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The CU2.0 Podcast
This podcast explores contemporary, critical thinking and issues impacting the nation's credit unions. What do they need to be doing to not just survive but prosper?
The CU2.0 Podcast
CU 2.0 Podcast Episode 364 Wright-Patt CU and Marijuana Related Businesses, Up in Smoke 2025
You probably have forgotten about the role of credit unions in the country’s marijuana business - estimated to be north of $40 billion. I know I had. It’s been years since we did a show on this topic.
But on the show today is Kevin Hart, CEO of Green Check Verified, a business that provides tools to financial institutions that serve the country’s many marijuana businesses.
As Hart says in the show, narijuana may not be legal in federal law - it is legal in 39 states for medical use and 24 states for personal use - but there is no federal law prohibiting a bank or credit union from providing financial services to a marijuana business.
That marijuana business too must operate in full compliance with the laws in its states.
How does a credit union successfully navigate this landscape? Also on the show is Megan Bennett, manager MRB compliance at Wright-Patt Credit Union in Ohio. the 38th biggest credit union in the country with assets around $9 billion. MRB of course is Marijuana Related Businesses.
Bennett explains, in detail, how Wright-Patt decided to serve marijuana businesses, how it’s working for the institution, and why this is a win-win-win for the state of Ohio, the marijuana businesses and the credit union.
How many credit unions serve marijuana businesses in the US? Under 200, probably nearer 150. But Wright-Patt just may illustrate how it can be done, legally and well.
Listen up.
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Welcome to the CU2.0 podcast.
SPEAKER_01:Hi, and welcome to the CU2.0 podcast with big new ideas about credit unions and conversations about innovative technology with credit union and fintech leaders. This podcast is brought to you by Quillo, the real-time loan syndication network for credit unions, and by your host, longtime credit union and financial technology journalist, Robert McGarvey. And now, the CU2.0 podcast with Robert McGarvey.
SPEAKER_03:You probably have forgotten about the role of credit unions in the country's marijuana business. That business, by the way, is estimated to be worth north of$40 billion a year. I know I had... I've totally forgotten about the credit unions and marijuana businesses. to a marijuana business. That marijuana business, too, of course, must operate in full compliance with the laws in its states. How does a credit union successfully navigate this landscape? Also on the show is Megan Bennett, manager MRB compliance at Wright-Patt Credit Union in Ohio, the 38th biggest credit union in the country with assets around$9 billion. MRB, of course, is marijuana-related businesses. No, I didn't know that either. Bennett explains in detail how RightPat decided to serve marijuana businesses, how it's working for the institution, and why this is a win-win-win for the state of Ohio, the marijuana businesses, and the credit union. How many credit unions serve marijuana businesses in the U.S.? Under 200, probably near 150. But RightPat just may illustrate how it can be done legally and well. Listen up. Tell me what's what's the state of the marijuana business today vis-a-vis financial institutions?
SPEAKER_02:I think it's making good progress, solid progress, I would say, you know, certainly from where we started and not to do a look back. But, you know, there's always been these conversations about the cannabis industry being not banked or underbanked. I wouldn't necessarily even qualify it or classify it as underbanked at this juncture. Do they have access to all the financial services that they need yet today? No, but I mean, that primarily is in, I would say, more in the lending space and on the payment side of things. And so, again, depending on your seat and how you look at it. You could say that is still an open area, but the industry is continuing to mature. So we're seeing more financial institutions getting into the industry from a lending perspective. And then on the payment side, As long as MasterCard and Visa are sitting on the sidelines and they continue and they will continue to do so because of the federal illegality of cannabis and no MCC code, payments is always going to be a challenge.
SPEAKER_03:Yeah, I went to a marijuana dispensary where I live five years ago when I first did a piece on cannabis banking. And and had to pay cash. And I was buying a small quantity, so I had the cash. And I thought that was interesting that this, obviously, MasterCard and Visa were not participating. Are there any credit cards that aren't participating?
SPEAKER_02:No, not really. And nor should they be because there are no MCC codes and the financial institutions. And Megan is going to be much more of an expert on this. You can't lie as you work your way through the rails. And the payments have to run through the rail system. And that should be clear, transparent, and 100% compliant.
SPEAKER_03:Now, what's your guess about how many credit unions are involved in marijuana businesses in some manner, shape, or form?
