First US Credit Union Gets Accredited to Handle Cannabis and Hemp Banking

credit unions on weed

Hector Balderas, New Mexico Attorney General, announced on Monday that the state's Eagle Federal Credit Union is the first financial institution in the United States to be accredited for outstanding monetary banking protocols in cannabis and hemp operations in the United States. This accreditation is one of the many financial services certification programs organized by the Policy Center for Public Health and Safety. The center is co-run by New Mexico's State Attorney General, while ASTM International and PH & S are in charge of implementing a more comprehensive certification effort.

A Blow To Illicit Dealers

With the latest announcement, it seems illegal operators within New Mexico are in for a shock. Balderas said that the marijuana industry is going through a reawakening in the state and will soon be exploding. Before this massive explosion, the government was putting efforts into ensuring banking regulations to limit illegal and criminal activities within the cannabis industry. Balderas stated emphatically that establishing banking protocols for the state's cannabis industry is the most critical step before partnering with legal operators in the cannabis market.

Karen White, Executive Director of the Attorney General Alliance, said that one of the fundamentals of marketplace validation is being aware of the specific financial institutions that follow procedures and regulations that are in line with state and federal laws. The cannabis industry also needs to be able to bank and receive financial services, as well as take institutional investments. These newly developed protocols will guide financial institutions and their insurers in their dealings with the cannabis industry.

How This Benefits The Industry

This update is supported by Safe Harbor Financial, a subsidiary of Partner Colorado Credit Union. The accreditation brings banking and financial clarity to institutions banking on hemp and cannabis, ensuring the security of the monetary system. The president and CEO of US Eagle Federal Credit Union, Masha Majors, said that credit unions were initially established to provide banking services to the unbanked and underserved population. This group is where the cannabis industry falls under.

Due to the drug's status as a federally prohibited substance, the cannabis sector has been denied banking services for many years across the country. The unbanked and underserved status of the industry for decades has resulted in adverse effects on public safety across the country, including in states and communities where marijuana is legal. The overall certification model is accepted by state and federal agencies as the standard of compliance and is used in implementing general risk mitigation strategies.

Details of the New Protocols

The new protocol follows the following criteria:

Ensure that records are complete, easy to navigate, and readily available to meet law enforcement demands such as subpoenas and inquiries.

The availability of mainstream depository options for cannabis-related entities, including both plant-touching and ancillary service providers, to ensure the industry's accountability, transparency, and reporting.

Monitoring cannabis clients to ascertain that they are internally prepared to prevent or implicate any enforcement priorities previously recorded in the Cole Memo and still referenced in the Financial Crimes Enforcement Network (FinCEN) regulations.

Joining a network of cannabis banking fiscal institutions that participate and develop efficient practices girding cannabis banking and utilizing this participating network to assist one another with safety and soundness.

The highest levels of compliance standards must be met. This standard corresponds with BSA and FinCEN regulations.

Internal activities of all workers and clients involved in the compliance program will be monitored to ensure full compliance with processes that will cover US Eagle.

Creating a straightforward background for all activities with examiners, auditors, and other third parties who work with financial institutions will enable them to build mutual comfort and understanding that will ultimately improve processes over time.

To improve transparency, financial transactions must be digitalized to the greatest extent possible.

The Organizations Involved

Safe Harbor Financial is a crucial agency that has been leading the cannabis industry by developing efficient financial systems that follow the guidelines laid down by the U.S. Department of Treasury and FinCEN. Sundie Seefried, CEO of Safe Harbor Financial, is one of the leading experts and resource officers for law enforcement on issues relating to money laundering within the cannabis and hemp industries.

New Mexico's oldest member-owned, non-profit credit union is US Eagle Federal Credit Union. US Eagle, which was founded in 1935, has ten locations in Albuquerque, Bernalillo, Farmington, and Santa Fe and offers a full suite of financial products and services. With over $1.4 billion in assets, over 80,000 members, and a three-time Best-In-State Credit Union award, US Eagle is the place where people matter the most.

The Attorney General's Office is a body that prompts meetings, discussions, and panels in the Torn General Community. The body also acts as a host forum for all bipartisan cooperation activities within the AG community. It fosters all these relations and activities through social gatherings, webcasts, and working groups.

New Mexico Cannabis Legislation

A bill signed by Governor Bill Richardson in 2007 legalized medical marijuana use. A 1978 law permitted medical use, but only through a federally approved research program. It was the first state to pass a medical cannabis law.

Cannabis became legal for recreational use in New Mexico on June 29, 2021. This bill made New Mexico the 17th state to legalize adult-use cannabis in the United States. On April 12, 2021, Governor Michelle Lujan Grisham signed House Bill 2, the Cannabis Regulation Act, legalizing recreational use. The first licensed sales will take place by April 1, 2022.

Bottom Line

In a statement moments after the recreational bill was passed into law, Governor Lujan Grisham promised to make recreational cannabis legislation a significant step towards changing the state's economic future.

This newly-introduced financial banking protocol is an integral part of changing New Mexico's cannabis industry for the better. The state's workforce, economy, and the future of the cannabis industry rest on implementing these new protocols. Other states will take a cue from New Mexico and develop unique protocols to ensure their legal cannabis industries are no longer unbanked and underserved.