An Alaska credit union will provide financial services to businesses in the marijuana industry.
Credit Union 1 announced Thursday that it will launch a pilot program to provide marijuana-related businesses with services such as checking and savings accounts.
The move is significant for an industry that largely operates in cash. Financial institutions have hesitated when it comes to serving marijuana businesses because marijuana is still federally illegal.
“The lack of financial services, complete lack, has created a cash crisis and a safety issue in our community,” said James Wileman, Credit Union 1 CEO, at a press conference Thursday. “We seek to solve this by providing the financial services to the (marijuana-related businesses).”
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Alaskans voted to legalize recreational marijuana in 2014. Since then, marijuana retailers, cultivators and other businesses have opened around the state.
“Lack of access to banking services has been an obstacle for many licensees, some of whom have even had their personal accounts closed at various banks,” Erika McConnell, director of the state Alcohol and Marijuana Control Office, said at the news conference. Credit Union 1′s new offerings will help to address public safety concerns, she said.
It’s not just the businesses that have to deal in cash. The state’s tax division has collected nearly $20 million in excise taxes paid by licensed marijuana cultivators, said Kelly Mazzei, excise tax supervisor at the Alaska Department of Revenue. About 77 percent of that has been paid in cash.
“This staggering volume has placed a steady burden on the state to handle and count the cash, over $1.5 million per month right now,” she said at the press conference.
[How will marijuana businesses handle their cash? Outside companies might help]
In response to a question at the news conference about issues around marijuana still being federally illegal, Wileman said the move to start providing services for such businesses does “greatly increase the reporting burden" on Credit Union 1.
“But it’s something we feel we can do reasonably well,” he said.
The credit union is starting with a handful of businesses in the pilot program to make sure its processes are in regulatory and legal good standing, Wileman said, with plans to expand later.