August 6, 2025 • 47 mins
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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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_03 (00:00):
Welcome to the CU2.0 podcast.
SPEAKER_01 (00:05):
Hi, and welcome to the CU2.0 podcast with big new
ideas about credit unions andconversations about innovative
technology with credit union andfintech leaders.
This podcast is brought to youby Quillo, the real-time loan
syndication network for creditunions, and by your host,
longtime credit union andfinancial technology journalist,
(00:27):
Robert McGarvey.
And now, the CU2.0 podcast withRobert McGarvey.
SPEAKER_03 (00:35):
You probably have forgotten about the role of
credit unions in the country'smarijuana business.
That business, by the way, isestimated to be worth north of
$40 billion a year.
I know I had...
I've totally forgotten about thecredit unions and marijuana
(01:12):
businesses.
to a marijuana business.
That marijuana business, too, ofcourse, must operate in full
compliance with the laws in itsstates.
How does a credit unionsuccessfully navigate this
landscape?
Also on the show is MeganBennett, manager MRB compliance
(01:33):
at Wright-Patt Credit Union inOhio, the 38th biggest credit
union in the country with assetsaround$9 billion.
MRB, of course, ismarijuana-related businesses.
No, I didn't know that either.
Bennett explains in detail howRightPat decided to serve
marijuana businesses, how it'sworking for the institution, and
(01:53):
why this is a win-win-win forthe state of Ohio, the marijuana
businesses, and the creditunion.
How many credit unions servemarijuana businesses in the
U.S.?
Under 200, probably near 150.
But RightPat just may illustratehow it can be done legally and
well.
Listen up.
(02:15):
Tell me what's what's the stateof the marijuana business today
vis-a-vis financialinstitutions?
SPEAKER_02 (02:22):
I think it's making good progress, solid progress, I
would say, you know, certainlyfrom where we started and not to
do a look back.
But, you know, there's alwaysbeen these conversations about
the cannabis industry being notbanked or underbanked.
I wouldn't necessarily evenqualify it or classify it as
underbanked at this juncture.
(02:44):
Do they have access to all thefinancial services that they
need yet today?
No, but I mean, that primarilyis in, I would say, more in the
lending space and on the paymentside of things.
And so, again, depending on yourseat and how you look at it.
You could say that is still anopen area, but the industry is
(03:07):
continuing to mature.
So we're seeing more financialinstitutions getting into the
industry from a lendingperspective.
And then on the payment side, Aslong as MasterCard and Visa are
sitting on the sidelines andthey continue and they will
continue to do so because of thefederal illegality of cannabis
(03:30):
and no MCC code, payments isalways going to be a challenge.
SPEAKER_03 (03:35):
Yeah, I went to a marijuana dispensary where I
live five years ago when I firstdid a piece on cannabis banking.
And and had to pay cash.
And I was buying a smallquantity, so I had the cash.
And I thought that wasinteresting that this,
obviously, MasterCard and Visawere not participating.
(03:57):
Are there any credit cards thataren't participating?
SPEAKER_02 (04:01):
No, not really.
And nor should they be becausethere are no MCC codes and the
financial institutions.
And Megan is going to be muchmore of an expert on this.
You can't lie as you work yourway through the rails.
And the payments have to runthrough the rail system.
And that should be clear,transparent, and 100% compliant.
SPEAKER_03 (04:27):
Now, what's your guess about how many credit
unions are involved in marijuanabusinesses in some manner,
shape, or form?
SPEAKER_02 (04:36):
Of the financial institutions that we work with
today, we see about a 60-40split, maybe 55-45.
And that is small financialinstitutions, community banks,
and the 45% are credit unions.
(04:56):
However, credit unions, onaverage, process more dollars in
businesses because of theirethos and their position in the
marketplace.
SPEAKER_03 (05:09):
So what's the number of credit unions?
I mean, I looked online and Isaw a guess of 200, but it was
positioned as a guess.
SPEAKER_02 (05:20):
Yeah, I think that number's way too high.
I would say that areconsistently serving the
cannabis industry credit unions.
I would say that number is, Iwould say it's 120 at best.
SPEAKER_03 (05:40):
Size range.
So, right, Pat's a big creditunion.
Yes.
Or is this mainly big creditunions, or is it a mix, or what
is it?
SPEAKER_02 (05:50):
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 maintaina relationship they have with an
existing account holder.
And then you have the rightpaths of the world who saw the
opportunity, had the vision asto what they could do,
(06:13):
especially in an emerging marketstate like Ohio.
They thought it through.
They went through an exceptionaldue diligence process internally
and externally.
They came to the conclusion,they started serving the
industry, and then they realizedthe opportunity to scale was
going to be coupled withtechnology.
SPEAKER_03 (06:33):
So why, Megan, why is Right Patent involved in
marijuana?
SPEAKER_00 (06:39):
Yeah, so, I mean, Kevin pretty much hit the nail
right on the head.
We, that's exactly whathappened.
We saw the opportunity.
The state came to us early,early in the stages, and they
asked if we would be interestedin banking marijuana.
marijuana businesses as thelargest credit union in Ohio.
(06:59):
So we did a lot of discussions,a lot of internal, external.
We met with legal counsel.
We created different boards andcommittees and just talked about
all the potential options, allof the risks that we were going
to be assuming, how it wouldwork, what it's going to look
like.
So after probably a year and ahalf of of deliberating and
(07:22):
discussions, we decided that wewould bank.
And that's kind of where westarted.
And our main goal and thebiggest driver for us was that
we are a credit union and we arehere to serve our community.
And if marijuana is legal inOhio, they're part of our
community.
You know what I mean?
(07:43):
And it's safer for our communityif there's not a bunch of cash
just all over the streets, youknow, there's less risk if the
cash is being banked.
SPEAKER_03 (07:55):
Did this decision go up to your board?
SPEAKER_00 (07:57):
Yes.
Oh, definitely.
Yeah.
SPEAKER_03 (08:00):
And how, how do you reduce the amount of cash?
As I said to you before westarted to record, I went up to
a place and had needed cash andstore employees were walking
around with guns.
Wow.
Yeah.
Whoa, this is fun.
Now in Arizona, you can actuallycarry a concealed weapon
(08:23):
legally.
So for all I know, half thecustomers had guns too.
I did not have a gun.
SPEAKER_00 (08:31):
That's yeah, that's funny.
So you, you asked, how do youreduce the amount of cash?
Is that what you asked?
SPEAKER_03 (08:37):
Yep.
SPEAKER_00 (08:39):
Um, so there, there's a lot of different ways.
Um, Number one is obviouslybanking 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 riskby a ton, less likely to have
break-ins, especially if peopleknow these cannabis businesses
(09:02):
are being banked.
They're not just holding on tohundreds of thousands of dollars
of cash.
And then in addition to that,now, obviously in Ohio, there
have been a lot more changesrecently with adult use coming
on.
And there's a lot of paymentoptions that we have.
So it's not just a cash marketanymore.
(09:23):
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 ofpeople who want to keep pushing
forward in the industry and keepmoving away from cash so that
cash isn't always going to beking and open up the opportunity
(09:46):
for different payment methods.
SPEAKER_03 (09:49):
Like what?
What can you see?
SPEAKER_00 (09:52):
Well, like pin debit.
So pin debit is where it wasbasically like a credit card
transaction, right?
So those ones are reallydifficult because like Kevin was
saying, the MMC code, Visa andMasterCard, they're not okay
with it.
There's always a potential foranother industry rails to open
(10:16):
up.
You know what I mean?
SPEAKER_03 (10:17):
You worked years ago at Discover, which is when it
was debuted, this was like a bigdifference vis-a-vis MasterCard
and Visa.
A new kid on the block.
And I think it was started bySears, if I remember correctly.
SPEAKER_00 (10:32):
Mm-hmm.
That's right.
Yeah.
Yeah.
