Demand Grows for Credit Union Pot Conferences

The growing interest among credit union executives in the potential opportunities in serving the multi-billion-dollar cannabis and hemp industries has led trade organizations to organize national conferences.

Last year, for example, NASCUS held what is believed to be the first national credit union Cannabis Banking Symposium in Los Angeles that was a sell-out success, Brian Knight, NASCUS EVP and general counsel, said. The trade group is holding a second annual conference in Chicago on June 17-18 and made a slight name change to go along with it, the Hemp & Cannabis Banking Symposium. Hemp plants, containing little or no THC, the chemical that induces the high sensation, were federally legalized and are processed to produce all types of consumer and industrial products.

What’s more, the Credit Union Association of New Mexico and Leverage Point Inc., a communications firm, both based in Albuquerque, are organizing a new national Credit Union Cannabiz Conference that will be held in Chicago from April 5-8, fittingly just days before the unofficial national holiday of 4-20 celebrated by cannabis culture enthusiasts.

“Obviously, we interact with an awful lot of credit unions, and cannabis is really a topic that comes up no matter where you are when you’re talking with credit union CEOs,” CUANM President/CEO Paul Stull said. “I don’t really get the impression that the amount of interest in this has been addressed. We felt that we wanted to have a dialogue, a national dialogue. That bigger national discussion is really around what I see as a turning point for credit unions.”

The banking opportunities are enormous when you consider that in 2020 dispensary sales of legal marijuana is expected to top $10 billion with an economic impact of more than $50 billion for local economies, according to Don Arkell, a senior consultant for CU Lending Advice in Kayville, Utah. He will be one of the featured speakers at the Cannabiz Conference.

Moreover, what may open even more opportunities for credit unions is the hemp industry. The 2018 farm bill included a provision that removed hemp as a scheduled substance. Hemp plants are legal because they contain 0.3% or less of THC. These plants are used to produce a wide range of industrial and consumer products. One of the most popular products derived from the hemp plant is cannabidiol, or CBD, which is used in a variety of consumer, pet and medicinal products.

According to the National Hemp Association in Washington, D.C., CBD sales reached nearly $2 billion in 2018 and these sales are projected to grow exponentially over the next few years. NHA also reported that sales of hemp-based CBD, rather than marijuana-based CBD, are expected to include more than $12 billion of the $20 billion in sales forecasted for 2024.

Eleven states and the District of Columbia have legalized marijuana for adult recreational use and 36 states have legalized medical marijuana. Pot remains illegal in Idaho, Nebraska and South Dakota. Nevertheless, it’s anticipated that some or most of the states that allow medical pot use will legalize marijuana for adult recreational use over the next few years.

Moreover, if the federal government ever legalizes marijuana, credit unions may want to be prepared to serve these industries and their ancillary businesses.

But like any potential business opportunity, credit union executives must first do a substantial amount of research and due diligence to understand the complicated maze of requirements and resources needed in the areas of personnel, operations and compliance to serve the hemp and marijuana industries. These national conferences aim to provide credit unions with this essential information, education and access to resources that can help them offer cannabis banking services in their local communities.

“There is tremendous opportunity, and tremendous risk, involved in banking cannabis funds,” Credit Union Cannabiz Conference Executive Director Amy Vigil said. “We realize that this is a new frontier that requires in-depth knowledge of cannabis-related businesses, of compliance and federal regulation. We aim to demystify how credit unions can serve this growing business.”

Vigil is vice president of association services for the CUANM. Stull is also involved with the conference’s organizing efforts.

“If you’re going to offer business accounts or business services [to marijuana related businesses], that’s a whole new area for credit unions. These MRBs need traditional commercial banking services that allow for a more robust use of financial services,” Stull said. “Everywhere I would go, people would talk about this, but there was no one place to get together and do it. We believe we have a good set of speakers, but we also are allowing time for round table discussions. I think a lot of times just knowing what other people are doing is a great value in helping you decide what direction you might go in.”

In addition to Arkell, who will talk about industry case studies and weigh the risks and rewards in marijuana markets, other featured speakers include Nancy Flynn, founder of the Marijuana Policy Institute and the ePolicy Institute in Washington, D.C., who will speak about best practices to ensure legal, regulatory and HR compliance; and the conference’s keynote speaker, Gov. Gary Johnson, who served as New Mexico’s governor and was the first governor to advocate for marijuana legalization while in office from 1995 to 2003. In 2014, he served as president/CEO of the Cannabis Sativa Inc., an OTC publicly traded company that sells a variety of marijuana products. Two years later, he entered the presidential race.

Organizers are not certain how many will attend the new conference, but they may want to prepare for a big crowd.

Last June, nearly 170 gathered in Los Angeles for the first-ever NASCUS Cannabis Banking Symposium that featured a dozen sessions on key issues for credit unions and regulators.

“I would say over the last few years, probably as much as one-fourth of the speaking requests NASCUS has gotten has been on issues related to marijuana banking,” Knight said.

Because the trade group’s pot symposium exceeded all expectations, it was a no-brainer to schedule a second annual symposium.

“We’re doing a couple of things different this year in Chicago. Last year was focused on just cannabis as an overall umbrella product. Obviously, we have different legal realities as we move into 2020,” he said. “Now we have a very clear and important legal distinction between hemp and cannabis as a result of the 2018 Farm Bill and USDA interim final regulations.”

On the first day, the NASCUS symposium will focus on issues and executive questions regarding medicinal and recreational marijuana.

However, Knight pointed out that even for credit unions that decide not to serve the pot industry, they still need to develop policies.

“When credit unions decide they don’t want to touch cannabis banking, then the question becomes, who aren’t we going to serve?” Knight explained. “Are we saying we don’t want to serve the dispensaries, the growers, the processors? Are we serving employees who work at marijuana businesses? Are we serving marijuana business owners in their individual capacity? Do we serve the ancillary third-party businesses? Will we allow a credit union member, who is a commercial landlord, lease space to the marijuana dispensary? Credit unions need to answer all of those questions internally, so that their frontline staff knows who gets an account and who doesn’t.”

The symposium’s second day will focus on the hemp industry.

“Industrial hemp is legal as long as it’s done within a regulatory framework approved by the USDA, but there’s still a whole host of other issues related to hemp (including regulations for the myriad of industrial and consumer hemp products) that people need to think about and try to understand, and in some cases, they are waiting for answers from us,” he said.

In addition to assessing the current state of hemp banking, the symposium will take an in-depth look at the USDA’s interim regulations for hemp banking, enhanced due diligence, the complexities of serving CBD clients, implementing a state hemp program and performing risk assessments.