SPEAKER_02:Of the financial institutions that we work with today, we see about a 60-40 split, maybe 55-45. And that is small financial institutions, community banks, and the 45% are credit unions. However, credit unions, on average, process more dollars in businesses because of their ethos and their position in the marketplace.
SPEAKER_03:So what's the number of credit unions? I mean, I looked online and I saw a guess of 200, but it was positioned as a guess.
SPEAKER_02:Yeah, I think that number's way too high. I would say that are consistently serving the cannabis industry credit unions. I would say that number is, I would say it's 120 at best.
SPEAKER_03:Size range. So, right, Pat's a big credit union. Yes. Or is this mainly big credit unions, or is it a mix, or what is it?
SPEAKER_02:No, it's a mix. I mean, we have one customer. They're$80 million in assets, and they did it just because they want to be able to maintain a relationship they have with an existing account holder. And then you have the right paths of the world who saw the opportunity, had the vision as to what they could do, especially in an emerging market state like Ohio. They thought it through. They went through an exceptional due diligence process internally and externally. They came to the conclusion, they started serving the industry, and then they realized the opportunity to scale was going to be coupled with technology.
SPEAKER_03:So why, Megan, why is Right Patent involved in marijuana?
SPEAKER_00:Yeah, so, I mean, Kevin pretty much hit the nail right on the head. We, that's exactly what happened. We saw the opportunity. The state came to us early, early in the stages, and they asked if we would be interested in banking marijuana. marijuana businesses as the largest credit union in Ohio. So we did a lot of discussions, a lot of internal, external. We met with legal counsel. We created different boards and committees and just talked about all the potential options, all of the risks that we were going to be assuming, how it would work, what it's going to look like. So after probably a year and a half of of deliberating and discussions, we decided that we would bank. And that's kind of where we started. And our main goal and the biggest driver for us was that we are a credit union and we are here to serve our community. And if marijuana is legal in Ohio, they're part of our community. You know what I mean? And it's safer for our community if there's not a bunch of cash just all over the streets, you know, there's less risk if the cash is being banked.
SPEAKER_03:Did this decision go up to your board?
SPEAKER_00:Yes. Oh, definitely. Yeah.
SPEAKER_03:And how, how do you reduce the amount of cash? As I said to you before we started to record, I went up to a place and had needed cash and store employees were walking around with guns. Wow. Yeah. Whoa, this is fun. Now in Arizona, you can actually carry a concealed weapon legally. So for all I know, half the customers had guns too. I did not have a gun.
SPEAKER_00:That's yeah, that's funny. So you, you asked, how do you reduce the amount of cash? Is that what you asked?
SPEAKER_03:Yep.
SPEAKER_00:Um, so there, there's a lot of different ways. Um, Number one is obviously banking the cash. If the cash is being banked, it's being taken to the Federal Reserve. It's no longer at the facility. That in itself reduces the risk by a ton, less likely to have break-ins, especially if people know these cannabis businesses are being banked. They're not just holding on to hundreds of thousands of dollars of cash. And then in addition to that, now, obviously in Ohio, there have been a lot more changes recently with adult use coming on. And there's a lot of payment options that we have. So it's not just a cash market anymore. You have ACH type payments, cashless ATM, pin debit was an option for a while. That one's kind of fallen off, but there's a lot of innovation in this industry and a lot of people who want to keep pushing forward in the industry and keep moving away from cash so that cash isn't always going to be king and open up the opportunity for different payment methods.
SPEAKER_03:Like what? What can you see?
SPEAKER_00:Well, like pin debit. So pin debit is where it was basically like a credit card transaction, right? So those ones are really difficult because like Kevin was saying, the MMC code, Visa and MasterCard, they're not okay with it. There's always a potential for another industry rails to open up. You know what I mean?
SPEAKER_03:You worked years ago at Discover, which is when it was debuted, this was like a big difference vis-a-vis MasterCard and Visa. A new kid on the block. And I think it was started by Sears, if I remember correctly.
SPEAKER_00:Mm-hmm. That's right. Yeah. Yeah. So there's always the potential for someone else to open up their own rails, in which case they could be fine with cannabis transactions. And then that would open up credit card usage, obviously, as long as those credit cards were being used on those rails and not the Visa and MasterCard rails. I think it just takes innovation and funds. Obviously, you need money to try and do something like that. But the right people thinking about the right things and asking the right questions, I think we could get there.
