Sign Nevada Banking Lease Template Later

Industry sign banking nevada lease template later

alright excellent give that a shot yeah so we'll kick it off so we're here today talking about cannabis and banking has always been a hot issue everybody's kind of familiar with it now on that it's a big issue it's a big problem legislators finally listening the courts have weighed in um and it this really file as an article that we had submitted following the fourth quarter fourth corner credit union a decision at the federal court in Colorado um so what are the problems here with with the banking why is it such an issue aside from kind of the regulatory we have some very practical things like money smelling I believe it or not this this is uh this odor sticks that basically everything it touches so a little a practical problem is actually depositing money his institution that literally smells and what we're finding is that clients are starting to believe it like I mean this in the most literal terms wash the money in a dryer so they'll actually put dryer sheets in a dryer and run that in the cycle to get the smell out of the cash to then try to deposit into the bank um it's kind of funny that way but we have we have the smelling issue we have depositing that money we have the requirement that these business stuffs have saves and vaults transporting cash I always being in a big issue and really what it all boils down to is the government really treating the cannabis industries like money service businesses and by that we call em SBS and the in the legal financial world of what that means is a money service business is one that deals with cash so these cash check and businesses money exchanges traveler's checks stores and the US Post Office believe it or not qualifies under money services business so more scrutiny uh focus towards a money services business and that's what we're dealing with so we have these problems okay what do you do with it and clients come to us all the time and we always have the same answer there's no good answer this is what we do is you tell them all right here's the status of the law guys this is what you follow and then we'll talk about some things to be done to kind of get around or through other banking issues so we started out just talking about the law and I'll run through this because I know everybody on the call is fairly sophisticated party and the members certainly been following us will just run through this real quickly but just to let you know these banks the reason why if you don't know the reason why they don't deal with a lot of the cannabis industry is because of the insurance requirements they have to have with the federal depository FDIC insurance of course so really a nice example of this gone wrong was a recent webinar put on by green full hour media out of california i believe and purely educational was always upfront this entity green flower media with their bank who happened to be Chase Manhattan about their activities that they were involved in cannabis but that was all educational that was all fine they put on their webinar it was a two-day webinar I listened the whole thing because I was shoveling snow here in Philadelphia um and I had to add a year plugin but what happened was green flower media offered a bonus package that members could purchase or those who signed up to purchase chase bang shut their accounts down the day they put on the webinar so nobody who had paid to get the bonus packages gut could get anything because it couldn't process the payments so this is still real time in action very practical really hurts a lot of things and that's why we really need the federal government ought to take some action and we're seeing some state action there too but really it what's very interesting is we went and looked at one of the bit as all the members probably know they have these suspicious activity reports that have to be filed pursuant to the Financial Crimes enforcement Network and so we went and looked at what does that actually mean and Ted really dug up the hard numbers on how many sa ours are we talking about being filed and who's filing them and these are this is from thin send and it eats only to January 26 2015 and actually the period was run fades from the coulomb memo from primary 14 2014 through January 26 2015 and during that period of time marijuana related suspicious activity reports numbered 3157 that ran the gamut from mortgage brokers to banks to credit unions to even a couple casinos and what they were doing was simply reporting under the three different types of SAR s that that address marijuana which is a marijuana limited SAR which is the least alarming and it's basically that the reporting institution the reporting financial institution is simply saying that that none that is a marijuana business but none of the elements of the Cole memo are implicated in it so it's a relatively safe business however they have to report any type of activity involving a marijuana business the second element was a marijuana priority which is it may implicate one or more of the eight directives coming out of the Cole memo and there is a heightened level of concern but not serious and then the third is the most extreme which is the marijuana termination meaning but not only do they report the suspicious activity but they sent a narrative to the Treasury Department that simply says that we're terminating we're terminating our relationship based upon what we think are violations of the guidelines that were set for it so over this period of time from february2014 to January 2015 3157 viral marijuana-related SAR s were received unfortunately they don't break down which of those three areas that the SAR s were SS hit however of that group 249 banks reported the SAR s71 credit unions 37 securities broker 10 money services businesses one mortgage company for insurance companies and two casinos filed these SAR so it is we may think it's simply a bank or a credit union however it's widespread and it's systemic and so the concern for businesses that they comply with every element and stay clear running afoul of anything that would suggest a violation of one of those eight guidelines that have produced in the Cole memo