As the chief operating officer of O Bee Credit Union, Jennifer Roberts helped develop one of the country’s first banking compliance programs for state-licensed cannabis businesses. O Bee was the first credit union in Washington to serve all three license types — producers, processors and retailers — when it launched its pilot program in 2014.
Roberts, who joined O Bee in 2006 and worked her way up through the credit union’s ranks, now has more than a decade of experience with cannabis banking, successfully threading the needle between the needs of businesses and the rules of state and federal regulators.
“We’ve spent 10 years proving this is possible,” she says. “And not only is it possible, it is making for a better experience for business owners who are able to expand their own businesses and locations and services, and as a banking industry, we’re making it happen and we’re not having any problems.”
Roberts sat down with Marijuana Venture to talk about her experience with cannabis banking and how O Bee has been able to make it work, providing services and financial tools to cannabis businesses and their employees.
Marijuana Venture: Do you have any stories or anecdotes you can share about banking cannabis businesses for more than 10 years? The good, the bad or the crazy?
Jennifer Roberts: I might redefine that as the good, the bad and the smelly. It was pretty interesting navigating professional conversations, whether it was with employees or more conservative members who didn’t really understand these smells and these new people with duffel bags.
Those conversations were a good tool for me to increase my professional conversational skills and to explain that we are serving the cannabis industry. Then we had to figure out purification and scent reduction. These are not the challenges I expected.
Once the deposits started to come in and those questions came up, I was like, ‘I guess we’ll deal with this today,’ and you get on Google and find all the ways to disinfect or sanitize cash. Sometimes we would take currency that had a stronger odor and we would separate it and pack it in smaller amounts between other cash.
From a business standpoint, there were a lot of funny little nuances that we didn’t expect, but I wouldn’t say anything has been bad.
Overall, it’s been amazing because when you provide banking services to somebody who literally can’t get it anywhere else, they are so excited and happy that we are there for them and taking a chance, and they know we are subjecting ourselves to federal pressure.
It’s not only the owners, but also the employees, because their accounts would be getting shut off left and right, and they would come in and say, ‘You’ll actually let me have an account and you won’t shut it down?’
And we’d say, ‘Yes, we don’t just offer these services. We welcome serving you. We want to have you here.’
That for me was the win. It just celebrated the idea of community members working together to fulfill a need.
MV: Can you talk a little about the process of developing a cannabis banking program at O Bee Credit Union all those years ago?
Roberts: Before recreational cannabis was legalized in Washington, we had medical, but there was no federal guidance about it. O Bee was a very small credit union then, just three branches and probably 65 employees — but we did have some medical marijuana businesses.
Fast forward to our vote (in 2012), bringing recreational into the light and making cannabis legal for consumption in Washington state. And then the Cole Memo came out (in 2013), so for us that was a little bit of a trigger. Banking is already highly regulated, but then to take a highly regulated industry trying to serve another highly regulated industry — that requires a lot of additional work. I was a team of one person trying to do everything and we realized we could not keep up with the compliance requirements for medical cannabis, so we ended up having to close those accounts, which felt really terrible, and our business owners were pretty upset with us, reasonably.
When recreational passed, I was still just a team of one, thinking we definitely can’t serve this industry. The amount of time it takes to do all the things on the banking side for compliance is just not possible. But in May of that year, we had a member walk in the door, and the nice thing about being a little credit union is that you can say, ‘Hey, can we talk to who’s in charge?’ And that’s what this member had done. The CEO at the time and I were available, so we said, ‘Sure, we’ll sit down and meet with you.’ He told us how we’re serving his two other state-licensed businesses. Why won’t we serve his new, soon-to-be cannabis business? He really helped us understand how widespread this industry was going to become in really short order. Another thing he had said was that the marijuana industry is the new beer industry. It’s here to stay.
Any time a member makes a request of us as a credit union, we always feel like it’s our duty to do our best to see if we can say yes. So, I said, ‘Give me some time. This is going to take a lot of effort. But give me some time and I’ll let you know.’