SPEAKER_02:And the challenge for a lot of these innovations that Megan's talking about, and we see them all the time, it's got to work at scale, to what Megan also raised. If it works in a dispensary, is it going to work in a different dispensary in a different state? Right. because each state, and this can be at the city, county, and or is certainly at the license level, the money movement has to be able to exhibit compliance across the board at that single dollar level. And so that becomes the challenge, especially as cannabis industry has grown up and continues to mature through about 80 different point of sale systems today. So how do you pull all those disparate data points mechanisms of capturing information delivery and showing compliance on the sales into a new payment system. It is a complex data connectivity puzzle.
SPEAKER_03:Now, how often do cannabis businesses make deposits? I mean, do they have two or three runs a day to a branch?
SPEAKER_02:It varies. wildly. You know, I've never heard, you know, I'm sure there are some of the, you know, the mega stores that are out there, especially in tourist locations. So I would say like a Planet 13 is a great example in Las Vegas. You know, they have buses bringing people in there. They're probably making more than one or two cash pickups. But, you know, generally speaking, two, three times a week, depending on the volume is where that goes. And, you know, a couple of data points in around some of the things that Megan said. So we see about$1.2 billion a month in sales deposits today in the network of Green Check. 72 to 75% of that 1.2 billion is cash on a monthly basis, preferred method. of payment and preferred method of collection for a lot of cannabis businesses. And 85% of those funds never see a branch because it goes directly into a Fed and or a third party counting room for the Fed.
SPEAKER_00:Yep, exactly.
SPEAKER_03:But how does that work? Tell me, Megan.
SPEAKER_00:So at least the way that we do it, and I'm assuming a lot of financial institutions do it, we partner with armored car services. They carry a contract with the cannabis business. They decide on whatever schedule they want. Like Kevin said, typically it's one to three times a week, depending on what their volume is. They come pick up the cash directly from the dispensary and they take it to their vault, count it there. And then weekly they take it to the Federal Reserve and We get our deposits. It never even touches our branches. It never comes into the bank. It just is all handled by them straight from their vault, straight from the marijuana businesses vault to the courier, straight to the Federal Reserve.
SPEAKER_03:Now, that is a lot slicker. and safer and smoother than I would remember hearing five years ago.
SPEAKER_02:Yeah. Yes. Yes,
SPEAKER_00:it has. I
SPEAKER_03:was picturing, you know, there's three guys pretending that they're not moving a bunch of cash money from a marijuana business.
SPEAKER_02:Well, the industry had that depiction. You're not wrong, Robert. It had that depiction of that scene in Scarface. Everybody's seen the movie where the banker's sitting inside the window smiling because a couple of folks are showing up with duffel bags of cash. And then fast forward in the movie to 30, 45 minutes later, and that same banker's in the window with his head in his hand with a look of dread on his face because two vans pulled up and people coming out with automatic weapons at et cetera. You know, that was certainly something Megan was ever looking for. No. The first scene or the second scene.
SPEAKER_04:Yeah.
SPEAKER_03:Now, the Wright-Patt field of membership, as I've read it, is
SPEAKER_00:pretty
SPEAKER_03:geographic specific to Ohio. Am I right?
SPEAKER_00:Yep, that is correct.
SPEAKER_03:So are the businesses, I assume, are in Ohio?
SPEAKER_00:Yep. As of right now, we are only banking in entities in Ohio. We are allowed to bank entities outside of our footprint. So right now, our footprint is really in the Dayton, Cincinnati, Columbus area. But since we are an Ohio credit union, we are able to bank cannabis businesses, say, up in Cleveland. They're not necessarily in our footprint, but we still want to be able to offer them services knowing that they don't have very many options. So we can expand outside of our footprint as long as we're within the state of Ohio.
SPEAKER_03:How would you rank the size of your cannabis business in Ohio versus other financial institutions in Ohio? Are you the biggest?
SPEAKER_00:Yes, we hold the market share. Last I checked, I don't remember the exact percentage. I want to say we were around like 40% to 45% of the market share is what we have.
SPEAKER_02:I think you're north of that now, Megan.
SPEAKER_00:Oh, yeah? Even better.
SPEAKER_02:Yeah, I do. I really do. Well, they're recognized for the services, right? A lot of folks still have... an approach to the market of we'll offer depository services and don't tell anybody.
