The Seattle-based nonprofit once known as Group Health Credit Union changed its name in 2010 to evoke a green, leafy, hardy plant seen as having medicinal properties.
No, not that one.
But four years later, what is now Salal Credit Union is gingerly stepping into a different field of green by doing business with growers of the cannabis plant.
In an apparent first for Western Washington that could ease fears that truckloads of cash will be a magnet for crime, Salal says openly that it expects to provide bank accounts for some state-licensed marijuana growers and processors.
The credit union plans a “beta test” with a couple of the businesses in the next few weeks, expanding soon to others in King, Snohomish and Pierce counties if all goes well, Salal CEO Russ Rosendal said.
“We’re going to be fairly selective even after the testing period on who we take,” Rosendal said, saying owners must have a “significant business background.”
Salal’s tentative step follows Numerica Credit Union’s decision to serve Spokane-area growers and processors. Both credit unions will offer pickup of deposits by armored car.
Neither plans to offer accounts to retail stores.
Rosendal said Salal isn’t set up to handle the large volumes of cash that retailers could need. Numerica spokeswoman Kelli Hawkins said retailers can’t know exactly who is buying their product.
The credit unions rely on February guidance from the federal Justice and Treasury departments saying banks will be less likely to face prosecution for financial crimes if they follow state laws and the Obama administration’s priorities, including keeping pot away from kids and criminal gangs.
The advice offers no guarantees.
“There are certainly some gray areas in there,” Rosendal said, “but we think that some of the processes and controls that we’ve got in place, and certainly working with the state, should allow us to bank some of these companies.”
It’s good news, said U.S. Rep. Denny Heck, who has pushed to change the marijuana banking laws in Congress.
Olympia Democrat Heck said he would bet two or three other financial institutions will join the first two while keeping mum publicly.
But many are wary.
Washington Bankers Association President Jim Pishue said he has not heard of a bank planning to open marijuana accounts.
Olympia-based Heritage Bank won’t, said Jeff Deuel, president and chief operating officer, unless something changes.
“As a public company, it just doesn’t seem like it’s worth any of the risk to take this on right now until things are more clear,” Deuel said.
That may be a reason the first to embrace the industry are credit unions, owned by account holders and not by shareholders.
But other credit unions, including BECU and TwinStar Credit Union, say they won’t serve weed businesses.
Which leaves businesses in a bind.
Seattle’s Sea of Green Farms first tried Umpqua Bank and then Bank of America, part owner Philip Tobias said, but both closed its business accounts once management discovered the source of its money.
Its state license in hand, the grower and processor is still using personal accounts to pay employees, Tobias said.
The problem grows once the company makes its first sale to a retailer, probably around the first week of June, he said.
“I’m trying to convince people not to bring cash in, because that just makes a big risk,” Tobias said.
Salal and Numerica both cited the public-safety risk of an all-cash pot market among their reasons for participating.
Rosendal added that with Salal’s historic ties to health care, it would like to work with marijuana businesses with medical, research and testing goals. But they will have to be licensed under the recreational-pot law. The medical market is unregulated.
“Personally, I’m in favor of allowing adults to do what adults want to do responsibly,” Rosendal said. “I think there are some really legitimate uses of the product for chronic illness.”
Scott Jarvis, director of the state Department of Financial Institutions, said he’s heard from some institutions that will keep existing customers who get licenses. Others may be waiting for more expected guidance from federal regulators, he said.
A couple of credit unions are not enough to ensure access, he said.
“There will be people who will still be on a cash basis,” Jarvis said, “and that’s troublesome.”