So there's always the potentialfor someone else to open up
their own rails, in which casethey could be fine with cannabis
transactions.
And then that would open upcredit card usage, obviously, as
long as those credit cards werebeing used on those rails and
not the Visa and MasterCardrails.
I think it just takes innovationand funds.
(10:53):
Obviously, you need money to tryand do something like that.
But the right people thinkingabout the right things and
asking the right questions, Ithink we could get there.
SPEAKER_02 (11:03):
And the challenge for a lot of these innovations
that Megan's talking about, andwe see them all the time, it's
got to work at scale, to whatMegan also raised.
If it works in a dispensary, isit going to work in a different
dispensary in a different state?
Right.
because each state, and this canbe at the city, county, and or
(11:26):
is certainly at the licenselevel, the money movement has to
be able to exhibit complianceacross the board at that single
dollar level.
And so that becomes thechallenge, especially as
cannabis industry has grown upand continues to mature through
about 80 different point of salesystems today.
(11:48):
So how do you pull all thosedisparate data points mechanisms
of capturing informationdelivery and showing compliance
on the sales into a new paymentsystem.
It is a complex dataconnectivity puzzle.
SPEAKER_03 (12:06):
Now, how often do cannabis businesses make
deposits?
I mean, do they have two orthree runs a day to a branch?
SPEAKER_02 (12:18):
It varies.
wildly.
You know, I've never heard, youknow, I'm sure there are some of
the, you know, the mega storesthat are out there, especially
in tourist locations.
So I would say like a Planet 13is a great example in Las Vegas.
You know, they have busesbringing people in there.
They're probably making morethan one or two cash pickups.
(12:41):
But, you know, generallyspeaking, two, three times a
week, depending on the volume iswhere that goes.
And, you know, a couple of datapoints in around some of the
things that Megan said.
So we see about$1.2 billion amonth in sales deposits today in
the network of Green Check.
72 to 75% of that 1.2 billion iscash on a monthly basis,
(13:07):
preferred method.
of payment and preferred methodof collection for a lot of
cannabis businesses.
And 85% of those funds never seea branch because it goes
directly into a Fed and or athird party counting room for
the Fed.
SPEAKER_00 (13:24):
Yep, exactly.
SPEAKER_03 (13:26):
But how does that work?
Tell me, Megan.
SPEAKER_00 (13:30):
So at least the way that we do it, and I'm assuming
a lot of financial institutionsdo it, we partner with armored
car services.
They carry a contract with thecannabis business.
They decide on whatever schedulethey want.
Like Kevin said, typically it'sone to three times a week,
depending on what their volumeis.
(13:50):
They come pick up the cashdirectly from the dispensary and
they take it to their vault,count it there.
And then weekly they take it tothe Federal Reserve and We get
our deposits.
It never even touches ourbranches.
It never comes into the bank.
It just is all handled by themstraight from their vault,
(14:11):
straight from the marijuanabusinesses vault to the courier,
straight to the Federal Reserve.
SPEAKER_03 (14:20):
Now, that is a lot slicker.
and safer and smoother than Iwould remember hearing five
years ago.
SPEAKER_02 (14:27):
Yeah.
Yes.
Yes,
SPEAKER_00 (14:29):
it has.
I
SPEAKER_03 (14:32):
was picturing, you know, there's three guys
pretending that they're notmoving a bunch of cash money
from a marijuana business.
SPEAKER_02 (14:37):
Well, the industry had that depiction.
You're not wrong, Robert.
It had that depiction of thatscene in Scarface.
Everybody's seen the movie wherethe banker's sitting inside the
window smiling because a coupleof folks are showing up with
duffel bags of cash.
And then fast forward in themovie to 30, 45 minutes later,
(14:59):
and that same banker's in thewindow with his head in his hand
with a look of dread on his facebecause two vans pulled up and
people coming out with automaticweapons at et cetera.
You know, that was certainlysomething Megan was ever looking
for.
No.
The first scene or the secondscene.
SPEAKER_04 (15:15):
Yeah.
SPEAKER_03 (15:17):
Now, the Wright-Patt field of membership, as I've
read it, is
SPEAKER_00 (15:22):
pretty
SPEAKER_03 (15:23):
geographic specific to Ohio.
Am I right?
SPEAKER_00 (15:27):
Yep, that is correct.
SPEAKER_03 (15:30):
So are the businesses, I assume, are in
Ohio?
SPEAKER_00 (15:34):
Yep.
As of right now, we are onlybanking in entities in Ohio.
We are allowed to bank entitiesoutside of our footprint.
So right now, our footprint isreally in the Dayton,
Cincinnati, Columbus area.
But since we are an Ohio creditunion, we are able to bank
cannabis businesses, say, up inCleveland.
(15:55):
They're not necessarily in ourfootprint, but we still want to
be able to offer them servicesknowing that they don't have
very many options.
So we can expand outside of ourfootprint as long as we're
within the state of Ohio.
SPEAKER_03 (16:08):
How would you rank the size of your cannabis
business in Ohio versus otherfinancial institutions in Ohio?
Are you the biggest?
SPEAKER_00 (16:18):
Yes, we hold the market share.
Last I checked, I don't rememberthe exact percentage.
I want to say we were aroundlike 40% to 45% of the market
share is what we have.
SPEAKER_02 (16:33):
I think you're north of that now, Megan.
SPEAKER_00 (16:35):
Oh, yeah?
Even better.
SPEAKER_02 (16:37):
Yeah, I do.
I really do.
Well, they're recognized for theservices, right?
A lot of folks still have...
an approach to the market ofwe'll offer depository services
and don't tell anybody.
SPEAKER_04 (16:52):
You
SPEAKER_02 (16:52):
know, Megan hasn't taken out a billboard, but, you
know, they're program and thecannabis industry works on word
of mouth.
And when you have the when youhave the size and scale and
products and services thatthey're bringing in, you know,
in that interest stateenvironment to your question,
Robert, that carries a lot ofweight.
SPEAKER_03 (17:13):
Yeah.
It's a very sizable creditunion.
Now, are you over 10 billion inassets yet?
SPEAKER_00 (17:19):
Not yet.
We're getting there.
SPEAKER_03 (17:21):
Do you want to get there?
SPEAKER_00 (17:25):
Yep.
We are gearing up for CFPB andwe are, we're pushing, we're
getting ready for it.
Oh,
SPEAKER_03 (17:32):
okay.
SPEAKER_02 (17:33):
Fascinating line.
SPEAKER_03 (17:35):
Yeah.
SPEAKER_02 (17:35):
Yeah.
And if you will.
SPEAKER_03 (17:37):
Yeah.
So what services are you sellingto them?
SPEAKER_00 (17:41):
Just up, out everything that we offer regular
businesses, we are trying tooffer to our cannabis
businesses.
Obviously, it has not alwaysbeen like that.
Like we were talking aboutearlier, we've been doing this
since 2018 is when we reallystarted talking through all of
(18:02):
this.
Our first account was onboardedin 2019.
So we have made a lot of changesand added a lot of things to So
as of right now, we offer, youknow, 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
(18:22):
just talking about a little bitago.
So normal businesses can go intothe branches.
We don't allow our tier ones tohave branch access or to have
debit cards.
What's
SPEAKER_03 (18:33):
a tier one?
SPEAKER_00 (18:34):
So the tier one is the direct plant touching
business.
So any of the dispensaries,cultivators, processors, the
ones that are actually touchingthe product are the tier ones.
And then the tier twos would belike the ancillary services,
maybe a management company, aholding company, investment
company, hydroponics companythat sells mostly to a cannabis
(18:57):
business would be considered atier two.
SPEAKER_03 (19:00):
Why can't the tier one access the branches?
SPEAKER_00 (19:03):
That was just a decision that was made early on.
Again, because this was so newand we didn't want to overwhelm
our membership.
Frankly, we also didn't wanthundreds of thousands of dollars
of cash showing up at a tellerline just randomly.
