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Wright-Patt Credit Union solicited business from medical pot growers

Financial institutions have been reluctant to get into the medical marijuana business, but at least one local institution — Wright-Patt Credit Union — has actively sought business from approved growers as the nascent industry in Ohio gets off the ground.

The credit union in a Dec. 21 letter said it hopes one day to provide financial services to a business owner who received a license to grow medical cannabis in Huber Heights.

The chief executive of a Chicago-based company that received a license to cultivate medical marijuana in Yellow Springs said he received a similar letter.

Medical marijuana is not legal under federal law, even numerous states have approved it under their own state statutes. Financial institutions are concerned about the liability of handling money made from selling an illegal Schedule 1 drug under federal law. As a result, many marijuana businesses have had to deal in cash only.

The Dec. 21 letter to Jason Wilson, owner of Paragon Development Group, congratulates him on securing a license to grow medical marijuana and encourages him to start a process that could allow Wright-Patt Credit Union (WPCU) to provide financial services to Paragon.

“As I am sure you are aware, the marijuana-related business (“MRB”) industry has historically suffered for lack of access to basic financial services due to the current discrepancy between state and federal regulations,” says the letter from Scott Everett, WPCU vice president of business services.

RELATED: What does Huber Heights medical pot ban mean for planned growing site there?

“Wright-Patt Credit Union is in the process of preparing a program which would allow us to provide banking services to this greatly underserved component of our society in compliance with applicable state and federal monitoring requirements.”

Wilson provided the letter to Huber Heights officials — and later to the Dayton Daily News — to assuage concerns that the company’s finances wouldn’t be transparent.

The letter says WPCU partnered with the Colorado-based company Safe Harbor Services, which describes itself on its website as “the nation’s first and only service-based program that specializes in helping financial institutions provide business banking to cannabis-related businesses (CRBs).”

The Dayton Daily News also reached out to licensed prospective cultivators in Yellow Springs and Monroe.

Charlie Bachtell, chief executive of Chicago-based Cresco Labs, which secured a state license to cultivate medical marijuana in Yellow Springs, said Cresco has not yet opened an account with the credit union.

“We’re just in the beginning stages of the due diligence process,” Bachtell said Monday.

RELATED: How the federal budget battle impacts Ohio’s medical marijuana industry

‘Still evaluating’

When contacted for comment, WPCU spokeswoman Tracy Szarzi-Fors said the credit union is “still evaluating” whether to get into marijuana-related banking. The Ohio Department of Commerce, one of the government arms overseeing Ohio’s fledgling industry, contacted the credit union and asked if if it wanted to get involved, Szarzi-Fors said.

“The state wants to ensure banking services for these businesses” she said. “It allows money to be accounted for and taxed, and prevents the medical marijuana dispensaries from being forced to be all-cash businesses, with all the attendant safety and criminal activity problems that could bring.”

MAP: Where medical marijuana could be grown in Ohio

Wilson recently told Huber Heights City Council members that the credit union contacted him after he was awarded a license by the state to grow initially up to 3,000-square-feet of medical marijuana at an indoor growing facility on Executive Boulevard.

He said having a checking account is critical because, “I’ll be able to put the money in the bank, versus having it on-site.”

Because of the banking industry’s reluctance to handle money from medical marijuana, Wilson said he anticipates that in the early days of operation much of his business — selling marijuana in bulk to processors — will be done with cash.

Paragon still has some major hurdles to overcome before growing medical marijuana, and it doesn’t appear as if it will grow it in Huber Heights. Although his license says that is where he must build his facility, Wilson is working with the city on a compromise that would allow him to move the facility once it’s built.

The city recently passed a ban on medical marijuana businesses.

‘We speak their language’

Bachtell said the discrepancy between marijuana laws in some states and overall federal law introduces a “unique dynamic.” 

“Banking by nature and banks by nature are conservative — as they should be,” he said.

The state’s medical marijuana program needs to be sufficiently regulated to give banks comfort in dealing with medical marijuana businesses, Bachtell said.

“They know that if anyone has already successfully obtained any of these licenses, they have already been ran through a very thorough vetting process,” Bachtell said.

Three of Cresco’s four original founders have a banking background, he said. The company also has relationships with banks in Pennsylvania and elsewhere — and the company expects to have relationships with banks in Ohio.

“We speak their language,” Bachtell said.

RELATED: Ohio’s medical marijuana: What’s really going on?

Shifting regulation

While opening bank accounts for medical cannabis operations once was a challenge — and still can be in some states — it’s not as difficult as it once was, industry observers say.

Alan Brochstein, a cannabis industry analyst, said it’s generally easier for businesses to secure bank accounts in well regulated states with clear regimens. Banks seem to be more open to those accounts in those environments, he said.

“There are plenty of banks that are working with the industry right now,” Brochstein said. “It’s not super novel.”

RELATED: Why Ohio may have to break the law to launch its medical pot program 

Ohio’s program is much more regulated than the one in California, Brochstein said, which should ease some of the concern.

“The less regulation, the harder it’s going to be,” he said.

Federal opposition to marijuana in any form is one of the industry’s biggest hurdles.

Banks have relied on the so-called “Cole Memo,” a federal memorandum drafted in 2013 that generally stipulated federal law enforcers would not focus on well-regulated operations in states where such businesses were legal. Instead, enforcement would be directed at preventing the distribution of the drug to minors and preventing the movement of money to gangs or other illegal entities and other imperatives.

RELATED: 104 businesses seek 40 licenses to process medical marijuana in Ohio

U.S. Attorney General Jeff Sessions Sessions rescinded the Cole Memo in January. A separate legal protection for medical marijuana businesses from federal enforcement is a budget amendment preventing the U.S. Department of Justice from cracking down on medical marijuana companies operating legally under state law, but the future of that measure is also uncertain amid the budget fight in Congress.

“The banking system kind of relied on that (the Cole Memo),” Brochstein said. “Because there’s no more Cole Memo, it’s going to be really challenging going ahead.”


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