for the guidance that was issued in february2014 yeah and I and I think the you know that the issue was we thought we had some good guidance with FinCEN on these sa ours we had read me reading numbers that about thirty percent of all kind of its related entities we're handling did have bank accounts with financial institutions credit unions um but after this fourth quarter credit union opinion on we see that FinCEN is just not good enough the courts aren't going to enforce it the court the courts have been very clear and specifically judge Jackson in Colorados been very clear that's just not good enough the courts aren't bound by FinCEN guidelines and they certainly can enforce them they're nothing but guidelines so they really kicked it to Congress so what's Congress doing right I think everybody now knows about the carers Act I'm not going to talk too much about that but there are it's a House bill come out of the house I get some safe harbors for cannabis businesses and even addresses a real estate so there's leasing or selling real estate the cannabis related industry also not subject to prosecution right by any federal agency and the other thing that carries Act does i just want to mention it briefly is it reschedules cannabis from schedule one who is scheduled to uh this is a hot point of contention on because really this is another webinar I'm jumping ahead but when you do to reschedule something on the FDA guidelines you look at the various schedules to say marijuana should be scheduled to is really disservice a schedule to includes cocaine a methamphetamines really not something that canopy should be classified as in my opinion really should be a class five which is your tylenol with codeine stuff like that really fits into that category better so we don't love the carers act but you know in the spirit of compromise getting something through wouldn't mind seeing that going past also have the marijuana business access access to banking act that was the federal law understood by the Colorado Perlmutter they represented out of Colorado Pro mater um safe harbors real estate a lot of the same language as hair is on that and we have a companion Senate bill Senate bill 1726 same type of language as the House bill 2076 we also had a fine financial institutions customer protection act this was really not initially geared towards cannabis but it's a fairly new development in early februari as believers februari for that 2016 was introduced and there was a hearing on this bill which essentially prohibited the federal agencies including the banking agencies from terminating bank accounts simply because of the nature of a business now it didn't say specific cannabis but representative Perlmutter try to add amendments to it to include cannabis accounts they did he hold a hearing unfortunately we know where this went otherwise would be big news it was struck down in committee by a vote of 329 and that vote was right across party lines dams for Republicans against um you know on previous webinars and writing articles I've written I've advanced that you know this isn't really a partisan issue that there are there support amongst Republicans as well as Democrats for this on this vote doesn't really seem to indicate that so maybe they may be over all cannabis medicinal quality there is some partisan across the party line going long but when it comes to find institutions and banking we are seeing straight party-line splits on those votes or again just introduced a law it's out of the house and the Senate now we're seeing some states kind of taking the bull by the horns if you will and introducing their own banking laws on this unfortunately I don't know how I'll ever go far enough a lot of these laws of Oregon has a Nevada has a law they're very different laws I'm not going to go into details of each one of them here today but essentially it says okay a bank you can be a bank or a Nevada a thrift company and that's a whole nother definition we talked about but you can be a bank in our state and you can be privately insured in our state so that you don't have to worry about getting the FDIC insurance unfortunately it seemed to me you still need a master account which is the problem that fourth quarter credit union ran into so unfortunately I think the efforts amongst the states while laudable and good and notice move the ball court and it's something we do need really I'll never go far try to chip away at some of the fear that these institutions have against having me as idle government come down with a hammer because when you're subject to the Patriot Act Rico complaints the banking security you have all these regulations and it's an overwhelming tidal wave that comes against you but you have to do is approach you from different angles whether it's the carers act whether it's the strong web medical Access Act which doesn't Darrell directly with banking but limits some of the prosecution's that could occur and again with some of these other bills that are proposed it takes different approaches and what it's trying to do from all different angles is normalize the approach to marijuana medical marijuana and how its approached even if its tax tax issues which will address at a later webinar so all the legislation that's out there as frustrating as it is that it's taken time to even get out of committee there are very creative people in Congress they're approaching this from many different angles which offers us optimism that as we go forward whether or not it's a sweeping bill that strikes down at all the prohibitions or whether it's a piecemeal approach that it gets you to the same place that's the that's what you have to take from this so what are we seeing um and and really our members are probably most interested in hearing this part what are the solutions what are the creative solutions that we're seeing in order to get around the banking because the industry isn't slowing down at all all of all the major financial banks all the major investment firms we get reports from financial experts in the field we're very very bullish on the cannabis market nationally I'm invest invest invest they say to do it but yet we're getting this push and pull between those who want