How Can I Sign Oklahoma Banking PDF

How to industry sign banking oklahoma pdf now

hi and welcome to our afternoon subject cannabis banking past present and future we're here on a bit of a drizzy day in austin texas uh got some guests here and a little bit north of us who are probably laughing at me being buried in snow and ice here uh in texas um we have been inundated with questions uh we at risk out uh regarding cannabis banking and really you know legalization policies and procedures and so what we thought we would do is get a panel of experts together and have a short conversation to share with you guys in the world here so let's jump in all right so i'll be your moderator today uh justin fisher i'm the ceo and co-founder of risk scout i have about 20 years of fintech experience mostly working to build solutions for community banks and credit unions across the country and i founded risk out to basically help all institutions deal with higher risk businesses not just cannabis related although we'll talk about that today but also msbs private atms and many many more so more information on that near the end and being in my position i get to see quite a bit of interesting things going on in the cannabis industry i participate in a lot of referral networking groups and a lot of the general space as well as the banking and compliance base and just to set the precedence here with cannabis banking you know sometimes we talk to audiences and there's a misunderstanding between cbd and thc so the cannabis plant as a whole can produce a cbd product a thc product like marijuana we don't generally use that term or even a fibrous product for clothing for him create for different elements that can be used industrially so when we talk about these products today we're going to talk about mostly thc but i just want to highlight the difference that cbd and industrial hemp have very different regulatory space and they're handled very differently you know still important higher risk businesses but different than thc it's also important to think about i talked to a lot of institutions who come in and say well i'm not doing anything cannabis related and you know that's that's totally fine and that's your prerogative and your risk score but one of the things to think about is that's kind of like saying i'm not going to do anybody who sells alcohol okay well maybe not liquor store but you know your local mom and pop sells alcohol right and so you really need to think about the differences in what you want to bank in the community and if you're throwing out everybody so the baby with the bathwater then you're really missing out not only on the opportunity but an opportunity to actually bank people in your community so you know there are different types of businesses including cultivators processors retail e-commerce you've got transportation we've seen really great lighting vendors industrial supply even financial vcs escrows lenders so you know not all of these are going to have the same risk profile as a cultivator or plant touching business so keep that in mind you can build a program very explicitly in your compliance program on who you're going to bank and it can be very profitable and still be a part of banking your community and taking advantage of the opportunity another interesting thing is you know we're talking today mostly around the banking world but you know lending which is also part of banking but there's alternative lenders out there as well merchant processing insurance and escrow which are all really underserved financial services in this market so keep that in mind um these are things that uh that really create a really amazing opportunity and probably one kind of one of a kind opportunity until we get to some legalization and commoditization of this of this product all right so three big things i want you to to hear number one this industry is booming right so uh this last year in 2020 we were in a range between 15 to 18 billion on the thc side um there's still estimates that there's about a 60 billion dollar market total so that would include the illicit sales and so as um as this legalizes in more states you know we're going to see this number just really continue to grow maybe over 40 billion in the next five years one of the interesting things as well is there were some polls done by the associated press and about 10 years ago we had we had zero recreational states now we've got you know 11 in dc and you know public opinion 10 years ago was 26 supported legalization the last public opinion poll done by pew research actually shows almost a 70 percent support of legalization right and we saw a lot of that in uh the november election as well and we're seeing even states like virginia just recently you know getting um further along those approval paths and you know finally i think everyone's starting to realize this probably why we're getting so much attention from from other fis who've not generally been interested but we have a political alignment that a climate that's now aligned with legalization right some some interesting movement here where the previous bills like the safe act and the more act have been shut down in the senate now could potentially have new life and so uh even as late as last week schumer and some other lead democrats are pulling those bills back together and they're talking about releasing a new cannabis package of legislation in the next few weeks is what the estimate is so we could see something very impactful um this year if you ask me um you know i think we'll see some kind of de-schedulization or some decriminalization maybe not legalization uh this year but but likely in the next uh two to three years as um you know i use the usda and industrial hemp as an example um you know as they get they can get all the working pieces together and figure out how federal versus state laws are really going to work i think that's the part that's going to take