Women lead the way around cannabis banking in the U.S.
Big banks locked out of industry as female-led credit unions forge path around ban
A federal prohibition on marijuana has locked U.S. banks out of an industry surging toward $75 billion (U.S.) in sales. Who’s catching that money? A small number of local credit unions, and the women who run their operations.
Sundie Seefried’s credit union near Denver has only six branches, but last month it raked in $160 million from cannabis-related ventures desperate for a place to stow cash. As chief executive officer of Partner Colorado Credit Union, she assembled a 13-person team that screens those companies, accepting about 200. Depositors don’t collect interest — they pay fees for due diligence.
“I tell my clients, if I go to prison I better have enough money in my account for cigarettes,” Seefried quipped in an interview. But seriously: “Did I ever see myself trying to solve this national problem? Never. But can I just drop it and walk away? I can’t.” Big banks can’t touch money from pot without risking severe punishment by the federal government, potentially including the loss of their national charters. Many credit unions, on the other hand, are regulated by states. As more of those jurisdictions move to legalize weed, a number of lend- ers are building units to soak up billions of dollars generated by growers, dispensaries and related companies.
Women are the backbone of credit unions. They run more than half of the nation’s institutions and account for about 70 per cent of the workforce, according to a study last year by the Filene Research Institute. And as it happens, several of those women are now rising to national prominence within their industry as pioneers of pot banking, speaking at conferences and getting to know thousands of entrepreneurs.
The divergence of credit unions and banks over cannabis has only grown starker in recent months. Ahead of midterm elections, Wells Fargo & Co. cut off services to a promedical marijuana politician because of contributions she received from lobbyists. The bank said it absolutely can’t touch cash linked to weed. Credit unions, meanwhile, watched voters create three more potential markets last week by backing measures to legalize cannabis for recreational use in Michigan and medicinal use in Missouri and Utah.
Seefried was on the brink of retirement almost half a decade ago when attorney friends persuaded her to give pot banking a closer look. Now she spends her days talking with entrepreneurs and regulators about the cash her firm oversees for startups, as well as venture funds seeking ways into the business. She’s amassed more than 3,000 LinkedIn connections — many from the world of weed — while delivering 56 speeches in just two years.
A wave of mergers and takeovers may soon ensue, according to AltaCorp Capital Inc., creating ample opportunities for well-connected investment bankers to generate fees. Credit unions typically lack those operations, focusing on traditional banking services, such as guarding deposits, moving cash and lending.