CU 1 Extends Financial Services to Pot Businesses

An Alaska credit union has launched a pilot program to provide financial services to marijuana businesses, which among other benefits will relieve state workers from counting $1.5 million in cash tax payments each month.

James Wileman, President/CEO of Credit Union 1 ($1 billion in assets, 84,064 members) said the decision fits with its history of serving the underserved, and will relieve the state’s businesses and agencies from the burdens of handling too much cash.

Alaskans voted to legalize marijuana in 2014, the first licenses were granted in 2016 and marijuana retail sales are on-track to reach $200 million in 2018.

Alaska’s Alcohol & Marijuana Control Office has licensed 262 businesses from the Alaska Bud Brothers Aerogardens in Kasilof to the Zenzic Gardens in Palmer. About 150 other businesses are awaiting approval.

As of February, 31 states had legalized medical marijuana and nine states have allowed recreational use of the drug, despite federal laws.

However, in Alaska and many other areas, the business is entirely cash, creating issues for the businesses generating it and their suppliers receiving it.

Wileman said the pilot program is not an endorsement of marijuana by the state chartered, federally insured credit union.

“The lack of financial services — a complete lack — has created a cash crisis and a safety issue in our community. We seek to solve this by providing financial services,” Wileman said.

Officials from the state Tax Division and the Alcohol & Marijuana Control Office spoke at the news conference supporting Credit Union 1’s decision. A state tax official said agency workers have collected nearly $20 million in state excise taxes paid by licensed cultivators, counting more than $14 million in cash, or about $1.5 million a month.

Jana Weltzin, an Anchorage lawyer who represents pot growers and sellers, said at the news conference that the lack of financial services hampers their ability to grow and be profitable.

“Alaska marijuana licensees are homegrown, small companies striving to pioneer in uncharted waters,” she said.

“Imagine starting a small business — which is hard enough — jumping through all the hoops and hurdles of the regulations, and when you finally get off the ground and operational you have to handle all your payroll, taxes, utilities, rent, purchase of materials, and other payments your business needs to operate with cash.

“That’s assuming all those businesses take cash: no wire transfers, no checking accounts—which means in reality, no safety for your business, your family or your employees,” she said.

Weltzin thanked Credit Union 1 for providing a path for marijuana businesses to end those practices, which she said were unsustainable.

“Because CU 1 cares about Alaskans, it’s decided to pioneer a new frontier that only 33 other banks in the nation were brave enough to face,” she said.

The credit union pledged that it would donate at least 1% of its 2019 profits from the program to the #CU1LUV Community Fund, which helps non-profits and Alaskans in need.