time but we are seeing an alignment in the political landscape now so my first guest is kristen parker i get to work with kristen on a daily basis she's our director of compliance and she comes with over a decade of experience in the bsa chair she has a lot of really unique experience actually managing a lot of the different high-risk programs that we see so msb's atms cannabis related um she's obviously certified to the to the gills and we're really happy to have her at risk out so kristen we have a couple of questions for you here so why is it so hard to get banking services when some of this cannabis related business is legal today well i would say there's probably several reasons here i would say it's probably a lot of the risk of you know with hemp specifically you can plant a legal hemp seed and it could grow into an illegal crop if the thc level is above you know 0.3 and the burden of learning a new a new field like this you know you don't know what you don't know and learning um learning this whole industry can be very complex and when you're in smaller community banks or even larger ones taking out and carving out the time to do so can be very very burdensome and then the other piece might be you know maybe your management or your board of directors is very concerned about a reputational risk just based on the nature of the industry yeah i know that's really great we definitely see a lot of i don't know what i don't know um and that drives a lot of concern and fear in the space um and you know unfortunately some community businesses are impacted by that um even though they are managing a legal legal product um so so tell us kind of a high level layman's terms like what's the high level difference between regulations and sort of thc cbd in him so you know with with thc it's federally illegal but it is legal in some states with hemp you know it's legal everywhere it's up to the states it's legal it's legal federally but it's up to the states you know being um having their laws passed or approved by the usda um some states are not even to that point yet um cbd is federally legal if derived from hemp but you know there's a lot of gray area there fda involvement you know it was approved for a a drug you know not too long ago so they got their hands on that legality of it and they just you know move slowest snails to give us any answers on what we can and can't do with him or with cbd you know so that that's basically it on a high level yeah i know that that's great points i mean you know the thing that's different about cbd is that with edibles and smokable hemp and different elements of sort of ingestion it sort of puts it on the radar for um you know the fda right um also interesting i think from the compliance side right that we have some pretty good no memo based guidance but we have some pretty good guidance from a lot of agencies on hemp um but obviously nothing on thc because of the federal challenges and and cbd is a bit lacking is that a true statement yeah absolutely true yeah and you know with what federal guidance or guidance from any of our regulatory regimes you know we've got while we've got even some on him it's really not telling you exactly what to do it's just saying now you can you can do it um here's some high-level ideas of how you could do it but they don't you know they don't just come out and help you figure out how to build a program and make it scalable and sustainable too so that you because this isn't stopping this isn't slowing down and you know we've got some guidance on marijuana and you know just saying what you should do um you know in regards to filing sars and the coal memo and all of that but it's just we're never going to get that just straight forward here's here how to do it yeah yeah until we see really clear regs you know it makes it kind of a gray area what do you think it happens to banking um sort of banking compliance if legalization on the thc product happens i think you're going to still have the burden that you have with hemp i think you know you're going to have multiple it's probably going to roll out like hemp did up to the states states have been very slow to move it probably fall in the usda regime and you know it's just going to be years before we have any type of concrete you know telling of what it's going to look like and not only that but all these states that have had it legal we've got to deal with the cash the legacy cash that is sitting in you know god knows where all over the united states under people's mattresses whatever we've got to figure out how to tackle all of that and all of that's going to be just it's going to be challenging for years and years to come but at least you've got that you know peace of mind that you're not going to be held reliable on you know that piece from the federal side yeah well it's really great insight and we know from just the usda the farm bill was signed in december 2018 and we're still not fully rolled out with industrial hymn so it's a good point that it could take quite a bit of time but it is an underserved community and it it'll be nice to see when banks can you know come off the sidelines and feel more comfortable uh banking it thank you kristen all right my next guest is melissa marsall we get to work uh with melissa as well she is um leads the bank and everything uh hemp and she has a hemp trademark out there him banks here actually references quite a lot to him businesses i talk about she's very public about supporting the community and the farming base and west town is is essentially in an all-in approach providing all the services necessary for him businesses to to do their business uh welcome melissa how are you today i'm great justin thanks glad to be here good so hemp and cbd is still risky even though it's legal why do you why do you choose to bank these businesses well we get the value add i mean this is a legitimate business and i think we've said it a hundred