So it's easier for us to handleall the transactions privately.
(19:28):
by a dedicated team and then usethe armored car service.
So if they have to go in maybefor like a cashier's check or
something, we have allowedexceptions like that.
We just don't allow full accessto the branches.
SPEAKER_03 (19:41):
But I understand not wanting$100,000 in cash.
SPEAKER_04 (19:44):
Yeah.
SPEAKER_03 (19:45):
That would tie up several tellers for the whole
day.
Oh, yeah.
Just counting the money.
Or at least one teller for awhole day.
It's just...
Yeah, see, originally I wasenvisioning a guy being very
cryptic and mysterious with asupermarket bag filled with, you
(20:06):
know, a little paper bag filledwith cash.
I said, wow, that's aninteresting scene inside a
credit union.
SPEAKER_04 (20:14):
Yeah.
SPEAKER_03 (20:16):
But so it's not like that at all.
I'm disappointed.
SPEAKER_00 (20:22):
Not quite like that.
Yeah.
SPEAKER_03 (20:24):
So, Kevin, tell me about the services that your
company offers that are designedto help financial services get
to marijuana businesses.
SPEAKER_02 (20:36):
Well, it's a complex data puzzle.
So, you know, the challenge hasbeen for FIs is, you know, how
are they going to be able toservice these businesses without
having to become experts incannabis regulations at that
state level and whatever willevolve eventually at the federal
(20:57):
level?
Great at being bankers.
And then, you know, the cannabisindustry is still nascent and
evolving and the rules andregulations are continue to
evolve around that.
So, you know, how can youconnect these two disparate,
highly regulated, individuallyhighly regulated industries
together?
And that really is, you know,how do you gather information
and data, analyze it, and thenpresent it back in a scalable,
(21:21):
simple fashion.
And so that's the.
baseline and the benchmark forhow we built Green Check and
what it's supposed to do.
So right, Pat is looking at thecannabis industry.
How do they know that one, thebusiness is licensed, and then
how do they know on an ongoingbasis they're maintaining their
compliance posture, not onlyfrom a licensed perspective, but
(21:46):
what they're selling, whothey're selling it to, where
that money comes from, Werethose transactions done in a
compliant fashion where bulkpurchasing wasn't allowed, sales
to minors wasn't occurring,different payment methods or
improper payment methods weren'tbeing used.
If the cannabis business ranafoul of their rules and
(22:09):
regulations and they were citedby the regulatory boards and the
licensing agencies within thestate, You have to be able to
present that information backto, you know, Megan and her team
at scale.
And so, you know, that's wherewe sit.
So, you know, some people saywe're a fintech.
(22:29):
Some people say we're a regtech.
Some people say we're a datacompliance company.
We're kind of all the abovebecause when you look at a
high-risk industry, you have tobe able to wear all those hats
and then make them usable forthe end client, which is the
financial institution.
SPEAKER_03 (22:47):
Now, a lot of businesses encounter high levels
of regulation.
I mean, even selling cigarettesat a 7-Eleven is pretty
regulated at this point.
If you have a bar that sellsalcoholic drinks, it's pretty
regulated.
Self-food and alcohol is evenmore regulated.
(23:09):
So is the marijuana businessdifferent from those?
SPEAKER_02 (23:14):
Oh, yeah.
Well, because then in here,here's the major difference,
Robert, for each of thoseindustries that you talked
about, when's the last time yousaw a news story or heard of
non-attack stamped cigarettesbeing sold?
Oh, in New York City all thetime, man.
(23:58):
And it's probably still in that50, maybe it's down to 40% of
the illicit market that's outthere.
A financial institution has toworry about that because not
only are they facilitatingillegal trade, but that actually
then becomes money laundering.
I'll go back to the Scarfacereference, right?
(24:19):
Yeah.
You know, they can't just sitthere and whether it went
through the Fed county room orwent directly into a branch,
they just can't take bags ofcash and turn a blind eye to it.
And they have to be able toreport on it.
So you have to be able tomonitor the supply chain of the
plant and the associated dollarsas it moves through the
(24:40):
communities, the states and theindustry.
SPEAKER_03 (24:44):
Now, a few years ago, I remember reading a story
that The state-regulatedmarijuana businesses in
California were leaving thesystem because they found the
regulations to be too onerousand weren't making any money.
They weren't leaving themarijuana business.
They were just leaving thestate-regulated part of the
business, or at least that wasthe belief.
(25:07):
Was that unique to California,or is this a national issue?
SPEAKER_02 (25:13):
Now, I would say that was unique to California,
and I wouldn't characterize itthat way.
I mean, a lot of the folks whenthey first did this, and Megan
mentioned this, some of themwere 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 everydeposit dollar, et cetera.
(25:34):
Those days are gone.
And if a financial institutionis doing this strictly for fee
revenue today, not to grow theirasset size, et cetera.
They're doing it for the wrongreasons.
SPEAKER_03 (25:49):
No, I was actually talking about the marijuana
producers, the growers
SPEAKER_02 (25:52):
in
SPEAKER_03 (25:53):
California.
SPEAKER_02 (25:53):
Well, that's a supply chain issue.
There's an overabundance of...
plant availability because theway the industry grew.
And even though they thoughtthey were regulating it, it
became oversupplied.
And, you know, then commoditypricing takes in.
And if you're a cannabisoperator and it doesn't matter
(26:15):
where you are in the supplychain, if you built your model,
financial model based upon aprice per pound and all of a
sudden that's down by 50, 70, 80percent, your business model
just went kaput.
So, you know, some of them all,you know, they all came flying
in chasing the green rush, butthe green rush dried up.
SPEAKER_03 (26:38):
Now, what's the mix of your customers?
SPEAKER_02 (26:41):
Well, our primary customers are the FIs.
So again, you know, we're about55, 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 listof FIs that we have.
And they sit there for free.
(27:01):
We make it available to them sothey can find the products and
services that they're lookingfor.
And then once they're on theplatform and that data is
available, it then permeates andbecomes more available to the
financial institutions.
So it's a flywheel effect thatservices everyone.
SPEAKER_03 (27:23):
And do the Businesses stay in your system?
Do some come and go?
SPEAKER_02 (27:29):
We've had some light attrition, but our retention
rate is 92%.
Wow,
SPEAKER_03 (27:37):
that's excellent.
What's the geographicdistribution?
SPEAKER_02 (27:41):
We are in every state while I'm in Saipan.
SPEAKER_03 (27:46):
And I assume some states are bigger than others.
SPEAKER_02 (27:50):
Oh, yeah.
Well, that's just based upon thesize of the market.
Yes.
SPEAKER_03 (27:55):
Are there any small states that are surprisingly
big?
SPEAKER_02 (28:00):
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 thethings that we always look at,
if you go into any state andpick the number, I'm going to
make the math simple for me.
If you pick a state that has apopulation of 3 million people
(28:21):
that are over the age of 21,okay?
on average, 10%.
So 300,000 people will purchasemarijuana once a month.
It's about a 10% buy-throughrate anywhere based upon legal
age.
And that balances out prettydarn well nationally.
So larger states, largerpopulations, larger program.
(28:45):
However, offset by pricevariances and price difference,
because Purchase rate in a stateof California is going to be
very, very different than thepurchase rate and the average
sell-through price that you willsee in Ohio.
SPEAKER_03 (28:59):
Why is that?
SPEAKER_02 (29:02):
It's not overgrown.
It didn't blow up.
It didn't just let anybody andeverybody that could fill out an
application get a license, andit still doesn't have to compete
with the illicit market.
So one of the challenges thatthat 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
(29:26):
bought$1,000 worth of product.
The margin rates aren't thatbig.
So you can't take your buddy'sblack market weed in the back
door and sell it all out throughthe front door and say, okay,
we're good.
Here's my money.
Let me deposit it.
SPEAKER_03 (29:42):
Wow.
Interesting.
Yeah, I live in Arizona and Iknow this state here tries to
regulate against that.
