Banking services for cannabis companies. Massachusetts will launch its retail cannabis market in about one to two weeks’ time. Cannabis consumers and business owners in Massachusetts have long awaited this day. Regulators and law enforcement are still unsettled about the decision. The main problem is due to the lack of access to federally-backed financial services that pushes cannabis operations to be cash-only businesses. However, one Massachusetts credit union wants to give some key banking services to cannabis organizations in the recreational sector.
Banking services for cannabis companies. Credit Union Services Could Get Millions in Cash off The Streets
According to the Boston Globe, a federally chartered small credit union called GFA Federal Credit Union will offer banking and financial management services to cannabis companies in Massachusetts. This declaration makes GFA the only financial institution in Massachusetts to gain access to the cannabis retail industry and it happens after at least 2 years of arrangements and research into making it occur.
GFA’s chief executive Tina Sbrega told the Globe they are analyzing the cannabis business as a legal business that needs such recognition and that, the lack of banking services, gives a tremendous public safety issue in the state’s communities. As of the 1st of October 1, GFA will provide services such as cash management, checking accounts, payroll, wire transfers, and bill payments.
The purpose of these key services is to help keep millions of dollars in cash off the streets. This has made public safety and law enforcement agencies to praise the initiative of GFA. Walpole’s chief of police and a member of Massachusetts’ Cannabis Advisory Board, John Carmicheal said “Public safety-wise, this is a home run,” Typically trenchant in their opposition to adult-use legalization, Massachusetts police who are normally trenchant in their opposition to adult-use legalization have constantly shown their gratitude for bank involvement.
Nevertheless, when cannabis companies have access to banks, it makes officials foresee and regulate deal between licensed businesses. Therefore, making it easy to spot fraud, tax evasion and black market diversion. Furthermore, it makes the cannabis industry a safer place; a cash-only operation has a high probability of being robbed.
Small Banks Can Be the Answer to the Cannabis Cash Problem
Apart from law enforcement, Massachusetts regulators and the industry are also happy about the GFA’s move. Banking services provide services such as making it easier for customers to buy cannabis with plastic, reduce overhead and risk for the businesses. It is time-consuming and expensive to handle cash transactions in addition to the logistics of covering business expenses such as payroll.
Even though there are a lot of advantages, many big banks are still thinking twice about doing business with state-legal cannabis companies. Federal marijuana restriction gives severe risks to financial institutions supported by the government. However, GFA is not among those top banks. It’s a credit union worth about $500 million in assets. This means GFA is has a low possibility of facing an enforcement action from the federal government. It also means GFA won’t put existing clients and investments at risk due to its business with cannabis companies.
Steve Hoffman who is the chairman of the Massachusetts Cannabis Control Commissioner wants more banks and credit unions to follow the leadership of GFA. According to Colorado-based Safe Harbor, a company that helps financial institutions work with cannabis businesses, it wouldn’t be a bad idea if smaller financial institutions could make a move in an industry where larger firms aren’t progressing.
GFA is optimistic that they can be a small bank that can solve the cannabis industry’s cash problem. However, they cautiously starting. GFA can only do business with 15 to 20 cannabis companies in the when it launches. It not allowed to grant loans to small cannabis businesses, which raises the subject of equality in an industry which is mostly ruled by large firms. GFA is making it clients to know that it will give equal treatment to large, smaller and newer companies.