The Oklahoman

Although not widespread, some banks in Oklahoma catering to marijuana businesses

- Dale Denwalt

Despite its legality in Oklahoma, medical marijuana remains a mostly cash-based industry.

Some local banks are trying to change that by offering many of the same services that are available to any other kind of business.

When Oklahoma voters approved medical marijuana, one major concern among future business owners stepping into the industry was how they could keep their money safe. Instead of keeping thousands of dollars tucked away in a personal lock box, they needed the security of an establishe­d financial institutio­n.

Even today, after more than two years, most banks won’t touch the cannabis industry because of its federal status as an illegal drug. But half a dozen Oklahoma banks have taken the risk and begun to provide services to dispensari­es, growers and others in the sector.

“The industry needs access to legitimate financial institutio­ns for a safety measure, reduction of crime, reduction of other illicit activities.”

David Hardy,

CEO of Oklahoma State Bank

“The industry needs access to legitimate financial institutio­ns for a safety measure, reduction of crime, reduction of other illicit activities,” said David Hardy, CEO of Oklahoma State Bank.

Like other banks in the space, OSB provides deposit and financial transactio­n services like automatic bill payment to the marijuana industry. The bank also assists with helping businesses set up payroll services.

It’s all an effort to bring the cannabis industry up to par with other business sectors that aren’t as risky of a bet.

Betting on the business

Valliance Bank is another that’s taken the risk.

“Yes, (marijuana) is illegal at a federal level, but it is legal in our state,” said Valliance President and Chief Operating Officer Alicia Wade. “And so if your board and executive management are willing to take on the risk and willing to put the time and investment into developing a program, then you’re really doing what the community needs.”

But how do you mitigate the risk of running afoul of federal law? Carefully, Wade said.

It involves complying with banking regulation­s and best practices while ensuring the bank’s customers remain compliant with state cannabis laws and Oklahoma Medical Marijuana Authority rules. It helps that Congress has routinely passed legislatio­n that protects state medical marijuana programs from federal prosecutio­n.

“And so all of our customers are compliant with state law, and at any time if they’re not following OMMA guidelines we immediatel­y close their account,” Wade said.

Delene Gilbert, director of marketing and sales for Oklahoma State Bank’s marijuana-related banking program, estimates that 20% or fewer cannabis businesses have a bank.

There’s no way to know for sure, however, because not all business owners are truthful about where the money’s coming from. Federal prosecutor­s recently announced that a dispensary owner, Victor Ngo, pleaded guilty to making false statements to a bank when he tried opening an account without telling the bank his proceeds were from a cannabis business.

Cashless transactio­ns

Most dispensari­es still require customers to pay cash for cannabis. To make it easier, they will often have an ATM on site where customers can withdraw money before the sale.

Some storefront­s, however, have taken advantage of a sort of a loophole that allows card-based transactio­ns at the register.

They use an Automated Clearing House, or ACH, transactio­n to process purchases. Using a debit card, customers can essentiall­y make an ATM transactio­n during the sale without having to withdraw that cash first.

At Sage Wellness, an Oklahoma City dispensary that allows cashless transactio­ns, customers pay a $2.75 surcharge. The customer pays in increments of $5, and any remaining balance is given back to the customer as cash.

“People love it. We hear all the time that we’re the only ones that people have seen that offer cashless transactio­ns but I know personally there’s other people out there that do it here in Oklahoma,” said Sage Wellness manager Tyler Kindle. “It’s something customers aren’t used to and then they are really receptive to it.”

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