If you need a little cash to start your own business, where do you go? You could go to your bank and pay over the odds for a loan. You could borrow from family or friends and cross that line that should not be crossed. Or you go to a credit union. That’s fine unless you’re in Oklahoma and want to start a medical cannabis business.
Tulsa’s Encentus Federal Credit Union have stopped providing credit to the medical marijuana industry. They say the cost and regulatory burdens are too much for it to be worthwhile and that pulling out of the market was the right thing to do.
The company also said they would be informing current customers that their accounts would be closed within the month.
Board chair Jana Hallman said the burden of the FinCEN, Financial Crimes Enforcement Network, are proving too much and essentially requires staff to become auditors. It’s a lot of work and a lot of liability and the credit union doesn’t want any of that. Instead, it is pulling out of the medical marijuana market altogether.
“Upon significant review and research, we have come to realize that we do not have the staff nor the software sufficient to maintain the business activity,” Hallman wrote in an August 26 letter. “It takes a lot of time and software to really be able to keep up with it like we need to and at least right now we’re not in the position that we can pour those kinds of dollars into software (and staff).”
“It’s just we cannot financially continue to do it. We’re sorry, but we are held responsible for keeping our financial institution in good standing.”
The recent passing of the SAFE Banking Act, in the House should soon put an end to this hassle but it has to pass the Senate first. It passed in the house by 321 to 103 but the Senate is going to be a much tougher ask. Some senators have said they are in favor of passing the bill while others are less enthusiastic.
The bill aims to make access to credit easier for legal marijuana-based businesses. It seeks to address some of the challenges being faced by credit unions and help the burgeoning marijuana industry access the funds it needs to sustain itself, create jobs and deliver tax revenue.
According to Tulsa World, there are still options for accessing credit so not all avenues are being closed off. Just some of the more accessible ones.