First-of-its-kind program to offer Alaska banking for cannabis businesses

An Alaska credit union wants to offer banking services to businesses in the state’s legal cannabis industry.

Based in Anchorage, Credit Union 1 is starting a pilot program to learn more, and Credit Union 1 CEO James Wileman talked with Alaska Public Media’s Casey Grove about the program.

Grove: Why does Credit Union 1 want to get into providing these financial services and a few years into the legal industry, why hasn’t it been done already in Alaska?

Wileman: Credit Union, 1 has always efforted to make our own magic and identify those who are under-served. And now with cannabis- and marijuana-related businesses, we see it very similarly. They don’t have access to any banking service. They are completely under served as a cash-only basis. And we’re just really excited to be providing a service to a group of entrepreneurs that don’t have access to it, number one, but have that Alaskan spirit of can-do and will do and they have done so for the last couple of years, and we’re excited to get in and be a part of it. I think the reason that it didn’t happen sooner was, there’s a risk involved. There’s some significant compliance that you have to make sure you maintain and do, and a lot of Institutions have decided over the last few years, obviously, not to get into that. We’ve worked on a program very diligently for the last, probably a year to 18 months, and we feel like we’ve put it together and now it’s time to find out.

Grove: How many businesses do you have participating at this point and what services specifically are you offering?

Wileman: So we’re looking to start our pilot program with just a handful of businesses. I believe it’s five to seven and we’ve chosen businesses from different aspects of the industry so that we can make sure we have those pieces in place and understood. And once we have that operating for a short period of time, we’re hoping less than six months, we’ll look to expand and add a few more businesses. Possibly up to, say 10 for example, and then operate our program for a little bit there as well. So we’re hoping within about six, maybe seven or eight months, if things go smoothly and we don’t find anything that needs major adjustment, that we would be ready in the second to third quarter of 2019. The services that will be available (will) be like for any other businesses. Ability to wire funds, for example, for taxes. Send ACH payments for bills. Making you know connections to payroll services, so that employees could get paid by direct deposit instead of cash, which right now I know some businesses do on randomized days so that their employees are safe and things like that.

Grove: What are some of the difficulties that you’ve seen that are different for banking with the cannabis industry as opposed to any other business?

Wileman: Yeah, you’ve got marijuana still being on the federally, you know, Schedule I narcotics list. So that introduces some variance there of risk that you have to account for. There’s guiding principles out there from the Financial Crimes Enforcement Network, which is a part of the U.S. Treasury that provides guidance on banking marijuana related businesses in the cannabis industry. And as long as you follow those and build a program that gives you that reasonable certainty, you are doing what’s required. Then you shouldn’t have any issues, and for us it’s about building a program that makes sure we do those things.

Grove: I feel like for some people the issue of cannabis is not so much about the legality, it’s more of a social issue for them. And I wonder, is there concern at Credit Union 1 about being associated with drug culture?

Wileman: I mean, Credit Union 1 has always prided itself on being a financial institution that serves everybody. All means. Economically, socially, ethnically. All walks of life. We see, certainly that issue here, but we don’t take a political or moral stand on it. This is a business that was established legally in the state of Alaska in 2014 with licensees beginning operations in ’15. And I think just like the Alcohol and Marijuana Control Board licenses bars, package stores, things of that nature. I see the marijuana-related businesses being in a very similar bucket, in that they are providing a legal service that people need or want or do enjoy, and that’s a personal preference on a personal level and it’s not our place to make a moral judgment on that. And, you know, we certainly understand there are those that might have those concerns, and we’re happy to have those conversations. But when you come at it from what makes sense and serving those who are under served and doing the right thing, you can you can weather those conversations and those discussions, and we’ve done so over the years as a credit union very well, and we think we will continue to do the same.