The pot banking business was already booming for North Bay Credit Union and a new partnership could take that even further.
The $92 million-asset credit union recently signed an agreement to bring on the California Cannabis Industry Association as a select employer group, meaning any legal marijuana business in the state that is a CCIA member will automatically qualify for North Bay membership. While the credit union was already serving pot shops across the state by qualifying them for memberships through donations to other SEGs – a common method for getting around SEG-based membership restrictoins – the agreement with the statewide trade group is expected to help ease that process.
North Bay has offered marijuana banking services for about three years now, and while those businesses only account for about 2% of its total member base, they comprise about 20% of total deposit activity, said CEO Chris Call. On top of that, growth surged in 2020, with assets rising by about 35%, most of which came from cannabis accounts.
“During the pandemic a lot of our cannabis accounts really took off,” said Call. “A lot of people who were sheltered in place relied on pot to get them through difficult and anxious times, so [legal pot shops] did really well and have had a lot of money to deposit, so it’s been a good year for them.”
Last year’s growth isn’t expected to let up anytime soon, he added. “Even if the pandemic were to clear up tomorrow, just the acceptance and the growth of the cannabis business and industry – and consumers’ acceptance of it – is continuing to grow.”
North Bay only provides banking services for cannabusinesses and does not lend to those shops, said Call.
Despite being a small credit union, Call said the legal marijuana industry has been a successful niche market for North Bay because “as a smaller credit union, we can adapt more quickly and more efficiently than a larger institution might to some of the challenges of cannabis banking.”
Part of that has meant bulking up its compliance team in recent years, including Bank Secrecy Act and anti-money laundering experts, ACH specialists and more, all working “almost hand-in-hand with our regulator to make sure they’re comfortable with what we’re doing.” That’s complemented by technology tools that have helped North Bay be more efficient, such as BSA software for suspicious activity report filings and a system tied into the state’s trace-and-track cannabis program.
With all of that in place, Call said the credit union does not expect to have to bring on new compliance officers to manage any additional risk from new businesses that join through the CCIA partnership.
“The whole reason we’re doing this is to provide public safety in our local community,” said Call. “This isn’t really about us making a ton of money or promoting cannabis in any way; we got involved in this because we wanted to promote public safety and we feel like we’ve done a good job of this. We’ve taken close to $1 billion off the streets of our local community and put it into the financial system where it belongs.”
