We want the North Bay to be a safe, thriving place as we adapt to the realities of modern culture which includes the legal consumption of cannabis.
After California voters passed Proposition 64 in 2016 approving the recreational use of cannabis, an underground economy emerged into the sunshine. North Bay Credit Union recognized early on that the region’s large cannabis industry was going to grow exponentially, as were the risks of dealing with the cash generated from the sales of cannabis. A very big problem needed a solution.
Although cannabis is now legal in California, it remains illegal at the federal level. As a result, banks have refused to provide services to industry operators because they could be in technical violation of federal law by facilitating the operation of an “illegal” enterprise. This means that legal businesses in the state that need to remit taxes, make payroll for their employees and pay operating expenses such as rent and utilities, have to do so in cash because they cannot get a bank account.
Transporting large amounts of cash around our community and storing cash in homes and unprotected businesses creates an incentive for both crime and violence. A business owner should not be walking city streets with a duffel bag full of cash to pay her bills. The local media regularly reports on home invasions, armed robberies and carjackings that are designed to steal cash that should be handled safely in a financial institution. Banks’ refusal to take the cash has created a public safety issue.
Rather than be part of the problem, NBCU wants to be part of the solution.
Credit unions were created to solve problems and serve people that traditional banks could not, or would not. As the oldest credit union in Sonoma County, founded by farmers in 1948, we have an affinity toward ag producers, including those in the forefront of the county’s evolving agrarian landscape. The new cannabis economy has suffered from a banking void that a credit union such as ours can fill.
There are thousands of employees working in cannabis enterprises in the North Bay that provide economic growth and stability to our local cities. Our community prospers, both economically and a safety-wise, when financial institutions support legal local businesses.
We’ve gone out on a limb to do this. We are completely transparent with our credit union regulators and law enforcement entities about our activities. We’ve had to create an entire infrastructure to ensure we are monitoring the activities and transactions of the businesses we serve.
It hasn’t been easy.
We do not accept cash from cannabis operations at our branches. Cash is picked up the customer’s place of business via armored car and delivered to our account at the Federal Reserve Bank. We’ve enhanced our security systems.
We perform reviews of every sales transaction to ensure it represents a state legal sale to an authorized individual or licensed company.
We submit voluminous reports to federal agencies and are the de facto eyes and ears of law enforcement for the movement of funds through the accounts.
Despite our valuable contributions toward monitoring accounts and identifying potential illegal movement of funds, we are still at risk of federal prosecution.
The state of California investigated the potential for a public cannabis bank only to conclude that the issues were too complex and the risks too high.
Chris Call is CEO of Santa Rosa-based North Bay Credit Union, started in 1948 as Sonoma County Grange Credit Union. He has served for the last 27 years in executive management positions at Sonoma County financial services companies and joined North Bay Credit Union as CEO in 2014.
Read more about cannabis commerce in the North Coast: nbbj.news/cannabis