times just in the opening remarks and kristen it's legal so um i think a lot of banks are struggling to how to figure out how to compete in the market today community banks are all fighting for the same market share so we are pretty big niche bank and that's why we we specifically target underserved markets one of which being hemp and cbd and for us it really was and is a wonderful deposit gathering arena and it opens up doors for other opportunities in the space and we were able to mitigate the risk we know them we recognized them and we put in a pretty robust compliance program leveraging risk out as well and by that we're able to again effectively mitigate any known or perceived risk and again have a a pretty big market share in a pretty big industry i think that we're real proud to serve yeah no that's great so let me ask you how would legalization impact your institution so if it's passed um we're ready in our in our bank to be very honest to overall bank cannabis you know we've got our programs written for both him and the the above 0.3 thc so we're ready for it um it'll again be like it was with him we'll be very cautious and careful making sure our board is is with us like they are now with him and just again making certain that whatever risk we know are aware of will be in good shape now what a lot of us as community banks are hanging our hats on is the passage of the safe banking act that to us would give us the needed protection that we can bank these and not have the risk or for again perceived risk and keep saying of of getting in trouble if you will with the regulators they they haven't touched people that are and i don't think they will but again this just gives us an extra layer of assurance and again it will help us go to market quicker with that program i think it will loosen some of the things with him just because i think the focus will then be more over oh the overreaching cannabis space yeah no that's a good point so melissa we see upwards of 20 businesses a day who contact us through our other website asking for banks and credit unions and um you know banking services financial services most of them are being kicked out or their funds are frozen with square you know so forth it's challenging for these businesses um you know and then they they find you what's one thing you would like them to know um if you could talk to them directly now i always tell everybody that calls us you know that and we do hear those horror stories got to today from from some larger banks obviously the exit the space but we tell them you know just because they didn't know they were banking you and so the don't ask don't tell approach we can't do that so i always tell everybody we're going to ask you a lot of questions because our process and the way we're regulated says we need to know our customer so we're going to ask a lot of questions but i always take the opportunity to say and i mean it that we're getting to know your business so we can help you we may have something available to you that you may not even know and if i don't know what you're doing in your industry and your business i will not be able to give you that same sort of support so we always just tell everybody you know we're not going to bank you just because you're a hemp company but we're not going to not thank you because you're a hemp company so we just need to make sure everybody understands just like their industry is regulated we're highly regulated so as long as it's classified as high risk we just have to monitor and manage it differently but it certainly doesn't mean we don't love the industry and we don't support the industry and that these are just things we have to do to stay in compliance yeah thank you melissa and thank you for what you're doing for the community i've seen this firsthand true to form they care about the relationship uh with the business and the community they want to know what you're doing i know as a business i hear this all the time that you don't feel comfortable sharing all of these things because you've been rejected for those things um it's really important to find a bank who is like melissa or or mel or we're talking to next that is actively talking about what you're doing is actively interested in what you're doing and thank you melissa okay so mel mel is my next guest and mel has 26 years of banking she joined oklahoma state bank in 2014 and really they have been a pioneer of cannabis banking in the oklahoma area with over 200 cannabis businesses i regularly have these conversations with mel about all these community businesses and you know size doesn't matter i'm looking at the business itself and trying to understand you know what they're doing and bring them in and help my community and she truly does walk that walk just like melissa um and you know i think uh be really interesting to talk to you mel about your your thc program welcome thank you for having me so you're banking cannabis thc again i don't use the marijuana word a lot of banks no marijuana related businesses uh by the way don't use that word because it's somewhat derogatory and kind of tied into the war on drugs but we use cannabis thc mostly we talk about it but what are the challenges you face by banking cannabis thc businesses well the biggest challenges in this type of industry any high risk industry is your compliance there is so much compliance melissa alluded to being a highly regulated industry and so we're really joining two highly regulated industries here the cannabis industry and the banking industry so um compliance by and large is the biggest challenge another huge challenge we have in cannabis is the amount of cash because it's strictly a cash business you can't go in and use your debit card and make a purchase in a dispensary because it is so under banked we have wholesalers who are selling products to a retail outlet and all of those transactions are in cash also so so cash is hard to deal