SPEAKER_04:You
SPEAKER_02:know, Megan hasn't taken out a billboard, but, you know, they're program and the cannabis industry works on word of mouth. And when you have the when you have the size and scale and products and services that they're bringing in, you know, in that interest state environment to your question, Robert, that carries a lot of weight.
SPEAKER_03:Yeah. It's a very sizable credit union. Now, are you over 10 billion in assets yet?
SPEAKER_00:Not yet. We're getting there.
SPEAKER_03:Do you want to get there?
SPEAKER_00:Yep. We are gearing up for CFPB and we are, we're pushing, we're getting ready for it. Oh,
SPEAKER_03:okay.
SPEAKER_02:Fascinating line.
SPEAKER_03:Yeah.
SPEAKER_02:Yeah. And if you will.
SPEAKER_03:Yeah. So what services are you selling to them?
SPEAKER_00:Just up, out everything that we offer regular businesses, we are trying to offer to our cannabis businesses. Obviously, it has not always been like that. Like we were talking about earlier, we've been doing this since 2018 is when we really started talking through all of this. Our first account was onboarded in 2019. So we have made a lot of changes and added a lot of things to So as of right now, we offer, you know, obviously deposit accounts, savings accounts, money markets. We do offer lending as well. We don't offer branch access, which is kind of what we were just talking about a little bit ago. So normal businesses can go into the branches. We don't allow our tier ones to have branch access or to have debit cards. What's
SPEAKER_03:a tier one?
SPEAKER_00:So the tier one is the direct plant touching business. So any of the dispensaries, cultivators, processors, the ones that are actually touching the product are the tier ones. And then the tier twos would be like the ancillary services, maybe a management company, a holding company, investment company, hydroponics company that sells mostly to a cannabis business would be considered a tier two.
SPEAKER_03:Why can't the tier one access the branches?
SPEAKER_00:That was just a decision that was made early on. Again, because this was so new and we didn't want to overwhelm our membership. Frankly, we also didn't want hundreds of thousands of dollars of cash showing up at a teller line just randomly. So it's easier for us to handle all the transactions privately. by a dedicated team and then use the armored car service. So if they have to go in maybe for like a cashier's check or something, we have allowed exceptions like that. We just don't allow full access to the branches.
SPEAKER_03:But I understand not wanting$100,000 in cash.
SPEAKER_04:Yeah.
SPEAKER_03:That would tie up several tellers for the whole day. Oh, yeah. Just counting the money. Or at least one teller for a whole day. It's just... Yeah, see, originally I was envisioning a guy being very cryptic and mysterious with a supermarket bag filled with, you know, a little paper bag filled with cash. I said, wow, that's an interesting scene inside a credit union.
SPEAKER_04:Yeah.
SPEAKER_03:But so it's not like that at all. I'm disappointed.
SPEAKER_00:Not quite like that. Yeah.
SPEAKER_03:So, Kevin, tell me about the services that your company offers that are designed to help financial services get to marijuana businesses.
SPEAKER_02:Well, it's a complex data puzzle. So, you know, the challenge has been for FIs is, you know, how are they going to be able to service these businesses without having to become experts in cannabis regulations at that state level and whatever will evolve eventually at the federal level? Great at being bankers. And then, you know, the cannabis industry is still nascent and evolving and the rules and regulations are continue to evolve around that. So, you know, how can you connect these two disparate, highly regulated, individually highly regulated industries together? And that really is, you know, how do you gather information and data, analyze it, and then present it back in a scalable, simple fashion. And so that's the. baseline and the benchmark for how we built Green Check and what it's supposed to do. So right, Pat is looking at the cannabis industry. How do they know that one, the business is licensed, and then how do they know on an ongoing basis they're maintaining their compliance posture, not only from a licensed perspective, but what they're selling, who they're selling it to, where that money comes from, Were those transactions done in a compliant fashion where bulk purchasing wasn't allowed, sales to minors wasn't occurring, different payment methods or improper payment methods weren't being used. If the cannabis business ran afoul of their rules and regulations and they were cited by the regulatory boards and the licensing agencies within the state, You have to be able to present that information back to, you know, Megan and her team at scale. And so, you know, that's where we sit. So, you know, some people say we're a fintech. Some people say we're a regtech. Some people say we're a data compliance company. We're kind of all the above because when you look at a high-risk industry, you have to be able to wear all those hats and then make them usable for the end client, which is the financial institution.