Oh, yeah.
So what what is your what's yournightmare?
Right, Pat?
SPEAKER_00 (29:59):
Well, I have to preface this by saying I am not
a right Pat spokesperson.
These you know, this is allMegan and her experiences and,
you know, her opinions and, youknow.
That is not, this is not a rightpat nightmare.
This is a Megan nightmare.
SPEAKER_02 (30:17):
The opinions expressed here are-
SPEAKER_00 (30:19):
Yes, yeah.
Yeah, put the disclosure out.
I mean, I have an AML compliancebackground.
So I think that my nightmare, myright pat nightmare is going to
be the same as a lot ofcompliance and AML, BSA
compliance.
Folks, I mean, the nightmarewould be to have the program
shut down or to have a bad auditor an exam, get a cease and
(30:43):
desist letter, you know,anything like that that says,
hey, you're not monitoring theseaccounts the way you thought you
were.
You know, there's illicitactivity going through your
credit union.
But that that would be thenightmare, you know.
So
SPEAKER_03 (30:58):
does the state how does the state regulate what
you're doing?
your group in particular?
SPEAKER_00 (31:07):
So we are insured by the NCUA.
So we have an audit exam everysingle year and they come
through and they review ourprogram in depth to make sure
that, you know, they do an auditjust like they do for BSA
compliance.
They do the same thing for theMRB marijuana related business
program that we have here.
So we're, you know, thoroughlyreviewed every year.
(31:29):
They hold us to the sameregulations.
as BSA, making sure we're filingwhat we're supposed to be
filing, we're reviewing whatwe're supposed to be reviewing,
CIP, due diligence, all of thatstuff is getting done.
So
SPEAKER_03 (31:44):
Kevin, why are so few credit unions involved in
this?
I mean, if you have a posterchild like Bright Hat, which is,
they're not in the moneylaundering business as far as I
SPEAKER_00 (31:59):
know.
Definitely not, definitely not.
SPEAKER_03 (32:03):
I mean, they're even members, I'm sure, of the
Defense Credit Union Coalition.
So it's, I mean, upstandingmembers.
So why aren't more credit unionsinvolved?
SPEAKER_02 (32:16):
I think there is, you know, the way I describe it
is if I had a dollar for everytime I got the Heisman in
talking to anybody aboutcannabis banking, you We'd be
wildly profitable because manytimes you'd say, I'd like to
talk to you about cannabis, andthat hand would come right out
and say, eh, we wouldn't evenget to the second word, the verb
(32:40):
of banking.
A lot of folks worry aboutreputational risk, and I
understand that.
They feel that they will losemembers because they're
facilitating this.
It's a binary decision.
It's one of those third railwords that when you put that out
there for certain segments ofthe population.
(33:02):
And no amount of education isgoing to change their opinion.
And that certainly translatesinto some of the thoughts and
the moral compasses that certainexecutive teams and or board
members have.
And it's enough for us to judgeor question those components.
But I think that when theyapproach it with an open mind
(33:24):
and they see that they can dothis safely, and in compliance
and maintain the structure oftheir 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 broaderway?
So, you know, you follow Megan'sjourney, right, from 2018 to
(33:45):
where they eventually went withautomating the system because
they can grow and scale at amuch faster and more
inexpensively rate, you know,lower your expenses and increase
the return, you know, thosedecision points come there.
And so, you know, it's reallyall over the map.
But, you know, at the end of theday, it comes down to three
(34:07):
things.
Why would you do it?
Okay.
You have to have, you know, givethem the business and the
financial reasons to do it.
They have to understand thatthey can do this.
Just because cannabis isfederally illegal, it is not
federally illegal to bankcannabis.
But those ideas get conflatedtogether.
And then if they decide the whyand they realize they can, then
(34:31):
they look for the how.
And that's where Green Checkcomes in.
But we do help them with the whyand the can from an education
perspective.
SPEAKER_03 (34:40):
I personally like that.
The financial institutiondoesn't have to touch the cash.
This is a cool feature, I think.
I mean, if I were at a creditunion, I'd have a nightmare of a
guy coming in with a shoppingbag filled with cash.
Man, I can't deal with this.
(35:03):
No way, no how.
And he has armed guards withhim.
Oh, wow.
I really can't deal with this.
UNKNOWN (35:09):
Yeah.
SPEAKER_03 (35:10):
But if that's taken away, then what's the difference
between doing this and workingwith a winery in Arizona?
And there are quite a fewwineries in Arizona, all of
which I'm sure are banked.
I don't really see thedifference at this point.
SPEAKER_02 (35:26):
What did you have to go over, right?
When you were having theseconversations internally, what
were the things that you had tonavigate through?
SPEAKER_00 (35:35):
Yeah.
And that's what I was just aboutto say is that I agree with
everything that Kevin is sayingand And I'm sure that in the
beginning, we had the same fearsand the same concerns that a lot
of financial institutions havewho haven't gotten started, who
haven't taken the leap.
And a lot of it is, well,there's not a lot of regulations
(35:55):
out there or there's not a lotof 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 youstep-by-step what you have to do
doesn't mean you can't take theleap and go for it.
You have to be able to haveprocedures and policies.
(36:17):
You have to be able to back upyour decisions.
You have to document everything.
And you have to be willing tochange.
If something doesn't work, yougot to pivot, make a change, do
something new.
And I mean, we had all thosesame fears.
Reputational risk, of course.
Everyone is concerned aboutreputational risk because you're
a credit union and you're herefor the community.
Well, if you make a bad decisionand the community doesn't like
(36:40):
it, that's a really big risk.
So I mean, all of these risks ofthe unknowns, risk of failure,
what if we try this and itdoesn't work and we fail?
I think there's a lot of thingsthat Keep people from taking the
leap, and it's a lot less to dowith it's illegal, and it's a
(37:04):
lot more to do with the risk ofreputation, the risk of failure,
the risk of the unknown, stufflike that.
SPEAKER_03 (37:11):
Have you had any cases of employees whom you
wanted to work in your group whodeclined?
SPEAKER_00 (37:18):
No, we have.
SPEAKER_03 (37:20):
Because of marijuana, not for other issues.
SPEAKER_00 (37:22):
No, I think we have the opposite.
People find out.
Yeah, we do a lot of shadowingand people are very interested
in what we do and how we do itand why we do it.
Your
SPEAKER_03 (37:34):
group, you sit around watching Cheech and
Chong.
SPEAKER_00 (37:38):
Okay, that's
SPEAKER_03 (37:39):
cool.
Hey, can I sign up for that job
SPEAKER_02 (37:41):
too?
No, actually it does become arecruiting tool.
SPEAKER_00 (37:47):
Yeah.
SPEAKER_03 (37:49):
Now, have you turned down any businesses that have
wanted to be your customer ormember?
SPEAKER_00 (37:58):
Yes, we have one or two.
We have not turned down verymany at all.
SPEAKER_03 (38:02):
And why did you turn them down?
I'm not asking you forspecifics, really.
I'm more interested in general.
What would lead you to say, no,thank you.
We don't think we're the creditunion for you.
SPEAKER_00 (38:15):
Yeah.
So we, again, we're very open.
For the most part, we want toaccept everyone.
I believe with both of thebusinesses, it was the same
issue.
And that was that they wanted toown their own ATM and we do not
allow that.
And they were not willing to geta third party to own that ATM
for them.
So that was pretty much when wewere like, well, if you really
(38:38):
want to own the ATM, we can'tbank you.
You're going to have to findsomewhere else.
UNKNOWN (38:41):
Yeah.
SPEAKER_03 (38:41):
So you put ATMs in marijuana stores in Ohio?
SPEAKER_00 (38:46):
Mm-hmm.
Okay.
I mean, we don't.
Right, Pat doesn't.
But we allow our businesses tohave ATMs in their stores, yes.
SPEAKER_03 (38:53):
And what kinds if you don't allow them to have
their own?