with cash creates security risks and so those are the two biggest challenges is making sure we're in compliance making sure our customers are in compliance and then handling the cash yeah and that makes sense and uh just a side note we worked with a few institutions and some private atm owners and there's this really interesting additional layer of problems when that atm is being heavily um won't say manipulated but heavily operated by the actual business owner so it's even harder to track that cash as if you're not in the atm side of uh banking that's another thing to think about but you know those atms are very heavily used and if they're sponsored by that dispensary you have some added issues uh to deal with you sure so mel how does legalization i mean you're doing it now thc banking but how does legalization impact your bank well i would say with legalization we will see a lot more banks come into the space and so you know if you do a swot analysis looking down the road at legalization certainly one of your threats would be competition at this time there are so few banks in the united states that do have a cannabis program in oklahoma for example we we know who the oklahoma banks are but with legalization we would anticipate that a lot more banks would would come into the industry and that is good and that is bad so really the biggest thing we look at right now is how we can try to anticipate what's going to happen on down the road with legislation and be ready to pivot around that something that would help us with with legalizing would be if we could get visa and mastercard in this industry that would take out so much of the cash we now can give we can give a cannabis customer access to the electronic payment system and that kind of thing but debit and credit cards are not accepted in this industry right now so getting the cash out would be a huge bonus for us with legalization but then we must also look at the other banks who are going to want to and rightly so want to jump in this industry because it is certainly a growing industry yeah no that's a that's a good point and i was just going to add that i've recently even just with the uh the hint of legalization seemed that a lot of the going rates for bank fees um out there are starting to have to drop and and you know that that additional competition is going to make it impossible to charge um some banks out there not not present company but some banks out there charging 2500 a month for a bank account that's gonna be very difficult to charge but if you've built your program today on compliance that requires that much cost you know that much revenue to cover those costs you got to really think about that um and you're going to have a lot more competition it's a really good point so i'll ask you the same question i asked melissa you know businesses are coming to you they're they're you know probably in all different states of organization and you know um different types of businesses if you could um talk to them here and say give them you know some one piece of background and what would you want them to know well i think it's very important that they get their entities set up correctly talk to your attorney talk to a cpa get them involved in setting up your your business structure and your entities so that so that it is very clear things like beneficial ownership for example you know that's a bsa thing that we deal with on all levels not just in cannabis but having your documents together and having your licensing and all of this is very important when you're trying to get a bank account because as melissa already said we're going to ask you a lot of questions and we're going to ask you for a lot of documents and another thing we would like these customers to understand is compliance is very expensive and it's expensive for the bank and so we do have to pass that on but when we have the opportunity to work with partners such as risk out for example who put together a good package that helps us to really take a look at the big picture of these customers and understand how they are structured who owns them and how they operate that is a huge help to any bank looking to get involved in this industry yeah that's really great feedback yeah if you are wanting to set up as a business um your entities and somehow you're thinking that you want three or four buried llc's on your ubo form don't do that your bank's gonna have an issue with that don't bury your entities uh you know we have to get to a heartbeat we have to know who's owning these companies if you're going to want to get past use mel's advice and really um do good structure be organized show us that you care about compliance um you know on the banking side and it's going to be a lot easier for you well mel thank you so much it's that's really great feedback and you know we didn't have um you know a lot of time today to dive very deep um and so we will be doing some follow-ups to this we'll probably do some spotlights on thc banking some spotlights on him banking maybe talk a little bit more about lending and insurance and merchant processing which i know are really hot topics um but in the meantime we're going to end this video by sharing west town bank's information you can find them at westtownbank.com a lot of really great information about their hymn program uh very similarly with oklahoma state bank osb bank.com you can find mel and her team and and their thc banking initiative and if you're interested in risk out you can find us at riskout.com we also have a private linkedin group that's really designed for bank executive operation groups and compliance people to share information about all of these topics including also msbs and private atms and much more so we'd love to add you to that we'll be uh hosting more webinars in fact we have one next week on the intricacies of compliance in cannabis banking so you know look for those links where this video is posted