SPEAKER_03:Now, a lot of businesses encounter high levels of regulation. I mean, even selling cigarettes at a 7-Eleven is pretty regulated at this point. If you have a bar that sells alcoholic drinks, it's pretty regulated. Self-food and alcohol is even more regulated. So is the marijuana business different from those?
SPEAKER_02:Oh, yeah. Well, because then in here, here's the major difference, Robert, for each of those industries that you talked about, when's the last time you saw a news story or heard of non-attack stamped cigarettes being sold? Oh, in New York City all the time, man. And it's probably still in that 50, maybe it's down to 40% of the illicit market that's out there. A financial institution has to worry about that because not only are they facilitating illegal trade, but that actually then becomes money laundering. I'll go back to the Scarface reference, right? Yeah. You know, they can't just sit there and whether it went through the Fed county room or went directly into a branch, they just can't take bags of cash and turn a blind eye to it. And they have to be able to report on it. So you have to be able to monitor the supply chain of the plant and the associated dollars as it moves through the communities, the states and the industry.
SPEAKER_03:Now, a few years ago, I remember reading a story that The state-regulated marijuana businesses in California were leaving the system because they found the regulations to be too onerous and weren't making any money. They weren't leaving the marijuana business. They were just leaving the state-regulated part of the business, or at least that was the belief. Was that unique to California, or is this a national issue?
SPEAKER_02:Now, I would say that was unique to California, and I wouldn't characterize it that way. I mean, a lot of the folks when they first did this, and Megan mentioned this, some of them were doing it for the fee revenue. And I remember the early days, it was$5,000 a month for an account and 50 bips on every deposit dollar, et cetera. Those days are gone. And if a financial institution is doing this strictly for fee revenue today, not to grow their asset size, et cetera. They're doing it for the wrong reasons.
SPEAKER_03:No, I was actually talking about the marijuana producers, the growers
SPEAKER_02:in
SPEAKER_03:California.
SPEAKER_02:Well, that's a supply chain issue. There's an overabundance of... plant availability because the way the industry grew. And even though they thought they were regulating it, it became oversupplied. And, you know, then commodity pricing takes in. And if you're a cannabis operator and it doesn't matter where you are in the supply chain, if you built your model, financial model based upon a price per pound and all of a sudden that's down by 50, 70, 80 percent, your business model just went kaput. So, you know, some of them all, you know, they all came flying in chasing the green rush, but the green rush dried up.
SPEAKER_03:Now, what's the mix of your customers?
SPEAKER_02:Well, our primary customers are the FIs. So again, you know, we're about 55, 45 banks to credit unions. We have 14,000 unique cannabis, over 14,000 unique cannabis businesses on the platform. that are connected to the list of FIs that we have. And they sit there for free. We make it available to them so they can find the products and services that they're looking for. And then once they're on the platform and that data is available, it then permeates and becomes more available to the financial institutions. So it's a flywheel effect that services everyone.
SPEAKER_03:And do the Businesses stay in your system? Do some come and go?
SPEAKER_02:We've had some light attrition, but our retention rate is 92%. Wow,
SPEAKER_03:that's excellent. What's the geographic distribution?
SPEAKER_02:We are in every state while I'm in Saipan.
SPEAKER_03:And I assume some states are bigger than others.
SPEAKER_02:Oh, yeah. Well, that's just based upon the size of the market. Yes.
SPEAKER_03:Are there any small states that are surprisingly big?
SPEAKER_02:It's all based upon population. The simple math is, and Megan, I'd love to hear how this ties out for you, but one of the things that we always look at, if you go into any state and pick the number, I'm going to make the math simple for me. If you pick a state that has a population of 3 million people that are over the age of 21, okay? on average, 10%. So 300,000 people will purchase marijuana once a month. It's about a 10% buy-through rate anywhere based upon legal age. And that balances out pretty darn well nationally. So larger states, larger populations, larger program. However, offset by price variances and price difference, because Purchase rate in a state of California is going to be very, very different than the purchase rate and the average sell-through price that you will see in Ohio.
SPEAKER_03:Why is that?
SPEAKER_02:It's not overgrown. It didn't blow up. It didn't just let anybody and everybody that could fill out an application get a license, and it still doesn't have to compete with the illicit market. So one of the challenges that that Megan has to keep track of and that green check is part of. You can't show that you're doing$100,000 of sales, but you only bought$1,000 worth of product. The margin rates aren't that big. So you can't take your buddy's black market weed in the back door and sell it all out through the front door and say, okay, we're good. Here's my money. Let me deposit it.
