Michigan Weed Businesses Look To Lending

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As much as some banks and credit unions would like to get a foothold in the cannabis space, many don’t want growers and dispensaries hauling bags of bills up to their teller window.

“We don’t allow them to bring cash into our branches,” said Ray Zillgitt, senior vice president of risk management and general counsel for the Brighton-based Lake Trust Credit Union.

There are the obvious security risks when dispensaries can be dealing with $40,000 to $60,000 of cash in a day. There’s the issue of the time needed for bank employees to count all that money.

And, frankly, there’s the distinct skunky scent.

“There’s a pretty strong smell to the cash when it’s coming in,” said Zillgitt, whose credit union now has about 25 members who are connected to legal marijuana-related businesses in Michigan. The credit union, which has nearly 177,000 members overall, has about $2.5 billion in total assets.

Instead, he said, the process for dealing with the money involves armored car pickups that take the cash directly to the Detroit branch of the Federal Reserve Bank of Chicago, where it ends up credited to the institution’s account.

All that cash has go to somewhere
It’s been three years since Michigan voters decided in favor of legalizing marijuana for adult recreational use. But when it comes to banking, the legal marijuana business still has a Wild West kind of a vibe at times given the continued cash nature of much of the business.

Not all that long ago, bankers wouldn’t even think of touching the weed business.

“And I have heard some bankers say this: ‘If they find out we’re the weed bank, they’re going to leave,’ ” said Paul Dunford, who co-founded Green Check Verified in New Haven, Connecticut, to help traditional financial institutions serve cannabis customers.

Dunford now is consulting with roughly a half dozen Michigan credit unions and community banks — as well as another 60 or so institutions elsewhere — as these institutions are aiming to figure out how to provide banking services to firms that legally grow and sell marijuana in Michigan and elsewhere.

For example, Romulus-based Public Service Credit Union, which was founded in 1951 by Wayne County employees but now has a statewide charter, began examining what it would take to set up the necessary compliance process to offer services to dispensaries.

The credit union has not started taking such deposits yet but has plans to move forward.

Tanis Campbell, assistant vice president of risk for the Public Service Credit Union, said the credit union is moving cautiously to make sure it won’t run into problems down the line.

The Frankenmuth Credit Union announced a new pilot program called Envy in late July to provide checking, insurance, online banking and other services to legal cannabis-related businesses starting with the grower to the retailer. But the credit union didn’t swing its doors wide open to pot; plans involved adding one or two new cannabis-related business members each month in 2021.

“The market is just growing,” Dunford said, “Some of the stigma and fear associated with it has dissipated.”