to invest and banks a very thin line to walk right there so what are we seeing what are people doing um well we have bed axed and we have creative acts okay um some bad acts okay just to get around it people what they will do they'll commingle fund so they'll they'll just shift money from one bank account to another where they'll just deposit money into one bank account under you know trust for the the flowers heirs and then hope the bank doesn't figure it out until some later date and that later date they don't know when that's going to be and then they play the game it's like hot potato they jump from one bank to the next they're kicked out of one's institution to go to the next there's a famous well and now it's infamous story by the owner of med men our members probably if you thought any of this would be familiar with that entity uh jumping from one bank to the next and tell you in great detail how he does it it's terrible that you have to do that other other in other enemies other kind of identities creating that holding company scheme right so it's the shell game so company a holds holds this it's purely management purposes and I'll manage the funds of company why and then company X can make those deposits and they have a lease agreement with company why who then pays back and got it out uh connect the dots and you can try to play the shell game it's never something I recommend to a client uh what else can you do you can lie to the bank just flat-out lie that is something that happens I've had clients come and tell me hey listen uh we weren't truthful what do we do now now they're asking too many questions I say unfortunately probably best is to close at all close the account move on but they live in the money and and then the other thing is watching the money now I told you before but the literal washing of the money but now just the traditional sense washing money and for those people who don't know what that is that's literally saying that you have one business that made X number of dollars and you're inflating that amount to cover the income you received from the other cannabis business so you made a million dollars from the cannabis business you mean three million dollars from the leasing business you just say the leasing business made four million dollars you pump the money through that business make all the tax returns and financial reporting in that way of course it's a lie it's never good we don't recommend it but these and things we're seeing you got to stayed up you got some legitimate efforts to write you got the state efforts coming in we had the fourth quarter credit we have and we have an entity that Ted's been doing some research on in Oregon Thanks yes it's a statutory it's a max credit union out of Hourigan and what they what they found when they were doing their own due diligence they recognized that one of their clients was a dispensary and they had two choices one was to simply shut it down shut down the account or or come up with their own system in terms of how to how to address it and keep it viable and they've grown too close to 50 dispensary accounts out of close to 350 in Oregon right now and what they've done they've been very aggressive in terms of maintaining their own version of law and order to be compliant that not to say that they've cozied up to regulators but what they've done is they've had very good relationships with federal regulators and what they've done is taking a zero-tolerance approach with their customers they don't advertise aggressively they take their clients they bet them extremely well but they have standards and if you violate any of their standards there is no as I said zero tolerance there is no black and white so what they do they require their customers to go through annual inspections they go through background checks they cross reference receipts with tax returns and if any ody violates anything they're out they cancel the account of one of their customers solely by delaying or by not having a timely annual inspection conducted so and one of the things we respect we suggest to our clients it's simply that establish good relationships with your banks to financial institutions that you deal with today because in Pennsylvania as this grows they're going to look back and see what kind of what kind of customer are you what kind of relationship do they have how much trust are they have in you and what's happened with maps credit union in Oregon is they've had success because of their good reputation and the fact that they have an open-book policy so I mean there is hope yeah horizon and and so we would like to see these credit unions these banks kind of come into play um but you know what else is happening so some more legitimate ways of kind of moving this money from cash into a banking system or some system where you can then withdrawal it by another entity because a lot of times in some of these cannabis businesses aside from dispensaries when a checking savings in debiting and Credit Services is flooded just loan services I mean you literally have issues paying members where investors into a company in some cases the states that allow it out of state so it becomes very difficult to do what we've seen is entities either buying real property you're buying hard assets and then leveraging that property or those assets though they'll take loans mortgages or money out of the entity I'm sorry out of the property whether that be real property personal property art assets leverage that money get it out and then pay out everybody they need to pay out it's convoluted it gives you an investment vehicle in the property or the assets that you've acquired and you got to do something with it now but at least you're able to legitimately invest in a cash and then withdraw it through a financial institution now the question becomes how how deep is that lender that bank mortgage lender for instance in real property transaction going to look to see where the cash came from divided the rural property you know traditionally they won't look too far but you know truth be told it's a very it's a very new concept it's very new thing that people are doing so wait to see what happens there there's been a lot of talk about