SPEAKER_03:Wow. Interesting. Yeah, I live in Arizona and I know this state here tries to regulate against that. Oh, yeah. So what what is your what's your nightmare? Right, Pat?
SPEAKER_00:Well, I have to preface this by saying I am not a right Pat spokesperson. These you know, this is all Megan and her experiences and, you know, her opinions and, you know. That is not, this is not a right pat nightmare. This is a Megan nightmare.
SPEAKER_02:The opinions expressed here are-
SPEAKER_00:Yes, yeah. Yeah, put the disclosure out. I mean, I have an AML compliance background. So I think that my nightmare, my right pat nightmare is going to be the same as a lot of compliance and AML, BSA compliance. Folks, I mean, the nightmare would be to have the program shut down or to have a bad audit or an exam, get a cease and desist letter, you know, anything like that that says, hey, you're not monitoring these accounts the way you thought you were. You know, there's illicit activity going through your credit union. But that that would be the nightmare, you know. So
SPEAKER_03:does the state how does the state regulate what you're doing? your group in particular?
SPEAKER_00:So we are insured by the NCUA. So we have an audit exam every single year and they come through and they review our program in depth to make sure that, you know, they do an audit just like they do for BSA compliance. They do the same thing for the MRB marijuana related business program that we have here. So we're, you know, thoroughly reviewed every year. They hold us to the same regulations. as BSA, making sure we're filing what we're supposed to be filing, we're reviewing what we're supposed to be reviewing, CIP, due diligence, all of that stuff is getting done. So
SPEAKER_03:Kevin, why are so few credit unions involved in this? I mean, if you have a poster child like Bright Hat, which is, they're not in the money laundering business as far as I
SPEAKER_00:know. Definitely not, definitely not.
SPEAKER_03:I mean, they're even members, I'm sure, of the Defense Credit Union Coalition. So it's, I mean, upstanding members. So why aren't more credit unions involved?
SPEAKER_02:I think there is, you know, the way I describe it is if I had a dollar for every time I got the Heisman in talking to anybody about cannabis banking, you We'd be wildly profitable because many times you'd say, I'd like to talk to you about cannabis, and that hand would come right out and say, eh, we wouldn't even get to the second word, the verb of banking. A lot of folks worry about reputational risk, and I understand that. They feel that they will lose members because they're facilitating this. It's a binary decision. It's one of those third rail words that when you put that out there for certain segments of the population. And no amount of education is going to change their opinion. And that certainly translates into some of the thoughts and the moral compasses that certain executive teams and or board members have. And it's enough for us to judge or question those components. But I think that when they approach it with an open mind and they see that they can do this safely, and in compliance and maintain the structure of their program, it creates an opportunity of discovery. And then they decide, you know, is this something they want to do in a bigger and a broader way? So, you know, you follow Megan's journey, right, from 2018 to where they eventually went with automating the system because they can grow and scale at a much faster and more inexpensively rate, you know, lower your expenses and increase the return, you know, those decision points come there. And so, you know, it's really all over the map. But, you know, at the end of the day, it comes down to three things. Why would you do it? Okay. You have to have, you know, give them the business and the financial reasons to do it. They have to understand that they can do this. Just because cannabis is federally illegal, it is not federally illegal to bank cannabis. But those ideas get conflated together. And then if they decide the why and they realize they can, then they look for the how. And that's where Green Check comes in. But we do help them with the why and the can from an education perspective.
SPEAKER_03:I personally like that. The financial institution doesn't have to touch the cash. This is a cool feature, I think. I mean, if I were at a credit union, I'd have a nightmare of a guy coming in with a shopping bag filled with cash. Man, I can't deal with this. No way, no how. And he has armed guards with him. Oh, wow. I really can't deal with this.
UNKNOWN:Yeah.
SPEAKER_03:But if that's taken away, then what's the difference between doing this and working with a winery in Arizona? And there are quite a few wineries in Arizona, all of which I'm sure are banked. I don't really see the difference at this point.
SPEAKER_02:What did you have to go over, right? When you were having these conversations internally, what were the things that you had to navigate through?
