Credit Union Helps US Marijuana Businesses Put Down Roots


With a growing number of states giving recreational marijuana the green light, legal marijuana businesses, which typically operate using cash, struggle to access basic banking services. That’s where credit unions are increasingly stepping in, says Tina Sbrega, CEO of GFA Federal Credit Union. In the latest Credit Union Tracker, Sbrega gives PYMNTS insight into GFA’s decision to help legalized marijuana businesses grow in Massachusetts.

On Oct. 4, the Massachusetts Cannabis Control Commission (CCC) issued its final four recreational marijuana licenses to businesses, meaning legal marijuana will soon be available for purchase.

Massachusetts joins a handful of states, including Colorado, Washington and Maine, that have taken steps to legalize recreational marijuana. Legal use does not necessarily mean legitimate business, however, and this emerging and often controversial industry may quickly encounter financial roadblocks, which credit unions (CUs) are uniquely suited to address.

A few weeks before the CCC issued its final licenses, the GFA Federal Credit Union of Gardner, Massachusetts, announced it would be willing to work with legalized marijuana businesses, extending financial services to the industry and providing marijuana retailers with the same financial benefits used by traditional businesses.

GFA joins a small but steadily growing group of CUs that are offering financial services to this emerging market. Based on the latest data from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), there are approximately 100 credit unions nationwide currently working with legalized marijuana businesses.

In a recent interview with PYMNTS, Tina Sbrega, GFA’s CEO, explained how the decision harkens back to the CU’s history of catering to the unique financial needs of the underbanked.

“I think the credit union industry plays a very vital role in serving the underserved,” Sbrega said. “Part of our mission is to improve the quality of life in our communities. So, when we started talking to our board of directors about entering the cannabis banking space, we really looked to our mission statement.”

Helping a Green Industry Give Up the Green Stuff

As marijuana was previously a banned substance in the state, those interested in purchasing and selling it relied on cash. Recreational marijuana may be legal now, but many FIs remain reluctant to conduct business with marijuana retailers, due to the industry’s controversial nature. This forces many operations to continue using cash.

GFA, however, will offer basic financial tools to these businesses, including access to online banking, checking accounts, debit cards, cash management and payroll services. By offering these financial services and tools, GFA is hoping to help put marijuana merchants on the path to financial legitimacy.

“The industry is looking for basic banking services,” she said. “If you think about any retailer or manufacturing firm, the last thing they want to worry about is, ‘What are we going to do with all this cash?’”

Making digital banking tools available to marijuana merchants allows them to shift away from cash — a move that could make the industry safer for both businesses and their staff.

“[Marijuana retailers] want to think about growing their businesses, enhancing operations and taking care of their employees,” she said. “They don’t want to spend half their day moving money around and worrying about their employees getting paid in cash.”

GFA spent time researching how Colorado was affected after it legalized recreational marijuana in 2012: The state’s marijuana businesses were often beset by break-ins, robberies and even murders. As a result of this research, GFA determined that helping the industry shift away from cash is a public safety measure.

“That was really our driving force,” Sbrega said. “[We believe] somebody has to provide banking services for this legitimate industry.”

Serving an Unbanked Industry

Offering financial services to a traditionally unbanked industry dates back to GFA’s beginnings. The CU was founded in 1938 to offer financial services to French-Canadian immigrants who had moved to the Gardner area to work in manufacturing plants. Before GFA, immigrants struggled to find a bank that would offer financial services to non-citizens. Its desire to work with the emerging marijuana market parallels why GFA was founded in the first place.

“Here we are, 80 years later,” Sbrega said, “finding ourselves in a position where we feel it’s important to serve an underserved or underbanked community.”

It’s not uncommon for CUs to work with non-traditional businesses, such as marijuana retailers. They are often more willing to work with small businesses that might be overlooked by more traditional banks.

“Some of the small business loans that we make would be shunned by a larger financial institution, because it’s not a large enough loan request to satisfy their needs,” Sbrega said.

As mission-driven organizations, CUs are positioned particularly well to address the financial needs of enterprises that traditional banks might dismiss.

Understanding the Risks

Recreational marijuana may be legal in Massachusetts, but it remains banned at the federal level, which puts pressure on cannabis businesses and their financial partners to ensure that they follow regulations regarding marijuana-related money.

“This is a taxed business, yet the Department of Revenue and the IRS don’t accept cash,” Sbrega said, describing one of the tax, regulatory and compliance-related roadblocks these businesses face.

GFA has consulted with Colorado-based Partner Colorado Credit Union and its subsidiary, Safe Harbor Private Banking, which provides marijuana businesses with banking and compliance services, to ensure that it is complying with all relevant regulations. GFA will also follow compliance guidelines and take steps to ensure that it only engages with legitimate retailers.

“We want to make sure every ‘t’ is crossed and every ‘i’ is dotted,” Sbrega said.

Despite these challenges, Sbrega is optimistic that GFA will be able to provide marijuana businesses with the necessary financial resources, reducing their reliance on cash and the associated risks.

“My hope is to provide legitimate banking services to meet the needs of a growing industry, and that we can form business partnerships with the industry,” she said.

It won’t be an easy road for marijuana retailers, but the support of a mission-driven CU can go a long way toward clearing the smoke.