SPEAKER_00 (38:57):
So they would just have to contract with a
third-party ATM provider.
That ATM provider would then putthe physical ATM in...
the dispensary, and then theywould service it.
They would fill it.
They would maintenance it.
They take care of everything.
The store just kind of holds theATM and gets the rev share off
of it.
SPEAKER_03 (39:17):
And why won't RightPath put its ATMs in these
places?
SPEAKER_00 (39:23):
That's something that we're considering.
Again, we're always looking athow we can better serve our
members, what our options are.
In the beginning, that justwasn't a priority for us.
We knew that they could get ATMsfrom third parties.
So it wasn't, you know, a bigpush for us to do that for them.
Again, you know, never saynever.
We're always changing things.
(39:45):
We're always upgrading.
We're always, you know, tryingto do our best for our members.
So, you know, it's always apotential, but it just wasn't
something that we decided in thebeginning to do.
I
SPEAKER_03 (39:56):
just remember the one time I was in a dispensary,
they did have an ATM that was ofuncertain origin, as far as I
could tell.
And from travels abroad, I havea horror of uncertain origin
ATMs.
I just won't come near them.
I didn't go near that oneeither.
For all I know, it's perfectlylegitimate.
I just say, no, I ain't going totouch this.
(40:18):
So, Kevin, what's it cost thecredit union to get involved
with you and what's involved inthe process?
SPEAKER_02 (40:27):
We have pretty standard pricing for everybody.
You know, there's an MSRP rackrate, if you will.
as you start to enter.
And if your program is going togrow and scale, obviously those
become negotiationconversations.
But the first thing we like todo is make sure that the
financial institution iseducated and they have their
(40:52):
eyes wide open on that why.
So we start with a programreadiness evaluation that's
really geared towards helpingthe financial institution, their
board, and everybody associatedwith them, insurance coverage,
et cetera.
Megan went through it, so sheknows that you're going to do
(41:13):
this and you can do this.
Nobody like shelfware, you know,technology company doesn't enjoy
it.
And certainly nobody ever wantsto 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, youknow, that sort of engagement.
And we look at policies,procedures, risk assessment,
(41:35):
liquidity strategies, scale ofthe program.
What does staffing have to looklike?
What sort of clients are yougoing to serve, et cetera, so
that everybody's on this thesame level as to this This is
where we're going to start, andthis is where we're going to go.
And then the licensing of thesoftware at SAS, it's simple.
There's red lines associatedwith the agreement, but they're
(41:55):
pretty standard andstraightforward.
And then coming out of that, wework very closely with the team
at the FI to make sure thattheir program's progressing as
it should along the way,especially around the data
integration, et cetera.
So it's a pretty straightforwardand simple process from our
side.
(42:16):
Megan's opinion, again, mattersmore, which is also why we're 6X
bigger than our next closestcompetitor, because we took a
technology approach to solving adata problem that facilitates
banking.
We didn't think about it in theclassic, I'm a banker, how would
I do this?
this, and we didn't build themodel on spreadsheets.
(42:40):
Spreadsheets are not technology.
Again, all respect to BillGates, but spreadsheets are not
technology.
It does not work, especiallywhen you're trying to scale a
complex data problem.
SPEAKER_03 (42:57):
I remember Lotus 1-2-3 was developed by
meditators, so...
SPEAKER_02 (43:02):
I love Lotus 1, 2, 3, by the way.
I love that product.
I
SPEAKER_03 (43:08):
liked it too.
SPEAKER_02 (43:09):
Yeah, it was great.
SPEAKER_03 (43:11):
Now, how many of the conversations that you have with
credit unions results in acustomer for you?
SPEAKER_02 (43:20):
That changes year over year.
I think the posture of thecredit unions and when Rodney
Hood was the chairman of NCUA, Imean, he came right out and
publicly said to the creditunions, serve this industry.
He did a podcast with us andsaid it in a very public forum.
(43:41):
Serve this industry.
You can do this.
And, you know, you arecommunity-based.
It's part of their core, theirmission, their ethos.
Not everybody listened to it.
And then again, also, that was afew years back now, three years
back, more states have comeonline.
Some states are still medicalonly.
Some states are still no.
(44:02):
And I just like alcohol.
I suspect this will not be, evenif it becomes federally legal at
some point in time, this willnot be sold in every state and
certainly every county acrossthe country.
So more and more people areseeing the opportunity They're
seeing public opinion change.
(44:23):
Their boards are changing.
Leadership changes.
I think, you know, steadilyyou'll see people continue to
get engaged with it.
And it is the fastest growingthing.
CPG market segment, it isunignorable when you look at the
sheer dollar volume size.
So instead of standing insidethe vestibule and holding those
(44:46):
aluminum doors shut saying, goaway, we're closed, swing them
open and invite your communitymembers in.
SPEAKER_03 (44:52):
And your technology, I'm assuming, would help a
financial institution avoiddoing things that are legally
questionable.
Am I right?
SPEAKER_02 (45:05):
I would say that.
But again, I'll defer to Megan,you know, because, you know, of
course, I'm going to say thatI'm I'm the vendor.
Right.
So but, you know, we really.
Well, hopefully you're notselling vaporware, man.
Oh, again, that's why Megan'sopinion matters more.
SPEAKER_00 (45:23):
Yes.
And and we had a veryinteresting conversion.
So we started.
with a very manual process.
Our program was all manual.
Like Kevin was mentioningspreadsheets.
We did a lot of spreadsheets, alot of OneNote, a lot of Word
document.
Everything was manual.
(45:43):
I mean, we were trackingeverything.
We were reviewing everything,but our transaction reviews were
on spreadsheets.
Every single transaction went ona spreadsheet.
We reviewed it, we mitigated it,we moved on.
And it was time consuming and itwas difficult Now that we have a
system, most of our stuff isautomated now and it has been
(46:06):
awesome.
It's also freed up our time sothat we can focus on other
things that maybe we didn't seebefore.
Technology is huge in thisindustry and it's been a huge
help for ensuring that ourprogram stays compliant.
We don't have to be nervous.
(46:27):
When it comes to audit time orexams or, you know, are we
monitoring what we need to bemonitoring because we have the
systems in place, we have thecontrols in place and, you know,
we're monitoring well.
SPEAKER_03 (46:39):
Before we go, think hard about how you can help
support this podcast so we cando more interviews with more
thoughtful leaders in the creditunion world.
What we're trying to figure outhere 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?
(47:01):
It's my hope it won't all bemega banks.
It'll always be a place forcredit unions.
That's what we're discussinghere.
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 youcan help.
We need your support.
(47:22):
We want your support.
We thank you for your support.
The CU2.0 Podcast.
Welcome to the CU2.0 podcast.
SPEAKER_01 (00:05):
Hi, and welcome to the CU2.0 podcast with big new
ideas about credit unions andconversations about innovative
technology with credit union andfintech leaders.
This podcast is brought to youby Quillo, the real-time loan
syndication network for creditunions, and by your host,
longtime credit union andfinancial technology journalist,
(00:27):
Robert McGarvey.
And now, the CU2.0 podcast withRobert McGarvey.
SPEAKER_03 (00:35):
You probably have forgotten about the role of
credit unions in the country'smarijuana business.
That business, by the way, isestimated to be worth north of
$40 billion a year.
I know I had...
I've totally forgotten about thecredit unions and marijuana
(01:12):
businesses.
to a marijuana business.
That marijuana business, too, ofcourse, must operate in full
compliance with the laws in itsstates.
How does a credit unionsuccessfully navigate this
landscape?
Also on the show is MeganBennett, manager MRB compliance
(01:33):
at Wright-Patt Credit Union inOhio, the 38th biggest credit
union in the country with assetsaround$9 billion.
MRB, of course, ismarijuana-related businesses.
No, I didn't know that either.