SPEAKER_00:Yeah. And that's what I was just about to say is that I agree with everything that Kevin is saying and And I'm sure that in the beginning, we had the same fears and the same concerns that a lot of financial institutions have who haven't gotten started, who haven't taken the leap. And a lot of it is, well, there's not a lot of regulations out there or there's not a lot of guidance. Well, that's okay. There is guidance. There's the Cole Memo. There's the FinCEN Red Flags. Just because it doesn't tell you step-by-step what you have to do doesn't mean you can't take the leap and go for it. You have to be able to have procedures and policies. You have to be able to back up your decisions. You have to document everything. And you have to be willing to change. If something doesn't work, you got to pivot, make a change, do something new. And I mean, we had all those same fears. Reputational risk, of course. Everyone is concerned about reputational risk because you're a credit union and you're here for the community. Well, if you make a bad decision and the community doesn't like it, that's a really big risk. So I mean, all of these risks of the unknowns, risk of failure, what if we try this and it doesn't work and we fail? I think there's a lot of things that Keep people from taking the leap, and it's a lot less to do with it's illegal, and it's a lot more to do with the risk of reputation, the risk of failure, the risk of the unknown, stuff like that.
SPEAKER_03:Have you had any cases of employees whom you wanted to work in your group who declined?
SPEAKER_00:No, we have.
SPEAKER_03:Because of marijuana, not for other issues.
SPEAKER_00:No, I think we have the opposite. People find out. Yeah, we do a lot of shadowing and people are very interested in what we do and how we do it and why we do it. Your
SPEAKER_03:group, you sit around watching Cheech and Chong.
SPEAKER_00:Okay, that's
SPEAKER_03:cool. Hey, can I sign up for that job
SPEAKER_02:too? No, actually it does become a recruiting tool.
SPEAKER_00:Yeah.
SPEAKER_03:Now, have you turned down any businesses that have wanted to be your customer or member?
SPEAKER_00:Yes, we have one or two. We have not turned down very many at all.
SPEAKER_03:And why did you turn them down? I'm not asking you for specifics, really. I'm more interested in general. What would lead you to say, no, thank you. We don't think we're the credit union for you.
SPEAKER_00:Yeah. So we, again, we're very open. For the most part, we want to accept everyone. I believe with both of the businesses, it was the same issue. And that was that they wanted to own their own ATM and we do not allow that. And they were not willing to get a third party to own that ATM for them. So that was pretty much when we were like, well, if you really want to own the ATM, we can't bank you. You're going to have to find somewhere else.
UNKNOWN:Yeah.
SPEAKER_03:So you put ATMs in marijuana stores in Ohio?
SPEAKER_00:Mm-hmm. Okay. I mean, we don't. Right, Pat doesn't. But we allow our businesses to have ATMs in their stores, yes.
SPEAKER_03:And what kinds if you don't allow them to have their own?
SPEAKER_00:So they would just have to contract with a third-party ATM provider. That ATM provider would then put the physical ATM in... the dispensary, and then they would service it. They would fill it. They would maintenance it. They take care of everything. The store just kind of holds the ATM and gets the rev share off of it.
SPEAKER_03:And why won't RightPath put its ATMs in these places?
SPEAKER_00:That's something that we're considering. Again, we're always looking at how we can better serve our members, what our options are. In the beginning, that just wasn't a priority for us. We knew that they could get ATMs from third parties. So it wasn't, you know, a big push for us to do that for them. Again, you know, never say never. We're always changing things. We're always upgrading. We're always, you know, trying to do our best for our members. So, you know, it's always a potential, but it just wasn't something that we decided in the beginning to do. I
SPEAKER_03:just remember the one time I was in a dispensary, they did have an ATM that was of uncertain origin, as far as I could tell. And from travels abroad, I have a horror of uncertain origin ATMs. I just won't come near them. I didn't go near that one either. For all I know, it's perfectly legitimate. I just say, no, I ain't going to touch this. So, Kevin, what's it cost the credit union to get involved with you and what's involved in the process?
