Illinois Credit Union Begins Serving New York Cannabis Entrepreneurs

The $1.6 billion Credit Union 1 in Rantoul, Ill., has agreed to serve New York cannabis entrepreneurs who are planning to open marijuana businesses across the Empire State.

The credit union struck a deal last month to provide affordable banking products and services to members of the New York CAURD Coalition, which is participating in New York’s Social Equity Cannabis Investment Fund, a public-private limited partnership authorized by the New York legislature and Gov. Kathy Hochul.

Illinois legalized adult recreational use of marijuana in 2021. The national cannabis market is estimated to reach $71 billion in sales by 2030 and the New York market could make up 10% of that, according to data from research firm New Frontier, CNBC reported on May 15. At the end of last year, there were 168 credit unions, 479 banks and 126 non-depository institutions that were serving marijuana-related businesses, according to FinCEN.

CAURD, Conditional Adult-Use Retail Dispensaries, is a new program, which New York state government claimed to be the first of its kind in the nation and will allow the state to invest in a private fund to finance the leasing and equipping of up to 300 conditional adult-use retail dispensaries. The CAURD licenses to operate these dispensaries are awarded primarily to individuals who have been impacted by the inequitable enforcement of marijuana laws.

The mission of the CUARD Coalition, formed by Britni and Jayson Tantalo, is to provide education and resources for more than 100 of its CAURD licensee members to help them open and operate dispensaries.

James Thomas, head of treasury management at Credit Union 1, said he met Jayson several months ago when they began discussing the issues CUARD coalition members were having, including securing affordable access to finance and banking services to run their cannabis companies.

Thomas knows all about the challenges of getting a small business off the ground and growing it. After working for 12 years at Wells Fargo, where he held several management positions including global product management manager, he co-founded FreshFin Poke in 2018, a restaurant that specializes in native Hawaiian cuisines. FreshFin Poke operates 10 locations across Wisconsin and Utah.

He returned to the financial services industry when he joined Credit Union 1 last October.

Thomas said he has shared his expertise with CUARD members on how to select a retail site, how to manage business documents and other insights on running a small business.

“For the banking [products and services] we’ve seen out in the industry, we feel like there isn’t a really affordable kind of robust banking option,” he said. “So we’ve been working every day to present them with that option.”

Credit Union 1 began serving the cannabis industry nearly five years ago, focusing on delivering affordable banking products and services to marijuana businesses across several states that have legalized medicinal and recreational use.

On the credit union’s Cannabis web page, it lists more than a dozen products and services it offers with no hidden fees or deposit fees. Some of the products listed include CU1Cash vaults with next day provisional credit, nationwide checking and savings accounts, online ACH payment and receiving options, Quickbooks connect, cash pick-up and delivery services, positive pay, currency/coin fulfilment, financing, employee accounts and ancillary programs.

In addition to serving the New York CAURD Coalition, Credit Union 1 has been selected to participate in the Illinois Department of Commerce and Economic Opportunity Cannabis Social Equity Loan Program. The $30 million fund will provide low-interest loans to social equity licenses within the Land of Lincoln state. The credit union also is the preferred banking partner of the Chamber of Cannabis in Las Vegas, a nonprofit organization that brings cannabis industry professionals together to build a more inclusive industry.

While credit unions and banks have benefited from the legal cannabis industry, there have been signs that it is struggling, according to recent national media reports.

For example, Business Insider reported that economist Robin Goldstein at the University of California at Davis said cannabis legalization is failing to live up to its promises of wealth generating opportunities for communities in many markets. In an interview with Business Insider, he argued it’s far too difficult for small-scale entrepreneurs to break into the industry, there’s too much regulation and the state taxes on pot are far too high.

“While cannabis prices are falling in legal states — a consequence of legalization driving innovation, Goldstein said — taxes and other regulatory hurdles can artificially inflate the price of legal cannabis to the point where regular customers may choose to go back to their old dealer down the street,” according to Business Insider.

What’s more, New York’s rollout of legal weed has been “slow and cumbersome,” which opened a “gray” market of businesses that sell pot without going through the regulatory hoops, according to a recent CNBC report. The New York Mayor’s Office estimated 1,400 businesses are selling marijuana without a license.