the Bitcoin and the block chains I can't tell you I've seen at least five different startups in this space with my own eyes literally in a vesture fundraising networks right here in Philadelphia on that are trying to push these Bitcoin block chain on type of systems forward and if the member unfamiliar with that Google Bitcoin blockchain it's well out of the realm of our discussion today but it's something it works very well problem is you're still not dealing with banks and hard money and financial institutions were credit and debit services it's not there um we do have software and companies I'm aware of companies i have a one client right now to a software that is trying to make thin send just easier for banks to comply with now in light of that fourth quarter credit union opinion i don't know how much that's going to be worth moving one but we do see those touches systems and he's not alone in that field so let me just for instance it takes about uh it takes a bank regulator when they're making these SAR reports where the fence and guidelines one regulator for everyone were to cannabis accounts compare that to a normal situation where you have one regulator to every approximately 100 accounts so this software makes it easier to kind of push the envelope to get to that of 100 account number um the other is the other thing you can do is just deal with banks I need something Ted said earlier you know get a good relationship with a bank and see if you can do it um that's really what I I push forward at a client going into a new state said one going to Oregon it's a very I think the conditions are fairly favorable there for banks to take it on in light of the law that's somebody who has the house law that came out of the house and senate it's gonna be signed by the governor it's almost assured they're gonna be signed and so I little I'm sending my clients out the banks in Oregon telling him to schedule meetings and do that because really that's that's the best of all worlds and so very finely and then we'll just take some questions from whoever what who like to ask but what are the opportunities in Pennsylvania I mean what are these what do these mean for our members this is a rude last opportunity there are opportunities at the wazoo I'm aware of Nevada of where Oregon there's banks in California and bank kind financial kind financial by the way started by a Philadelphia area native by the name of denenberg um great guy started a bank out there got into the banking services industry kind of backed out a little bit and took on some seed to sale tracking services as well so his institution not only will give you credit debit will also give you see the sale tracking on which is important I think to then tell you the banking regulators that they have to deal with hey guys we're not only just taking the money in we're seeing exactly where this is going from point A all the way out to the point of sale on so I think it's very important they're having a lot of success out there in California um just real quick I thought it's very interesting this is an article actually read just this week was stats on where the money's coming from if it's not coming from banks and really traditionally for our PA members a lot of this money a lot of your money is going to come from family and friends right the angel investors like people of family and friends and so what does that look like what are people paying on that it a verge is eleven percent which is pretty good um fifty-five percent of those cannabis businesses we're actually getting interest rates at ten percent or lower which is which is a very nice thing compare that to normal rates right now going about 4.75 8.25 percent normal loan so you're just getting a couple of ticks of points in there um for hard money through family and friends investments but i think is a very good news for anybody trying to enter this space and something that four members trying to raise money they may want to point out to people it's not 20 25 30 percent although there are numbers in that range for small proportion accountable but the vast majority are under eleven percent so we have a 5510 percent and we said that eleven percent you're jumping you're over sixty percent so the majority is under that eleven percent range so lots of lots of bullishness by the financial institutions get in hysteria or see the banks back away so we're going to dance right now we're in a little bit of a little bit of a tango with banks and we're going to see how that plays out but one thing's clear the courts won't do it and it's going to have to be left up to federal law to change now the guy dances are great but the guidances can change daily and nobody's bound by them and would set an act of Congress that will change this so I'm here we have some questions out there well we do let's see if we can get Tom I had his a question here our banks advocating for change that was kind of a question I had to yeah right so incredibly I'm sorry to cut you off their sin like what I got the quest on the screen here there's very little guidance from bank regulators themselves on we're getting almost nothing from so so silence is deadly heater on because we have no idea what they're saying we don't know where they're coming from you know some banks are doing it others aren't we obviously have the Federal Reserve Bank which which I'm sorry the Federal Reserve not bank the Federal Reserve which is actually a private agency that wouldn't issue that master count in the fourth quarter credit union opinion on so you know we all we know for now is the regulators are kind of letting things go but not too far because the bank you have sociation itself they don't know what the they don't know what the guidelines are they see that they see the the cold memo and then they see what's out there but they're also there's an implicit its own legal it's an illegal drug and if you're involved with it you're subject to prosecution and this is not simply prosecuting the bag that's prosecuting the individual officer so there's some reticence that's across the board from the banking arena itself yeah but we're god I would love to get a memo something from the reserve or any one of the banking