Desjardins steps into cannabis, with reluctance
Credit union takes cautious approach
TORONTO • Canada’s biggest financial co-operative has softened its stance on cannabis, and is now accommodating clients and members who want to participate in the industry.
“We have decided that we will support their needs if they want to go in this market right now,” said Guy Cormier, president and chief executive officer of Montreal-based Desjardins Group.
“Do we want to invest in this market? Do we want to be a leader in this market? Totally, no. But we will be there to do business with members and clients that we know very well.”
Cormier said Desjardins is already financing some “players” in Quebec, including with lines of credit, mortgages or long-term loans. And asked if they would help with financing in the capital markets, the CEO did not rule it out, although he said Desjardins would remain selective.
“We’re not closed for that,” Cormier said on Thursday, the day after Canada officially legalized recreational cannabis. “If there is an opportunity, we will look at it, but it will be more case by case.
“Do we want to invest and take a strong position on the market by investing directly in some players? Not necessarily. It will be case by case.”
Cormier’s comments were softer than those he made in 2017, when he flatly ruled out any interest by Desjardins in the cannabis industry, according to Quebec media reports.
The cannabis industry has also been a sensitive subject for Canada’s big banks.
In general, the major lenders have been leery of the marijuana industry, which remains illegal at the federal level in the United States, where a number of the banks do business.
Credit unions, however, may be more willing to deal with the cannabis sector, which Deloitte has projected could produce up to $4.34 billion in legal recreational sales in Canada next year.
Cormier, though, said Desjardins was approaching the industry with caution, and he suggested the credit union’s environmental, social and governance impact “filters” would also be in effect when it comes to cannabis.
“This is one aspect, that we will be part of this industry, prudently, carefully,” he said. “And we’ll look in the next few months, few quarters, few years, how it expands. But we will follow our members and clients if they need financing or some equity investment, if it’s needed.”
Cormier also gave a speech to the Economic Club of Canada while in Toronto, in which he said he was focused on growing Desjardins’ overall business, including their credit union network in Ontario, which is already the source of 25 per cent of their total operating income.
“A third of it comes from outside Quebec,” Cormier added. “We want to keep these numbers moving in the right direction in the next few years.”
To help get there, he said, Desjardins is eyeing new partnership opportunities or potential purchases over the next few years.
As an example, Cormier pointed to the collaboration between Desjardins and other credit unions on Aviso Wealth, an independent wealth management firm that Desjardins owns half of, and that Cormier noted now has more than 500,000 clients and more than $57 billion in assets under management and administration.