Briefcases and Backpacks Full of Cash: Safe Harbor’s Solution

By Sundie Seefried, CEO of Safe Harbor Private Banking

After Colorado voters approved the sale and use of medicinal and recreational cannabis, the state’s landscape changed. Suddenly, dispensaries and grow houses were everywhere, and customers numbered in the hundreds of thousands. But, federal laws made it difficult for cannabis businesses to open checking or savings accounts in federally insured financial institutions. It was nearly impossible to wire funds, access lines of credit, or maintain payroll accounts. The result is an industry that has been forced to pay its bills, employees, suppliers, and taxes in cash. Briefcases and backpacks full of cash. But, over a year ago, concerned about the risks a cash-based industry poses to public safety, Safe Harbor stepped up with a compliance cannabis banking program to take money off the streets and and offer law-abiding businesses a solution. Because lack of banking, and not moving banking access forward, doesn’t just punish marijuana businesses, it punishes tens of thousands of families trying to earn a living and feed their families, young families with children who deserve to be safe.

Safe Harbor is a division of Partner Colorado Credit Union, and like all credit unions, prides itself on a philosophy of “people helping people” and offering services to the traditionally underserved. In the world of high finance, our ambitions are modest, more about providing banking for the “unbanked and underserved’ than about maximizing income. Credit unions step in where other institutions simply won’t go. They spot challenges in the community and then rise to meet them. From our perspective, providing services to the marijuana industry is a public service in harmony with our credit union values. Safety comes first. As the community changed in Colorado with the legalization of marijuana, as a credit union and community cooperative, we adapted to those changes to serve the community and keep it safer.

Banking cannabis businesses is more than just a public service. For credit unions, it is also a strategic move. Since the Great Recession of 2007-2009, the banking industry has faced extensive regulatory changes and increased competition for new non-bank entities that have entered the financial services marketplace. For credit unions to stay relevant and viable, they must address changing community needs. And nothing has brought more changes to Colorado’s communities than the legalization of marijuana.

Cannabis entrepreneurs meet all their obligations with cash. Oftentimes, they spend hours visiting various ATMs at night depositing backpacks full of cash in small transactions. They pay their utility bills with cash and their taxes with cash. They also pay their service providers, accounting and branding firms, software companies and legal counsel with cash. And, when huge amounts of cash are being carried in public, there is a grave threat to public safety.

Last month alone, the Safe Harbor team took deposits of nearly $80 million off the streets and out of neighborhoods in Colorado. Altogether, we’ve banked over $1 billion to date for cannabis related entities. Our team diligently validates every dollar, and strictly reports and monitors transactions, according to FinCEN guidelines. Recently, we were asked why we have to limit the number of new clients we take on. Due to the fast growth of the program, we’ve adjusted new business onboarding from five clients per month to three, because it’s necessary to maintain balanced growth between the Safe Harbor commercial division and our consumer base. And, because we are a compliance-based program, we responsibly work within our safety and soundness limitations.

With the legalization of marijuana in Colorado, an industry was born into a situation of legal conflict between state and federal laws, which left the industry without banking privileges. This provided the credit union with a unique opportunity to serve the needs of struggling businesses while making the community safer. We remain committed to our cannabis business clients and will continue to offer them support, safety and stability in this ever-changing marketplace.

To learn more about the Safe Harbor banking program, you can download a copy of Sundie Seefried’s book, Navigating Safe Harbor, here.