By Ray Birch
CHARELSTON, W.Va.—Element FCU expects to become the first credit union in this state to serve the medical marijuana business. And, it expects to be the key to the growth of medical marijuana businesses here.
Element FCU has been selected by the state of West Virginia as the financial institution that will support the state’s Treasurer’s office as it works with companies approved for licenses to sell medical marijuana.
Element CEO Linda Bodie told CUToday.info the state was seeking a bank or credit union to fill the role after a bank backed out.
“We passed medical marijuana legislation over a year ago but the program has not yet started because the state Treasurer's office banking partner backed out,” said Bodie, who explained the bank that withdrew its support did so because of concerns over working with marijuana businesses.
The Treasurer’s office needed a financial institution to handle financial transactions from medical marijuana businesses for license and permit fees to get the medical marijuana program moving in this state.
“Until the Treasurer’s office has a financial institution to handle these transactions, no one could apply in West Virginia to become a dispensary or a grower,” said Bodie. “In 2018, legislation was passed to open up those who could serve the state’s office to more than banks. Previously it could only be a bank that could support the Treasurer’s office. So, that’s what we are doing now, preparing to accept these transactions from growers and dispensaries to get all this started in West Virginia.”
State Contract Won
As CUToday.info reported here, the state recently selected Element FCU from among five financial institution applicants to service the financial side of the state’s medical marijuana program following a lengthy RFP process.
“It's my understanding the state wants to begin accepting license applications soon,” Bodie said.
Bodie said the $35-million Element’s small compliance staff will expand as business demands, noting EFCU will look locally for experienced compliance professionals. The CEO does not expect staff expansion to be an issue early on, as the credit union only supports monetary transactions to get these businesses established through license applications.
Compliance Staff Ramp Up
When Element will likely need to grow is when the credit union begins to serve medical marijuana businesses once they are open to the public. Bodie expects that won’t happen for at least a year or two.
“I project that we will need to dedicate one compliance person for every 10 businesses we work with,” she said.
That is approximately the same rate of staff expansion that North Bay CU has undergone as it has expanded the number of marijuana clients it serves in its California market. CEO Chris Call previously told CUToday.info his CU has grown its compliance staff from one to 10 today, and that it has become a profit center as a result of serving legal cannabis businesses.
Bodie said her credit union does not expect to reach statewide with its support of medical marijuana companies.
Move to Drive Growth
She does, however, expect her credit union to grow as a result.
Linda Bodie
“Yes, this can be a growth opportunity for small credit unions,” Bodie said. “But I caution that it is not for everyone. You have to be very diligent and very careful, and small credit unions having limited resources … They have to make sure have they have the knowledge and make sure they have all the bases covered to take on something like this.”
Call shared a similar opinion even while forecasting significant growth, projecting his CU will grow from $50 million to $500 million over the next 10 years.
The fact legal marijuana businesses are new to West Virginia and that cannabis is still illegal on the federal level has the attention of Bodie and Element FCU.
“We definitely have concerns, but we also realize there are 38 other states engaged with legal marijuana businesses, and at last report there were over 600 banks and credit unions nationwide serving the marijuana industry,” Bodie said.
Helping People
Bodie said the biggest reason Element has entered the legal cannabis space is to get the medical marijuana program going in the state and serving residents.
“With medical marijuana, there are many people in West Virginia who need this medicine and in supporting the Treasurer’s office program, we’re helping to provide a way for them to get some relief,” Bodie said.