Lake Belief Credit score Union, different monetary establishments wade into Michigan hashish banking market

According to its latest financial reports, Lake Trust had total assets of $ 2.2 billion in 2020. Net income was $ 10 million in 2020, up from $ 9.3 million in 2019.

“The reason we decided to get into cannabis banking was twofold: The first part of it is that we clearly saw that there was a need, there were a lot of cannabis businesses with and without a sub-bank,” said Zillgitt . “In fact, we’d probably have to kick out two or three on a monthly basis because federal regulations didn’t allow us to pay them. And … to do something. ”

Lake Trust also wanted to help make the industry safer, he said.

“Some of the stories we heard when we interviewed these … cannabis companies were that their employees were walking around with backpacks of $ 50,000 to $ 70,000 buying money orders to pay their bills. It was just absurd,” said Zillgitt.

When the cannabis industry began in Michigan, conflicting federal and state laws kept most banks and credit unions from getting involved in the burgeoning industry. As a result, many had to trade in cash.

Medical marijuana and adult cultivation, New Generation Meds in Lansing, is one of the cannabis businesses that have managed to shed cash. It started banking with Lake Trust in August 2020 after starting to grow for the first time in February.

“Now most of our transactions and even sales are all done via (Automated Clearing House or ACH), wire transfer or check, so the cash aspect is not as important as it used to be because we are able to bank that gives us services that don’t involve handling cash, “said Meghan Sweeney, New Generation Meds office manager.” It’s kind of crazy … but everything just felt so normal. ”

The farm has 1,500 plants designated as medicinal plants and recently secured an adult license that allows them to grow an additional 2,000 plants. Sweeney declined to disclose financial details.

“It was very difficult for us to find a bank. I mean, even during the construction (financial institutions) … were nervous,” Sweeney said. “Even though we haven’t done anything with cannabis (yet), they were a bit nervous. Then Lake Trust came along just before we made our sales and … we were blessed, I guess.”

She said it was helpful to navigate the rules and regulations with the Lake Trust private bankers. Meeting the bank’s requirements will help New Generation comply with the financial statements required by the state marijuana regulator, she said.

Patricia Herndon, executive vice president of government relations for the Michigan Bankers Association, said Lake Trust is among the bigger players they see stepping into the ring. She estimates that around 5-10 banks in Michigan work with cannabis companies. The Michigan Credit Union League recently shared a similar figure with MiBiz: about 10 credit unions are participating.

Financial industry involvement is not slowing, Herndon said, and in the past six months to a year, the bankers association has begun connecting companies with financial institutions that have got into cannabis.

“The availability of financial services and banks in the primary, secondary and tertiary areas of cannabis banking continues to grow,” said Herndon.

That means that there are fewer companies today that pay in duffel bags with cash.

Others who can jump on the green bandwagon are the Frankenmuth Credit Union, a $ 1 billion institution with 60,000 members. It announced in July that it was launching a cannabis program called Envy. It did so in partnership with a company that specializes in providing cannabis banking solutions and helping with regulatory compliance in 32 states, Green Check Verified, according to a press release. Frankenmuth wants to win one or two new customers a month by the end of the year.

“It was important for Frankenmuth Credit Union to offer banking services to cannabis companies, but it was also important that we did it the right way,” said CEO Vickie Schmitzer in the press release. “This meant doing extensive research into the requirements of the industry and developing a compliant program to meet those requirements.”