
knows what's going to happen to the

615
00:21:12,880 --> 00:21:17,000
state licensed markets that are adult

616
00:21:15,120 --> 00:21:18,520
use and Medical in the wake of schedule

617
00:21:17,000 --> 00:21:20,720
3 we have a lot of people claiming to

618
00:21:18,520 --> 00:21:23,120
know um making lots of predictions but

619
00:21:20,720 --> 00:21:25,000
for salal and the other financial

620
00:21:23,120 --> 00:21:27,720
institutions have you considered what it

621
00:21:25,000 --> 00:21:30,240
would mean for you and banking the state

622
00:21:27,720 --> 00:21:32,400
license entities not much at least At

623
00:21:30,240 --> 00:21:33,919
first I think without some sort of

624
00:21:32,400 --> 00:21:35,840
change in the regulations or the

625
00:21:33,919 --> 00:21:37,520
guidance if that's changed then then

626
00:21:35,840 --> 00:21:39,159
we'll have to change our practices and

627
00:21:37,520 --> 00:21:41,799
of course you know it will have some

628
00:21:39,159 --> 00:21:43,880
crazy effect on the industry as a whole

629
00:21:41,799 --> 00:21:46,080
that will impact probably the types of

630
00:21:43,880 --> 00:21:48,200
businesses we see or or maybe what kind

631
00:21:46,080 --> 00:21:49,760
of activity those businesses can do but

632
00:21:48,200 --> 00:21:51,720
in terms of like our due diligence or

633
00:21:49,760 --> 00:21:52,960
what we're required to do that isn't

634
00:21:51,720 --> 00:21:55,200
going to change because they've

635
00:21:52,960 --> 00:21:56,600
descheduled it not until finsen tells us

636
00:21:55,200 --> 00:21:58,159
differently you know we're still going

637
00:21:56,600 --> 00:22:00,400
to follow those guidelines look for for

638
00:21:58,159 --> 00:22:03,200
those red flags that's going to be what

639
00:22:00,400 --> 00:22:04,400
guides our program until that changes so

640
00:22:03,200 --> 00:22:06,880
I think it's just going to cause a lot

641
00:22:04,400 --> 00:22:09,039
more chaos more than anything else don't

642
00:22:06,880 --> 00:22:10,600
could potentially anyway um if it's not

643
00:22:09,039 --> 00:22:13,039
done the right way and I don't know what

644
00:22:10,600 --> 00:22:14,600
the right way is yeah I mean for us it

645
00:22:13,039 --> 00:22:17,360
really doesn't change a lot unless like

646
00:22:14,600 --> 00:22:19,159
Karen said a regulatory body comes out

647
00:22:17,360 --> 00:22:20,919
and changes their guidance for banking

648
00:22:19,159 --> 00:22:23,520
specifically obviously there could be a

649
00:22:20,919 --> 00:22:26,600
financial positive Financial impact uh

650
00:22:23,520 --> 00:22:29,799
to these businesses um with IRS code and

651
00:22:26,600 --> 00:22:31,159
280e uh and so that could be a positive

652
00:22:29,799 --> 00:22:33,159
but what are some of the unintended

653
00:22:31,159 --> 00:22:35,200
consequences of that it's really hard to

654
00:22:33,159 --> 00:22:37,240
tell at this point yeah I think I'm in

655
00:22:35,200 --> 00:22:39,520
the boat with you guys which is waiting

656
00:22:37,240 --> 00:22:41,200
and watching is what we're all doing

657
00:22:39,520 --> 00:22:43,039
right now nobody really knows what will

658
00:22:41,200 --> 00:22:45,720
happen and it will take some federal

659
00:22:43,039 --> 00:22:47,520
intervention to clarify what this means

660
00:22:45,720 --> 00:22:50,200
for State markets whether it's to Banks

661
00:22:47,520 --> 00:22:51,919
or lienes themselves to the doj to other

662
00:22:50,200 --> 00:22:54,039
us attorneys like we've seen in the past

663
00:22:51,919 --> 00:22:56,000