Bennett explains in detail howRightPat decided to serve
marijuana businesses, how it'sworking for the institution, and
(01:53):
why this is a win-win-win forthe state of Ohio, the marijuana
businesses, and the creditunion.
How many credit unions servemarijuana businesses in the
U.S.?
Under 200, probably near 150.
But RightPat just may illustratehow it can be done legally and
well.
Listen up.
(02:15):
Tell me what's what's the stateof the marijuana business today
vis-a-vis financialinstitutions?
SPEAKER_02 (02:22):
I think it's making good progress, solid progress, I
would say, you know, certainlyfrom where we started and not to
do a look back.
But, you know, there's alwaysbeen these conversations about
the cannabis industry being notbanked or underbanked.
I wouldn't necessarily evenqualify it or classify it as
underbanked at this juncture.
(02:44):
Do they have access to all thefinancial services that they
need yet today?
No, but I mean, that primarilyis in, I would say, more in the
lending space and on the paymentside of things.
And so, again, depending on yourseat and how you look at it.
You could say that is still anopen area, but the industry is
(03:07):
continuing to mature.
So we're seeing more financialinstitutions getting into the
industry from a lendingperspective.
And then on the payment side, Aslong as MasterCard and Visa are
sitting on the sidelines andthey continue and they will
continue to do so because of thefederal illegality of cannabis
(03:30):
and no MCC code, payments isalways going to be a challenge.
SPEAKER_03 (03:35):
Yeah, I went to a marijuana dispensary where I
live five years ago when I firstdid a piece on cannabis banking.
And and had to pay cash.
And I was buying a smallquantity, so I had the cash.
And I thought that wasinteresting that this,
obviously, MasterCard and Visawere not participating.
(03:57):
Are there any credit cards thataren't participating?
SPEAKER_02 (04:01):
No, not really.
And nor should they be becausethere are no MCC codes and the
financial institutions.
And Megan is going to be muchmore of an expert on this.
You can't lie as you work yourway through the rails.
And the payments have to runthrough the rail system.
And that should be clear,transparent, and 100% compliant.
SPEAKER_03 (04:27):
Now, what's your guess about how many credit
unions are involved in marijuanabusinesses in some manner,
shape, or form?
SPEAKER_02 (04:36):
Of the financial institutions that we work with
today, we see about a 60-40split, maybe 55-45.
And that is small financialinstitutions, community banks,
and the 45% are credit unions.
(04:56):
However, credit unions, onaverage, process more dollars in
businesses because of theirethos and their position in the
marketplace.
SPEAKER_03 (05:09):
So what's the number of credit unions?
I mean, I looked online and Isaw a guess of 200, but it was
positioned as a guess.
SPEAKER_02 (05:20):
Yeah, I think that number's way too high.
I would say that areconsistently serving the
cannabis industry credit unions.
I would say that number is, Iwould say it's 120 at best.
SPEAKER_03 (05:40):
Size range.
So, right, Pat's a big creditunion.
Yes.
Or is this mainly big creditunions, or is it a mix, or what
is it?
SPEAKER_02 (05:50):
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 maintaina relationship they have with an
existing account holder.
And then you have the rightpaths of the world who saw the
opportunity, had the vision asto what they could do,
(06:13):
especially in an emerging marketstate like Ohio.
They thought it through.
They went through an exceptionaldue diligence process internally
and externally.
They came to the conclusion,they started serving the
industry, and then they realizedthe opportunity to scale was
going to be coupled withtechnology.
SPEAKER_03 (06:33):
So why, Megan, why is Right Patent involved in
marijuana?
SPEAKER_00 (06:39):
Yeah, so, I mean, Kevin pretty much hit the nail
right on the head.
We, that's exactly whathappened.
We saw the opportunity.
The state came to us early,early in the stages, and they
asked if we would be interestedin banking marijuana.
marijuana businesses as thelargest credit union in Ohio.
(06:59):
So we did a lot of discussions,a lot of internal, external.
We met with legal counsel.
We created different boards andcommittees and just talked about
all the potential options, allof the risks that we were going
to be assuming, how it wouldwork, what it's going to look
like.
So after probably a year and ahalf of of deliberating and
(07:22):
discussions, we decided that wewould bank.
And that's kind of where westarted.
And our main goal and thebiggest driver for us was that
we are a credit union and we arehere to serve our community.
And if marijuana is legal inOhio, they're part of our
community.
You know what I mean?
(07:43):
And it's safer for our communityif there's not a bunch of cash
just all over the streets, youknow, there's less risk if the
cash is being banked.
SPEAKER_03 (07:55):
Did this decision go up to your board?
SPEAKER_00 (07:57):
Yes.
Oh, definitely.
Yeah.
SPEAKER_03 (08:00):
And how, how do you reduce the amount of cash?
As I said to you before westarted to record, I went up to
a place and had needed cash andstore employees were walking
around with guns.
Wow.
Yeah.
Whoa, this is fun.
Now in Arizona, you can actuallycarry a concealed weapon
(08:23):
legally.
So for all I know, half thecustomers had guns too.
I did not have a gun.
SPEAKER_00 (08:31):
That's yeah, that's funny.
So you, you asked, how do youreduce the amount of cash?
Is that what you asked?
SPEAKER_03 (08:37):
Yep.
SPEAKER_00 (08:39):
Um, so there, there's a lot of different ways.
Um, Number one is obviouslybanking 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 riskby a ton, less likely to have
break-ins, especially if peopleknow these cannabis businesses
(09:02):
are being banked.
They're not just holding on tohundreds of thousands of dollars
of cash.
And then in addition to that,now, obviously in Ohio, there
have been a lot more changesrecently with adult use coming
on.
And there's a lot of paymentoptions that we have.
So it's not just a cash marketanymore.
(09:23):
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 ofpeople who want to keep pushing
forward in the industry and keepmoving away from cash so that
cash isn't always going to beking and open up the opportunity
(09:46):
for different payment methods.
SPEAKER_03 (09:49):
Like what?
What can you see?
SPEAKER_00 (09:52):
Well, like pin debit.
So pin debit is where it wasbasically like a credit card
transaction, right?
So those ones are reallydifficult because like Kevin was
saying, the MMC code, Visa andMasterCard, they're not okay
with it.
There's always a potential foranother industry rails to open
(10:16):
up.
You know what I mean?
SPEAKER_03 (10:17):
You worked years ago at Discover, which is when it
was debuted, this was like a bigdifference vis-a-vis MasterCard
and Visa.
A new kid on the block.
And I think it was started bySears, if I remember correctly.
SPEAKER_00 (10:32):
Mm-hmm.
That's right.
Yeah.
Yeah.
So there's always the potentialfor someone else to open up
their own rails, in which casethey could be fine with cannabis
transactions.
And then that would open upcredit card usage, obviously, as
long as those credit cards werebeing used on those rails and
not the Visa and MasterCardrails.
I think it just takes innovationand funds.
(10:53):
Obviously, you need money to tryand do something like that.
But the right people thinkingabout the right things and
asking the right questions, Ithink we could get there.
SPEAKER_02 (11:03):
And the challenge for a lot of these innovations
that Megan's talking about, andwe see them all the time, it's
got to work at scale, to whatMegan also raised.
If it works in a dispensary, isit going to work in a different
dispensary in a different state?
Right.
because each state, and this canbe at the city, county, and or
(11:26):
is certainly at the licenselevel, the money movement has to
be able to exhibit complianceacross the board at that single
dollar level.
And so that becomes thechallenge, especially as
cannabis industry has grown upand continues to mature through
about 80 different point of salesystems today.
(11:48):
So how do you pull all thosedisparate data points mechanisms
of capturing informationdelivery and showing compliance
on the sales into a new paymentsystem.
It is a complex dataconnectivity puzzle.
SPEAKER_03 (12:06):
Now, how often do cannabis businesses make
deposits?
I mean, do they have two orthree runs a day to a branch?
SPEAKER_02 (12:18):
It varies.
wildly.