regulators at the IC whatever might be give some guidance I don't think we're to see it though no now you guys talked about the essay RS and that's where these reports are filed by the banks or these other money institutions has there been any crackdowns on banks from anywhere at any regulatory agency as there is it all fear or is there an actual crackdowns of thanks I think the fact that the banks are self their self regulating in terms of monitoring issuing these reports being aggressive about it and terminating account so as Justin was talking out with Chase terminating account Wells Fargo has done it they themselves have done it so nobody's Treasury has not had to step in yeah we're not aware of and that doesn't mean it doesn't exist okay but we're not aware of the Department of Treasury coming in and saying we're FinCEN coming into saying that some of these banks shut it down close it down now I think it comes down to uh it's just cost prohibitive it's cost prohibitive for these banks to deal with the cannabis industry and to be perfectly frank while the cannabis industry is exploding I mean we're you know we're on track for a 10 billion pick pick a source and pick a billion-dollar number that's where we're going it's huge but keep in mind of all the industries that these banks serve in a bank like chase I mean unfortunately the cannabis industry it's just not the biggest industry so they have to weigh that and when it comes down if it's costing them too much money to do and it's not the biggest industry and they may they may may deal with some problem down the line as far as important well then it just becomes not worth while for um but I think it's very disingenuous for them to accept an account and then deny it so quickly but that's where most of a lot of the activity can come from these smaller local banks and credit unions that we see that it dry pass to not know it existed we think that that's that's what may be a growth area because they're willing to take that risk because they have they have a higher ceiling I hit right well we see a change in the attitude in banking with the new administration you think next year whether we don't know whether we're going to get a Democratic president or a Republican president but what what kind of changes do you foresee if any I well I can tell you there's not where's that kid again yeah no please it yeah scream when you know hi look we have Trump who I you know I don't know who we're not gonna get into a political conversation but I you know he's gonna let the cannabis go okay so I'm not saying he's gonna be the guy but he's the Republican guy who's going to let this industry go uh Clinton as a little less timet and then he got Bernie Sanders and we all know where he stands on this issue completely so although within a year anyway I mean really well all three look like pretty different plans going forward yeah I mean unfortunately I just a sec I don't see the banking issue changing at all I don't see the president having any influence over the banking issue possibly reserve Sanders on that but keeping in mind that the house in the senator both controlled by the Republicans so he's gonna have a long way to go to get anything past that way um it's gonna be hard I think though I don't think no matter who is the president of what administration's in office is going to affect the banking industry for cannabis in my mind the train left the station years ago uh and for a new administration to come in and say we're not gonna let this go we're good we're gonna we're going to now clamp down I don't think it's realistic at all yeah yeah well we're coming up on 30 minutes here so let me just want that's one less question to kind of wrap it up and this will help you kind of reiterate some of the strong points in your presentation so what's the best advice then for somebody once you get a license and wants to try to find a bank that will do some of that wink and nod and a handshake kind of business that we talked about in our podcast back when what's it what's the best advice for Pennsylvania cannabis businesses goes invested is developing that relationship today they you want to have that when when we do get the legislation we want that these relationships will flower pardon the pun um because that's what that's that's what you want to try to do because the banks themselves can be helpful they themselves are moving in the shadows so that's why there's a little more concern and a little more reluctance to jump in but the more comfortable they are with with their customers the more open-minded they'll be in terms of up giving an opportunity essentially and just to kind of piggyback on that from home I just closed it out the real property hard asset issue and leveraging that is something that I think can be done by really sophisticated parties so if you do the wink not in a handshake with the bank fine but you may want to lay some groundwork with existing real properties this is the assets for a member who was to cook already has a business then get involved with a bank that way and float these ideas to them because there's money to be made not only in taking your account but then also in leveraging a lot of this real and personal property oh yeah yeah you have to be open to challenges you have to be open to following a very rigid set of guidelines to be compliant to be successful but that's that's what we're confronted with but I have not met anybody today he's not willing to go that road well guys this has been amazingly informational uh there was a few questions we didn't get to maybe what we can do is email you those questions and then we'll continue this conversation on our website and we'll get this recording out to everybody who signed up for the podcast as well and really great having you Justin morricone and Ted flowers with see Google McCain bridge in Philadelphia thanks for much of being with us today hey thanks man and to all the members make sure to tune in to our next webinar coming up in a couple weeks on the IRS absolutely and if you're going to be around on march 11th please join us in pittsburgh we're having a social function where we can all meet face to face the hyp club alright thanks guys thanks so much you