With recreational marijuana sales starting to flow, banks seem to be warming to the idea of jumping into the business.
Swansea-based BayCoast Bank has confirmed to Banker & Tradesman that it is now offering deposit services to medical marijuana facilities, and is willing to extend those services to these medical marijuana facilities should their business expand into recreational marijuana use.
However, the bank added that it is not currently working with any facility that is strictly for recreational marijuana. The Boston Business Journal first reported the story yesterday.
“It is new ground here in Massachusetts, and we arrived at this decision after an extensive amount of due diligence and research,” Nicole Almeida, chief marketing officer at BayCoast Bank, said in a statement sent to Banker & Tradesman. “We carefully considered the risks that this newly evolving industry could pose to our region if there are no banking solutions available.”
Almeida said the roughly $1.63 billion BayCoast Bank established a Cannabis Banking Division, led by Chief Risk Officer Gary Vierra.
Inquires are being fielded through his office and staff will be available only by appointment to dispensaries and other cannabis-related businesses that are interested in obtaining banking services, and can demonstrate they are licensed or otherwise authorized to operate under state law.
Since medical and recreational marijuana have been legalized in Massachusetts, there has been widespread concerns that the industry would operate largely in cash.
Financial institutions have for the most part steered clear of the industry because of its illegality at the federal level. Servicing the industry could result in banks and credit unions running afoul of federal anti-money laundering rules and the Bank Secrecy Act.
This has stoked public safety concerns, considering the recreational marijuana industry is projected to hit $1 billion in sales by 2020.
Medford-based Century Bank was the first known bank in the state to provide services to medical marijuana businesses, but had made no indication that it would extend those services to recreational marijuana businesses.
Earlier this year, Steve Hoffman, chairman of the state’s Cannabis Control Commission, had been so worried there would be no financial institutions to bank marijuana businesses, he floated the idea of state-run pot bank. The proposal failed to gain traction.
A little more than a month before the state’s first recreational dispensaries opened, Gardner-based GFA Credit Union announced it would provide banking services to recreational marijuana businesses.
The announcement was welcome news, but as a credit union GFA could only provide services to those businesses in its field of membership, which includes Worcester County, a number of communities in Middlesex County and parts of Southern New Hampshire.
Plus, one financial institution would not be enough to bank the state’s entire industry.
BayCoast Bank’s entry into the market is not likely to be the last. Hoffman at a conference in October said he was in discussions with four or five other financial institutions about potentially providing services to the recreational marijuana industry.