You know, I've never heard, youknow, I'm sure there are some of
the, you know, the mega storesthat are out there, especially
in tourist locations.
So I would say like a Planet 13is a great example in Las Vegas.
You know, they have busesbringing people in there.
They're probably making morethan one or two cash pickups.
(12:41):
But, you know, generallyspeaking, two, three times a
week, depending on the volume iswhere that goes.
And, you know, a couple of datapoints in around some of the
things that Megan said.
So we see about$1.2 billion amonth in sales deposits today in
the network of Green Check.
72 to 75% of that 1.2 billion iscash on a monthly basis,
(13:07):
preferred method.
of payment and preferred methodof collection for a lot of
cannabis businesses.
And 85% of those funds never seea branch because it goes
directly into a Fed and or athird party counting room for
the Fed.
SPEAKER_00 (13:24):
Yep, exactly.
SPEAKER_03 (13:26):
But how does that work?
Tell me, Megan.
SPEAKER_00 (13:30):
So at least the way that we do it, and I'm assuming
a lot of financial institutionsdo it, we partner with armored
car services.
They carry a contract with thecannabis business.
They decide on whatever schedulethey want.
Like Kevin said, typically it'sone to three times a week,
depending on what their volumeis.
(13:50):
They come pick up the cashdirectly from the dispensary and
they take it to their vault,count it there.
And then weekly they take it tothe Federal Reserve and We get
our deposits.
It never even touches ourbranches.
It never comes into the bank.
It just is all handled by themstraight from their vault,
(14:11):
straight from the marijuanabusinesses vault to the courier,
straight to the Federal Reserve.
SPEAKER_03 (14:20):
Now, that is a lot slicker.
and safer and smoother than Iwould remember hearing five
years ago.
SPEAKER_02 (14:27):
Yeah.
Yes.
Yes,
SPEAKER_00 (14:29):
it has.
I
SPEAKER_03 (14:32):
was picturing, you know, there's three guys
pretending that they're notmoving a bunch of cash money
from a marijuana business.
SPEAKER_02 (14:37):
Well, the industry had that depiction.
You're not wrong, Robert.
It had that depiction of thatscene in Scarface.
Everybody's seen the movie wherethe banker's sitting inside the
window smiling because a coupleof folks are showing up with
duffel bags of cash.
And then fast forward in themovie to 30, 45 minutes later,
(14:59):
and that same banker's in thewindow with his head in his hand
with a look of dread on his facebecause two vans pulled up and
people coming out with automaticweapons at et cetera.
You know, that was certainlysomething Megan was ever looking
for.
No.
The first scene or the secondscene.
SPEAKER_04 (15:15):
Yeah.
SPEAKER_03 (15:17):
Now, the Wright-Patt field of membership, as I've
read it, is
SPEAKER_00 (15:22):
pretty
SPEAKER_03 (15:23):
geographic specific to Ohio.
Am I right?
SPEAKER_00 (15:27):
Yep, that is correct.
SPEAKER_03 (15:30):
So are the businesses, I assume, are in
Ohio?
SPEAKER_00 (15:34):
Yep.
As of right now, we are onlybanking in entities in Ohio.
We are allowed to bank entitiesoutside of our footprint.
So right now, our footprint isreally in the Dayton,
Cincinnati, Columbus area.
But since we are an Ohio creditunion, we are able to bank
cannabis businesses, say, up inCleveland.
(15:55):
They're not necessarily in ourfootprint, but we still want to
be able to offer them servicesknowing that they don't have
very many options.
So we can expand outside of ourfootprint as long as we're
within the state of Ohio.
SPEAKER_03 (16:08):
How would you rank the size of your cannabis
business in Ohio versus otherfinancial institutions in Ohio?
Are you the biggest?
SPEAKER_00 (16:18):
Yes, we hold the market share.
Last I checked, I don't rememberthe exact percentage.
I want to say we were aroundlike 40% to 45% of the market
share is what we have.
SPEAKER_02 (16:33):
I think you're north of that now, Megan.
SPEAKER_00 (16:35):
Oh, yeah?
Even better.
SPEAKER_02 (16:37):
Yeah, I do.
I really do.
Well, they're recognized for theservices, right?
A lot of folks still have...
an approach to the market ofwe'll offer depository services
and don't tell anybody.
SPEAKER_04 (16:52):
You
SPEAKER_02 (16:52):
know, Megan hasn't taken out a billboard, but, you
know, they're program and thecannabis industry works on word
of mouth.
And when you have the when youhave the size and scale and
products and services thatthey're bringing in, you know,
in that interest stateenvironment to your question,
Robert, that carries a lot ofweight.
SPEAKER_03 (17:13):
Yeah.
It's a very sizable creditunion.
Now, are you over 10 billion inassets yet?
SPEAKER_00 (17:19):
Not yet.
We're getting there.
SPEAKER_03 (17:21):
Do you want to get there?
SPEAKER_00 (17:25):
Yep.
We are gearing up for CFPB andwe are, we're pushing, we're
getting ready for it.
Oh,
SPEAKER_03 (17:32):
okay.
SPEAKER_02 (17:33):
Fascinating line.
SPEAKER_03 (17:35):
Yeah.
SPEAKER_02 (17:35):
Yeah.
And if you will.
SPEAKER_03 (17:37):
Yeah.
So what services are you sellingto them?
SPEAKER_00 (17:41):
Just up, out everything that we offer regular
businesses, we are trying tooffer to our cannabis
businesses.
Obviously, it has not alwaysbeen like that.
Like we were talking aboutearlier, we've been doing this
since 2018 is when we reallystarted talking through all of
(18:02):
this.
Our first account was onboardedin 2019.
So we have made a lot of changesand added a lot of things to So
as of right now, we offer, youknow, 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
(18:22):
just talking about a little bitago.
So normal businesses can go intothe branches.
We don't allow our tier ones tohave branch access or to have
debit cards.
What's
SPEAKER_03 (18:33):
a tier one?
SPEAKER_00 (18:34):
So the tier one is the direct plant touching
business.
So any of the dispensaries,cultivators, processors, the
ones that are actually touchingthe product are the tier ones.
And then the tier twos would belike the ancillary services,
maybe a management company, aholding company, investment
company, hydroponics companythat sells mostly to a cannabis
(18:57):
business would be considered atier two.
SPEAKER_03 (19:00):
Why can't the tier one access the branches?
SPEAKER_00 (19:03):
That was just a decision that was made early on.
Again, because this was so newand we didn't want to overwhelm
our membership.
Frankly, we also didn't wanthundreds of thousands of dollars
of cash showing up at a tellerline just randomly.
So it's easier for us to handleall the transactions privately.
(19:28):
by a dedicated team and then usethe armored car service.
So if they have to go in maybefor like a cashier's check or
something, we have allowedexceptions like that.
We just don't allow full accessto the branches.
SPEAKER_03 (19:41):
But I understand not wanting$100,000 in cash.
SPEAKER_04 (19:44):
Yeah.
SPEAKER_03 (19:45):
That would tie up several tellers for the whole
day.
Oh, yeah.
Just counting the money.
Or at least one teller for awhole day.
It's just...
Yeah, see, originally I wasenvisioning a guy being very
cryptic and mysterious with asupermarket bag filled with, you
(20:06):
know, a little paper bag filledwith cash.
I said, wow, that's aninteresting scene inside a
credit union.
SPEAKER_04 (20:14):
Yeah.
SPEAKER_03 (20:16):
But so it's not like that at all.
I'm disappointed.
SPEAKER_00 (20:22):
Not quite like that.
Yeah.
SPEAKER_03 (20:24):
So, Kevin, tell me about the services that your
company offers that are designedto help financial services get
to marijuana businesses.
SPEAKER_02 (20:36):
Well, it's a complex data puzzle.
So, you know, the challenge hasbeen for FIs is, you know, how
are they going to be able toservice these businesses without
having to become experts incannabis regulations at that
state level and whatever willevolve eventually at the federal
(20:57):
level?