SPEAKER_02:We have pretty standard pricing for everybody. You know, there's an MSRP rack rate, if you will. as you start to enter. And if your program is going to grow and scale, obviously those become negotiation conversations. But the first thing we like to do is make sure that the financial institution is educated and they have their eyes wide open on that why. So we start with a program readiness evaluation that's really geared towards helping the financial institution, their board, and everybody associated with them, insurance coverage, et cetera. Megan went through it, so she knows that you're going to do this and you can do this. Nobody like shelfware, you know, technology company doesn't enjoy it. And certainly nobody ever wants to purchase it just to see it on the shelf. You know, Megan talked about, are we going to be successful? So we like to start with, you know, that sort of engagement. And we look at policies, procedures, risk assessment, liquidity strategies, scale of the program. What does staffing have to look like? What sort of clients are you going to serve, et cetera, so that everybody's on this the same level as to this This is where we're going to start, and this is where we're going to go. And then the licensing of the software at SAS, it's simple. There's red lines associated with the agreement, but they're pretty standard and straightforward. And then coming out of that, we work very closely with the team at the FI to make sure that their program's progressing as it should along the way, especially around the data integration, et cetera. So it's a pretty straightforward and simple process from our side. Megan's opinion, again, matters more, which is also why we're 6X bigger than our next closest competitor, because we took a technology approach to solving a data problem that facilitates banking. We didn't think about it in the classic, I'm a banker, how would I do this? this, and we didn't build the model on spreadsheets. Spreadsheets are not technology. Again, all respect to Bill Gates, but spreadsheets are not technology. It does not work, especially when you're trying to scale a complex data problem.
SPEAKER_03:I remember Lotus 1-2-3 was developed by meditators, so...
SPEAKER_02:I love Lotus 1, 2, 3, by the way. I love that product. I
SPEAKER_03:liked it too.
SPEAKER_02:Yeah, it was great.
SPEAKER_03:Now, how many of the conversations that you have with credit unions results in a customer for you?
SPEAKER_02:That changes year over year. I think the posture of the credit unions and when Rodney Hood was the chairman of NCUA, I mean, he came right out and publicly said to the credit unions, serve this industry. He did a podcast with us and said it in a very public forum. Serve this industry. You can do this. And, you know, you are community-based. It's part of their core, their mission, their ethos. Not everybody listened to it. And then again, also, that was a few years back now, three years back, more states have come online. Some states are still medical only. Some states are still no. And I just like alcohol. I suspect this will not be, even if it becomes federally legal at some point in time, this will not be sold in every state and certainly every county across the country. So more and more people are seeing the opportunity They're seeing public opinion change. Their boards are changing. Leadership changes. I think, you know, steadily you'll see people continue to get engaged with it. And it is the fastest growing thing. CPG market segment, it is unignorable when you look at the sheer dollar volume size. So instead of standing inside the vestibule and holding those aluminum doors shut saying, go away, we're closed, swing them open and invite your community members in.
SPEAKER_03:And your technology, I'm assuming, would help a financial institution avoid doing things that are legally questionable. Am I right?
SPEAKER_02:I would say that. But again, I'll defer to Megan, you know, because, you know, of course, I'm going to say that I'm I'm the vendor. Right. So but, you know, we really. Well, hopefully you're not selling vaporware, man. Oh, again, that's why Megan's opinion matters more.
SPEAKER_00:Yes. And and we had a very interesting conversion. So we started. with a very manual process. Our program was all manual. Like Kevin was mentioning spreadsheets. We did a lot of spreadsheets, a lot of OneNote, a lot of Word document. Everything was manual. I mean, we were tracking everything. We were reviewing everything, but our transaction reviews were on spreadsheets. Every single transaction went on a spreadsheet. We reviewed it, we mitigated it, we moved on. And it was time consuming and it was difficult Now that we have a system, most of our stuff is automated now and it has been awesome. It's also freed up our time so that we can focus on other things that maybe we didn't see before. Technology is huge in this industry and it's been a huge help for ensuring that our program stays compliant. We don't have to be nervous. When it comes to audit time or exams or, you know, are we monitoring what we need to be monitoring because we have the systems in place, we have the controls in place and, you know, we're monitoring well.
SPEAKER_03:Before we go, think hard about how you can help support this podcast so we can do more interviews with more thoughtful leaders in the credit union world. What we're trying to figure out here in these podcasts is what's next for credit unions. What can they do to really, really, really make a difference in the financial scene? Can't all be mega banks, can it? It's my hope it won't all be mega banks. It'll always be a place for credit unions. That's what we're discussing here. So figure out how you can help. Get in touch with me. This is rjmcgarvey at gmail.com. Robert McGarvey again. That's rjmcgarvey at gmail.com. Get in touch. We'll figure out a way that you can help. We need your support. We want your support. We thank you for your support. The CU2.0 Podcast.