Senate Banking: At cannabis banking hearing, Pross provides credit union experience
WASHINGTON, DC (July 23, 2019) — Credit Union National Association (CUNA) witness Rachel Pross, Chief Risk Officer of MAPS Credit Union in Salem, Oregon, delivered the following oral testimony at today’s hearing in the Senate Banking Committee, titled “Challenges for Cannabis and Banking: Outside Perspectives.”
Ms. Pross will be available for media interviews following the hearing.
Chairman Crapo, Ranking Member Brown, and Members of the Committee: Thank you for this opportunity to testify. My name is Rachel Pross, Chief Risk Officer of Maps Credit Union: a midsized financial cooperative in Salem, Oregon with about 770 million dollars in assets and 65,000 member-owners. I’m testifying on behalf of CUNA, the Credit Union National Association. CUNA represents both state and federal credit unions and their 115 million members across America.
In the last 5 years, we’ve seen first-hand the many challenges facing financial institutions and the cannabis sector.
Maps takes no position on cannabis legalization, but we acknowledge that Oregon voters have spoken on the matter.
While Cannabis usage is legal in Oregon, it remains illegal in other states. Given that, it may be tempting to believe that the concerns raised by this hearing only affect cannabis businesses, and the financial institutions operating in states where cannabis is legal. That belief is wrong.
Even financial institutions that choose NOT to bank the cannabis industry still risk unknowingly serving those businesses.
Cannabis businesses don’t operate in a vacuum and indirect connections are hard to avoid.
As a bipartisan group of Senators noted in a 2016 letter to FinCEN, “locking lawyers, landlords, plumbers, electricians, security companies, and the like out of the nation’s banking and finance systems serves no one’s interests.”
The United States benefits from a vastly interconnected economy. A company like Wal-Mart—based in Arkansas, where recreational use is illegal—could, and likely does, sell paper or light bulbs to recreational businesses legally operating in California through its website or the 167 retail stores it operates in that state. The same is true for companies like Albertson’s, a grocery store chain based in Idaho, where cannabis use is illegal. Yet, Albertson’s has 126 stores in its neighboring states of Washington, Oregon, Montana and Nevada—states where cannabis use is legal in some form.
These examples show the problem: Every time an employee of a cannabis business uses his or her paycheck to buy groceries, the local Arkansas or Idaho credit union depositing the proceeds from those sales is directly impacted by the dilemma before this Committee today.
Without a federal law providing explicit legal clearance for financial institutions to provide banking services to cannabis businesses, it’s quite likely that many of those businesses will be forced to operate in the underground economy and many mainstream businesses would end up with no access to the financial services sector. That increases the potential of lost tax revenue and crime. It also deprives law enforcement of vital information.
Cannabis banking CAN be done safely and effectively, and Maps Credit Union offers communities in Oregon a safe solution.
After extensive research and risk analysis in 2014, our member-elected, volunteer Board of Directors voted to serve cannabis businesses for two primary reasons:
- First, to serve the underserved—which speaks to our mission and philosophy as a not-for-profit financial cooperative, and
- Second, to enhance community safety by removing cash from the streets.
Statistics show that cash-only businesses increase the risk of crime. A 2015 analysis found that, in the absence of being banked, one in every two cannabis dispensaries were robbed or burglarized—with the average single theft ranging from 20 to 50 thousand dollars.
Compare that to Maps: we are on track to remove over 860 million dollars in cash from the sidewalks of Oregon’s communities in just 3 years’ time. That’s millions of dollars that used to be carried around in duffel bags by legal business owners in our state, creating public safety concerns for the communities we live and work in.
We’ve established a rigorous screening and compliance protocol and have invested considerably in the robust infrastructure required to appropriately monitor and maintain these accounts. Our compliance program is regularly reviewed by state and federal regulators. We also obtain an independent, external audit of the Program annually. Most importantly, the compliance framework Maps uses to serve cannabis businesses is based on the U.S. Department of the Treasury’s FinCEN Guidance.
In accordance with that Guidance, Maps files quarterly Suspicious Activity Reports, or SARs, on every cannabis business account, prioritizing those reports to identify any accounts we suspect could be engaged in illegal activity. Today, 91.5% of our SAR filings are related to cannabis businesses.
In addition, Maps files Currency Transaction Reports on cash transactions exceeding 10,000 dollars in a business day. Because the cannabis industry is primarily cash-based, this type of data would not otherwise be available if financial institutions like Maps were not transparently serving the industry.
We firmly believe that banking the cannabis sector delivers a significant benefit to law enforcement, because we are essentially providing a continuous flow of free, highly-detailed information on cannabis related monetary activity in our state.
In conclusion, we need Congress to provide financial institutions that choose to serve state-sanctioned cannabis businesses with a safe harbor. For that reason, credit unions support the bipartisan SAFE Banking Act.
Thank you for the opportunity to testify today.
*Ms. Pross will be available for interviews in advance of and following the hearing. Please contact us should you be interested in speaking with her.
About CUNA
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.