How the Washington State Liquor and Cannabis Board put everything together was a really big help, and we were able to kind of piggyback off how they intended the program to work. For cannabis business owners to get a license, there was so much due diligence and so many hoops to jump through, but for us in the banking industry, it gave us an opportunity to have a compliant program. A few of us were working together and decided if we can serve the industry and do it well, we can prove it for the rest of the country. We can set the stage in Washington state for how to provide banking going forward.
Fast forward to July 2014, we made the official proposal, and it went up for board vote and it was a unanimous vote to start a one-year pilot program. Right out of the gate, we started serving retailers, producers and processors, and my team of one ended up becoming a team of two. We were hoping to serve at least 20 businesses so the fee structure of those businesses could help us create jobs, because credit unions are not-for-profits and we run on really tight margins. We surpassed that goal of 20 businesses within 90 days, and before we knew it, we blinked, a year had passed, and it was time for us to do a full evaluation of our pilot program and we were closing in on almost 200 businesses.
At that one-year mark, I was able to erase ‘pilot program’ from our internal documents and it’s been a fully formalized program ever since.
MV: What gave the board enough confidence to move forward with the program?
Roberts: The way Washington state made business owners jump through hoops required so much extra effort and cost for the business owners, but it allowed us to say, ‘Hey, this is a really cleanly run business.’ If these owners have invested this much money and this much time and effort into meeting all of these boxes on this checklist, they’re not going to cross these lines into whatever nefarious things the federal government might be concerned about.
That due diligence took off a lot of what we had to do in our burden to ensure those businesses met federal requirements, to differentiate between a well-run, state-licensed business and one that might be leaning into areas of crime, commingling funds, allowing access to minors, etc.
Based on that, we would do our own due diligence, but we’d also verify everything for the state as well. And we have not had any one of our business members closed for failing to meet state licensing requirements.
MV: What services do you offer cannabis businesses?
Roberts: We are a Washington state-chartered credit union, so that means businesses have to be located in Washington for us to serve them, but we work really hard to not differentiate cannabis businesses from other businesses because we see them as all the same. Our business owners in Washington are doing such a great job of trying to build their own business and legacy and why would we treat them any differently?
So, we offer full-service deposit products, online banking, payroll options and anything we can do on the lending side.
From the start, we really wanted to ensure that not just the business owners, but the employees of cannabis businesses could have full access because we would hear time and time again that even the employees would go to one of the big box versions of banks, and their accounts would get shut down because their payroll came in from a cannabis-related company.
So we really focused on making sure employees of these businesses had full access not just to deposit services, but also lending services.
In the last couple of years, we’ve been expanding on those services to cannabis business owners, and then we’re going even further into business lines of credit as well. That’s been really exciting, but we’ve only just started to touch on that.
MV: Can you talk a little bit about O Bee’s history and how that laid the foundation for the credit union today?
Roberts: One of the things I love about O Bee is that it’s always stayed true to credit union values of people serving people and not being about profit.
Ted McGill was the person who started O Bee, and he did it for people working in the beer industry, because banks were reticent to loan them money, to bank them and to help them out. It was almost the same exact vibe as today. So we’re just continuing this tradition of serving the underserved.
I think that is what translates to having a member walk through the door, be frustrated that he can’t open a new business account and get to sit down and talk to the CEO and COO and make something happen. You’re not going to get that at a really large bank. They’re going to do whatever they decide to do from their headquarters.
When we started, the only people that could be members of O Bee were brewery employees. We really pride ourselves in serving blue collar workers, people who have to get up and do the grind and want to improve their financial lives, whether it’s with business services or consumer services. Trying to stay true to helping people build savings, build wealth and have access to services has been key, and that has never changed. And it’s part of why I’ve stayed here for 18 years.
MV: From a banking perspective, do you have a piece of advice for cannabis business owners and managers?
Roberts: I haven’t been a business owner, so I’m always going to acknowledge that that’s my own limitation. So, I guess the only advice I would give is for people to have a really collaborative conversation to explore their needs and find out what banking options there are.
There are a lot more financial institutions (serving cannabis businesses) today than there were five years ago, which is great. But it’s still very limited, so having the right business needs met by the right financial institution is huge.
Every institution has their own on-boarding and due diligence processes. It can seem overwhelming, but it might be worthwhile to make that change.
We work really hard to meet the needs of our members and listen when someone asks for something and try to find ways to say yes.