Alaska—a beautifully scenic state that isn’t highly populated despite it having more coastline than any other U.S. state combined. Besides Alaska being known for its plethora of wild animals and breathtaking nature, it’s also known as a cool state that offers adults the opportunity to purchase, consume, and grow recreational cannabis. In 2014, Alaskan voters approved of recreational cannabis, and since then, various dispensaries and pot shops have brought in millions of dollars in revenue.
Despite Alaska’s rapidly growing cannabis industry, no major banks nor credit card processors are willing to get involved. However, Anchorage-based Credit Union 1 saw a unique opportunity, which led to the development of a special pilot program for certain Alaskan cannabis businesses to participate in. What does this program consist of exactly, which companies qualify as participants, and will this become a trend in the U.S. cannabis industry?
Inefficacy of Cash-only Systems
While cannabis contains numerous medicinal properties and therapeutic benefits, the plant remains a Schedule I illegal substance in America. For decades, various federally regulated banks have turned their backs on cannabis businesses throughout America and in other countries. As a result, currently, the majority of American cannabis companies operate on a cash-only system. Since major banks are unwilling to work with these types of businesses, what other options are there besides exchanging only cash?
Although cannabis legalization changes have progressed over the years, countless dispensaries, pot shops, and collectives are still operating with cash-only systems. Unfortunately, this has led to Alaska enduring a serious “cash crisis” because an overflow of it has been handled between cannabis businesses, owners, and customers for several years thus resulting in too much cash making its way onto the streets. To combat this crisis, James Wileman, Credit Union 1’s CEO became even more motivated to get his company’s pilot program underway.
Furthermore, there are safety concerns with cash-only transactions plus several other risks associated with this outdated system. However, Credit Union 1’s pilot program can make a positive difference, especially by lessening various risks caused by an all-cash cannabis industry. This will not only benefit numerous dispensaries, but also the state of Alaska.
According to Cecilia Jefferson, a manager of Dankorage Dispensary, cashless transactions will be safer, simpler, and more convenient for customers and various dispensary employees.
“A lot of our vendors and cultivators have the same problems,” she said in a statement. “It would be safer for us and our customers to carry around credit or debit cards, but everything is cash, cash, cash.”
Benefits, Qualifiers, and Duration
In November of last year, Credit Union 1 informed people about their new pilot program that’ll offer financial services to different state-approved marijuana-related businesses (MRBs). The $1 billion-asset financial institution surprised countless people by making such a bold move, especially one that other credit unions and federal banks have yet to do.
It wasn’t until recently that Credit Union 1 decided to get involved in Alaska’s cannabis industry to make a real impact. Due to its unique pilot program, a handful of state-licensed Alaskan cannabis dispensaries will be permitted to open legitimate bank accounts. According to Credit Union 1 representatives, the operation of their new pilot program isn’t meant to suggest any specific moral or political stance on cannabis usage. Instead, it’s meant to help underserved cannabis businesses and eliminate an overflow of cash on the streets of Alaska.
Thus far, the size of the pilot program and its duration hasn’t been released to the public yet. In the very beginning of the program though, only a few Alaskan MRBs will be given the opportunity to participate. However, the only MRBs that can be served are those that are state-approved and operate legally. Also, each participating cannabis business must endure monitoring by the credit union’s compliance team. The intention of this is to make sure that all parts of each business remain legal. If everything goes as planned though, it’s likely that more MRBs will be accepted and served by the credit union in the near future.
“When it comes to our members, we always seek to meet the financial needs of those we serve without judgment or prejudice—and as a state-chartered credit union that only serves Alaskans, we are in the best position to provide this service for MRBs,” Credit Union 1 said in a statement.
According to Wileman, the pilot program will most likely start in the first half of this year. Then, after the program runs for about six months, Credit Union 1 will determine whether they’ll offer their services to all Alaskan MRBs or not.
The Future of Marijuana Banking Services
Once Credit Union 1’s pilot program goes into effect, Alaska will certainly benefit, especially because less time would be spent by the state’s tax division agency counting cash. Whereas, Alaskan residents would likely benefit in the long-run due to the convenience and safety of cashless transactions.
Although Credit Union 1’s pilot program isn’t underway yet, other U.S. states will be watching to see how it plays out. Based on how successful the pilot program will be, it’s probable that similar programs will be implemented in other regions soon.