My opinion, surprisingly, is no. I do not recommend any institution wade into cannabis banking. With Federal regulation almost certainly coming in the future, my recommendation is to carefully consider what cannabis banking can bring to your institution, and, if it is something that the board and executive team approve, put the right resources in place to build comprehensive solution that is safe, cost-effective and adaptable.
If that sounds expensive, it doesn’t have to be. There is no requirement to put an expensive software program in place that may or may not be relevant once cannabis regulation is actually written. In fact, many of the cannabis banking programs we have seen have just used their existing core and BSA software. And, guess what? The regulators have been just fine with it.
What is more important is to build a comprehensive program that adequately vets, monitors, audits, reports, tracks and documents cannabis related businesses in your institution. It is equally important to provide adequate oversight, training, and subject matter expertise for your team. This can be built in house or much of it can be outsourced through a company like HDCS.
Regardless, net of all costs of implementing and maintaining a safe and effective cannabis program, your institution should realize an additional 100 bps in additional spread. For institutions that are early movers, those deposits should be extremely sticky. No cannabis related business wants to go through multiple vetting processes from different institutions. Most cannabis related businesses simply want a safe and secure banking relationship and will be loyal to the institution that provides that.
HDCS, Inc. | CEO/Founder