West Virginia CU Lands Contract to Serve State’s Medical Marijuana Business

A small credit union has landed a potentially big medical marijuana banking contract with the state of West Virginia.

West Virginia State Treasurer John Perdue said Monday that the $35.3 million Element Federal Credit Union in Charleston has been selected as the “apparent winning vendor for the Medical Cannabis Banking contract.”

“Beginning today (Monday) the State Treasurer’s Office and Element Federal Credit Union will be meeting and negotiating to finalize issuance of the purchase order. Until the purchase order is issued, no other information will be released and the blackout period remains in place,” Perdue said in a prepared statement. “After the issuance of the purchase order, the State Treasurer’s Office and the selected vendor will announce additional information, including long-term goals and interim procedures for medical cannabis banking.”

Because it met all of the state’s mandatory requirements, Element FCU’s proposal was selected over those submitted by J.P. Morgan Chase and a firm named DMTLP, Delivering Marijuana Teams Logistics Placement. MVB Financial Corp. also submitted a proposal but later removed itself from consideration, according to the Office of the State Treasurer.

The Treasurer’s office noted in a memo that J.P Morgan Chase and DMTLP’s proposals were disqualified because they did not meet all of the state’s mandatory requirements.

Although the West Virginia state legislature passed a Medical Cannabis Act in 2017, its implementation was stifled when banks on contract with the state informed Perdue they would not accept deposits and provide other financial services related to marijuana sales because pot is illegal under federal law.

Earlier this year, Perdue worked with state lawmakers to pass HB 2538. That bill expanded the definition of financial institutions that could bid on the medical cannabis banking business and created changes in the state’s law to facilitate obtaining a vendor to provide banking services such as processing the fees, taxes, penalties and other transactions for West Virginia’s sanctioned medical cannabis program.

“My staff has worked tirelessly to make this program viable,” Perdue said. “I look forward to awarding this contract and moving forward with a banking process. My main priority is to help people in our state who want this medical option for either themselves or a family member.”

The state treasurer’s office estimated that its direct banking costs will be at least $310,000 annually.

However, because there are a number of issues that remain under review by state lawmakers and officials, it is unknown when medical marijuana will be available for sale to qualified patients.

Under the oversight of West Virginia’s Department of Health and Human Resources, its Office of Medical Cannabis is responsible for developing the medical marijuana program.

“Much has been done to lay the groundwork for implementing the law, however there is more that still must happen both within DHHR and across the industry before a medical cannabis product can be made available (for example, development of growers, processors, and dispensaries for DHHR to permit and inspect),” the DHHR said.

Under the leadership of President/CEO Linda Bodie, Element FCU employs 17 staff members who operate three branches and serve a membership of 4,490.