Higher Yields Consulting team member, Michael O’Neill, recently sat down and discussed bud and banking, cannabis cash, and the legalization landscape. Mr. O’Neill is HYC cannabis compliance banking expert and part of our California Expansion Team. Mr. O’Neill’s banking background is extensive, spanning over the past two decades. He began his career with the Federal Reserve Bank as a Bank Examiner. Mr. O’Neill worked with a variety of large and small financial institutions, eventually leading him to the position of Director of Compliance and Operations for the Credit Union Association of Colorado and Wyoming. In 2014, Mr. O’Neill was presented the opportunity to become involved with marijuana-related businesses. He was approached by a local community bank in Denver to create a cannabis banking platform offering services to the high-risk Colorado industry. Mr. O’Neill devised a program that took into consideration not only current state laws and regulations, but also FinCEN and Cole Memo priorities. He has worked with banks in Arizona, California, Colorado, Connecticut, Louisiana, and Nevada.
“As part of the process, putting the bank platform together, we had to educate ourselves on the cannabis industry. We had to develop an understanding of how grows and dispensaries work in order to make a banking specific program. We had to ask ourselves, how do we go about auditing a cannabis facility? That was my job, develop an audit program that ensured compliant, cannabis banking.”
Federal legislation prevents marijuana businesses from openly banking, creating a cash crisis and real public safety issues within the industry. Marijuana businesses represent a risk to banking institutions because federal law still prohibits growing or selling cannabis.
“Making these businesses safer was a top priority when developing the platform. We encountered obstacles on both sides. On the banking side, there isn’t a “safe harbor”, only guidelines. With the cannabis industry, we had to address the trust and transparency issue, so we could create a successful partnership with the bank.”
The number of banking institutions working with the marijuana industry nationwide continues to grow. It is much easier for marijuana-related businesses to bank under a state banking charter, as opposed to a national charter.
“While this seems high-risk, and it is, if you put the right program in place, the right policies and procedures, the banking industry can safely handle marijuana-related businesses.”
One thing Mr. O’Neill is sure of, “banking is absolutely critical to this vertical industry”.
“Cannabis regulations fluctuate state to state, but many are modeled after Colorado. People are looking to Colorado for solutions, how are we doing this? We were the survey crew.”
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