I don't think anybody really knows right

664
00:22:54,039 --> 00:22:57,679
whether it's overall in that positive or

665
00:22:56,000 --> 00:23:00,000
negative despite the removal of the

666
00:22:57,679 --> 00:23:01,679
impact Act of 28 on the income tax side

667
00:23:00,000 --> 00:23:03,840
which is positive the rest of it I don't

668
00:23:01,679 --> 00:23:05,360
think we know now last question before I

669
00:23:03,840 --> 00:23:08,120
let you guys go what are the biggest

670
00:23:05,360 --> 00:23:10,279
challenges salal faces if things remain

671
00:23:08,120 --> 00:23:12,960
status quo I mean if they're not going

672
00:23:10,279 --> 00:23:14,159
to update those guidelines or you know

673
00:23:12,960 --> 00:23:16,320
make some changes to have these

674
00:23:14,159 --> 00:23:17,919
businesses are taxed it's just as talked

675
00:23:16,320 --> 00:23:20,120
about earlier it's just going to

676
00:23:17,919 --> 00:23:22,120
encourage more and more complex

677
00:23:20,120 --> 00:23:24,159
ownership and management agreements that

678
00:23:22,120 --> 00:23:26,120
are difficult to understand and monitor

679
00:23:24,159 --> 00:23:28,480
you know it encourages creative

680
00:23:26,120 --> 00:23:30,640
approaches to structuring your business

681
00:23:28,480 --> 00:23:32,760
so you can just make a buck right so

682
00:23:30,640 --> 00:23:35,720
you're not bogged down by regulatory

683
00:23:32,760 --> 00:23:37,240
requirements or or or what have you so

684
00:23:35,720 --> 00:23:40,240
if things don't

685
00:23:37,240 --> 00:23:42,320
change we're going to just continue to

686
00:23:40,240 --> 00:23:44,120
see in a change industry anyway like

687
00:23:42,320 --> 00:23:45,679
there's just so much change change in

688
00:23:44,120 --> 00:23:47,039
this industry because it's new because

689
00:23:45,679 --> 00:23:48,440
there's a lot of cash there's a lot of

690
00:23:47,039 --> 00:23:50,840
potential all of that is going to

691
00:23:48,440 --> 00:23:52,960
increase continue over time it es and

692
00:23:50,840 --> 00:23:55,679
flows depending on the economy but you

693
00:23:52,960 --> 00:23:58,080
know most of my team's time is spent

694
00:23:55,679 --> 00:24:00,120
either in an application or managing

695
00:23:58,080 --> 00:24:01,279
that change for these businesses that's

696
00:24:00,120 --> 00:24:02,760
difficult to do you know you got

697
00:24:01,279 --> 00:24:04,520
businesses that have new owners they've

698
00:24:02,760 --> 00:24:06,039
got new licenses they have expiring

699
00:24:04,520 --> 00:24:08,039
licenses they're converting in and out

700
00:24:06,039 --> 00:24:10,039
of the industry or they're partnering

701
00:24:08,039 --> 00:24:12,240
with non-licensed companies to do

702
00:24:10,039 --> 00:24:14,360
licensed work because of whatever reason

703
00:24:12,240 --> 00:24:17,000
X Y and Z all of that makes it very

704
00:24:14,360 --> 00:24:18,679
difficult for us to do our due diligence

705
00:24:17,000 --> 00:24:20,159
and make sure that we know the customer

706
00:24:18,679 --> 00:24:21,600
that is in front of us and that we're

707
00:24:20,159 --> 00:24:23,559
comfortable with the arrangement and a

708
00:24:21,600 --> 00:24:25,399
lot of those changes have to require a

709
00:24:23,559 --> 00:24:26,640
relook by our approvers at the Credit

710
00:24:25,399 --> 00:24:28,559
Unit to make sure we're still

711
00:24:26,640 --> 00:24:30,279
comfortable with that arange we're still

712
00:24:28,559 --> 00:24:33,159
comfortable with this ownership so

713
00:24:30,279 --> 00:24:34,720
unless there's change both in the market

714
00:24:33,159 --> 00:24:36,360
just in general but also in the

715
00:24:34,720 --> 00:24:39,200
regulatory environment there's going to

716
00:24:36,360 --> 00:24:41,320
be just a continuation of this

717
00:24:39,200 --> 00:24:42,600
consolidation there's a lot of

718
00:24:41,320 --> 00:24:44,000
consolidation in the market so there's

719
00:24:42,600 --> 00:24:45,200
going to be tendency towards

720
00:24:44,000 --> 00:24:46,559
consolidation there's going to be

721
00:24:45,200 --> 00:24:48,240
tendency towards these complex

722
00:24:46,559 --> 00:24:49,840
ownerships and that makes it very

723
00:24:48,240 --> 00:24:52,240
difficult for us to do our job yeah I

724
00:24:49,840 --> 00:24:54,559
think one other thing is just scale you

725
00:24:52,240 --> 00:24:57,320
know as our members get larger or they

726
00:24:54,559 --> 00:24:59,000
expand or new members want to join the

727
00:24:57,320 --> 00:25:01,000
credit un Union you know because there's

728
00:24:59,000 --> 00:25:03,159
a patchwork of all these State

729
00:25:01,000 --> 00:25:04,600
independent laws and regulations that

730
00:25:03,159 --> 00:25:06,799
means that we have to keep up with all

731
00:25:04,600 --> 00:25:09,039
of those and so absent of any federal

732
00:25:06,799 --> 00:25:11,399
consistent guidance that we can really

733
00:25:09,039 --> 00:25:14,159
latch on to you know it just creates

734
00:25:11,399 --> 00:25:15,919
that scale issue of you know having to

735
00:25:14,159 --> 00:25:18,760
either become more efficient adding new

736
00:25:15,919 --> 00:25:19,960
systems adding FTE whatever it may be so

737
00:25:18,760 --> 00:25:21,960
I mean that's a constant thing that

738
00:25:19,960 --> 00:25:23,840
we're trying to balance is you know okay

739
00:25:21,960 --> 00:25:25,720
we want to get into a new state or

740
00:25:23,840 --> 00:25:27,559
whatever it may be you know how do we do

741
00:25:25,720 --> 00:25:29,120
that how do we do it profitably how do

742
00:25:27,559 --> 00:25:30,799
we protect the credit union how to

743
00:25:29,120 --> 00:25:32,840
protect the member so I mean that's been

744
00:25:30,799 --> 00:25:34,080
a challenge from day one and if things

745
00:25:32,840 --> 00:25:35,640
remain the same it's going to continue

746
00:25:34,080 --> 00:25:37,399
to be the challenge is just that

747
00:25:35,640 --> 00:25:41,440
Patchwork across the board at the state

748
00:25:37,399 --> 00:25:43,520
level I hear you okay well I guess we'll

749
00:25:41,440 --> 00:25:45,399
see what's going to happen maybe

750
00:25:43,520 --> 00:25:47,360
actually this year in 24 because it's a

751
00:25:45,399 --> 00:25:49,159
presidential election lots of things can

752
00:25:47,360 --> 00:25:51,080
shake and move so I want to thank both

753
00:25:49,159 --> 00:25:53,279
of you Karen and Brett for coming on

754
00:25:51,080 --> 00:25:54,600
today thanks law for the participation

755
00:25:53,279 --> 00:25:57,240
think it's very Illuminating for our

756
00:25:54,600 --> 00:25:58,679
listeners and we'll stay in touch over

757
00:25:57,240 --> 00:26:01,799
what happened in the coming months

758
00:25:58,679 --> 00:26:01,799
thanks Hillary thank you very much

759
00:26:03,520 --> 00:26:08,320
Hillary and that concludes today's

760
00:26:05,640 --> 00:26:12,440
episode of the Cannabis law Now podcast

761
00:26:08,320 --> 00:26:12,440
until next time stay alert stay

762
00:26:16,240 --> 00:26:19,240
alive

Professional:

Hilary Bricken

Partner