Great at being bankers.
And then, you know, the cannabisindustry is still nascent and
evolving and the rules andregulations are continue to
evolve around that.
So, you know, how can youconnect these two disparate,
highly regulated, individuallyhighly regulated industries
together?
And that really is, you know,how do you gather information
and data, analyze it, and thenpresent it back in a scalable,
(21:21):
simple fashion.
And so that's the.
baseline and the benchmark forhow we built Green Check and
what it's supposed to do.
So right, Pat is looking at thecannabis industry.
How do they know that one, thebusiness is licensed, and then
how do they know on an ongoingbasis they're maintaining their
compliance posture, not onlyfrom a licensed perspective, but
(21:46):
what they're selling, whothey're selling it to, where
that money comes from, Werethose transactions done in a
compliant fashion where bulkpurchasing wasn't allowed, sales
to minors wasn't occurring,different payment methods or
improper payment methods weren'tbeing used.
If the cannabis business ranafoul of their rules and
(22:09):
regulations and they were citedby the regulatory boards and the
licensing agencies within thestate, You have to be able to
present that information backto, you know, Megan and her team
at scale.
And so, you know, that's wherewe sit.
So, you know, some people saywe're a fintech.
(22:29):
Some people say we're a regtech.
Some people say we're a datacompliance company.
We're kind of all the abovebecause when you look at a
high-risk industry, you have tobe able to wear all those hats
and then make them usable forthe end client, which is the
financial institution.
SPEAKER_03 (22:47):
Now, a lot of businesses encounter high levels
of regulation.
I mean, even selling cigarettesat a 7-Eleven is pretty
regulated at this point.
If you have a bar that sellsalcoholic drinks, it's pretty
regulated.
Self-food and alcohol is evenmore regulated.
(23:09):
So is the marijuana businessdifferent from those?
SPEAKER_02 (23:14):
Oh, yeah.
Well, because then in here,here's the major difference,
Robert, for each of thoseindustries that you talked
about, when's the last time yousaw a news story or heard of
non-attack stamped cigarettesbeing sold?
Oh, in New York City all thetime, man.
(23:58):
And it's probably still in that50, maybe it's down to 40% of
the illicit market that's outthere.
A financial institution has toworry about that because not
only are they facilitatingillegal trade, but that actually
then becomes money laundering.
I'll go back to the Scarfacereference, right?
(24:19):
Yeah.
You know, they can't just sitthere and whether it went
through the Fed county room orwent directly into a branch,
they just can't take bags ofcash and turn a blind eye to it.
And they have to be able toreport on it.
So you have to be able tomonitor the supply chain of the
plant and the associated dollarsas it moves through the
(24:40):
communities, the states and theindustry.
SPEAKER_03 (24:44):
Now, a few years ago, I remember reading a story
that The state-regulatedmarijuana businesses in
California were leaving thesystem because they found the
regulations to be too onerousand weren't making any money.
They weren't leaving themarijuana business.
They were just leaving thestate-regulated part of the
business, or at least that wasthe belief.
(25:07):
Was that unique to California,or is this a national issue?
SPEAKER_02 (25:13):
Now, I would say that was unique to California,
and I wouldn't characterize itthat way.
I mean, a lot of the folks whenthey first did this, and Megan
mentioned this, some of themwere 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 everydeposit dollar, et cetera.
(25:34):
Those days are gone.
And if a financial institutionis doing this strictly for fee
revenue today, not to grow theirasset size, et cetera.
They're doing it for the wrongreasons.
SPEAKER_03 (25:49):
No, I was actually talking about the marijuana
producers, the growers
SPEAKER_02 (25:52):
in
SPEAKER_03 (25:53):
California.
SPEAKER_02 (25:53):
Well, that's a supply chain issue.
There's an overabundance of...
plant availability because theway the industry grew.
And even though they thoughtthey were regulating it, it
became oversupplied.
And, you know, then commoditypricing takes in.
And if you're a cannabisoperator and it doesn't matter
(26:15):
where you are in the supplychain, if you built your model,
financial model based upon aprice per pound and all of a
sudden that's down by 50, 70, 80percent, your business model
just went kaput.
So, you know, some of them all,you know, they all came flying
in chasing the green rush, butthe green rush dried up.
SPEAKER_03 (26:38):
Now, what's the mix of your customers?
SPEAKER_02 (26:41):
Well, our primary customers are the FIs.
So again, you know, we're about55, 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 listof FIs that we have.
And they sit there for free.
(27:01):
We make it available to them sothey can find the products and
services that they're lookingfor.
And then once they're on theplatform and that data is
available, it then permeates andbecomes more available to the
financial institutions.
So it's a flywheel effect thatservices everyone.
SPEAKER_03 (27:23):
And do the Businesses stay in your system?
Do some come and go?
SPEAKER_02 (27:29):
We've had some light attrition, but our retention
rate is 92%.
Wow,
SPEAKER_03 (27:37):
that's excellent.
What's the geographicdistribution?
SPEAKER_02 (27:41):
We are in every state while I'm in Saipan.
SPEAKER_03 (27:46):
And I assume some states are bigger than others.
SPEAKER_02 (27:50):
Oh, yeah.
Well, that's just based upon thesize of the market.
Yes.
SPEAKER_03 (27:55):
Are there any small states that are surprisingly
big?
SPEAKER_02 (28:00):
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 thethings that we always look at,
if you go into any state andpick the number, I'm going to
make the math simple for me.
If you pick a state that has apopulation of 3 million people
(28:21):
that are over the age of 21,okay?
on average, 10%.
So 300,000 people will purchasemarijuana once a month.
It's about a 10% buy-throughrate anywhere based upon legal
age.
And that balances out prettydarn well nationally.
So larger states, largerpopulations, larger program.
(28:45):
However, offset by pricevariances and price difference,
because Purchase rate in a stateof California is going to be
very, very different than thepurchase rate and the average
sell-through price that you willsee in Ohio.
SPEAKER_03 (28:59):
Why is that?
SPEAKER_02 (29:02):
It's not overgrown.
It didn't blow up.
It didn't just let anybody andeverybody that could fill out an
application get a license, andit still doesn't have to compete
with the illicit market.
So one of the challenges thatthat 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
(29:26):
bought$1,000 worth of product.
The margin rates aren't thatbig.
So you can't take your buddy'sblack market weed in the back
door and sell it all out throughthe front door and say, okay,
we're good.
Here's my money.
Let me deposit it.
SPEAKER_03 (29:42):
Wow.
Interesting.
Yeah, I live in Arizona and Iknow this state here tries to
regulate against that.
Oh, yeah.
So what what is your what's yournightmare?
Right, Pat?
SPEAKER_00 (29:59):
Well, I have to preface this by saying I am not
a right Pat spokesperson.
These you know, this is allMegan and her experiences and,
you know, her opinions and, youknow.
That is not, this is not a rightpat nightmare.
This is a Megan nightmare.
SPEAKER_02 (30:17):
The opinions expressed here are-
SPEAKER_00 (30:19):
Yes, yeah.
Yeah, put the disclosure out.
I mean, I have an AML compliancebackground.
So I think that my nightmare, myright pat nightmare is going to
be the same as a lot ofcompliance and AML, BSA
compliance.
Folks, I mean, the nightmarewould be to have the program
shut down or to have a bad auditor an exam, get a cease and
(30:43):
desist letter, you know,anything like that that says,
hey, you're not monitoring theseaccounts the way you thought you
were.
You know, there's illicitactivity going through your
credit union.
But that that would be thenightmare, you know.
So
SPEAKER_03 (30:58):
does the state how does the state regulate what
you're doing?
your group in particular?
SPEAKER_00 (31:07):
So we are insured by the NCUA.
So we have an audit exam everysingle year and they come
through and they review ourprogram in depth to make sure
that, you know, they do an auditjust like they do for BSA
compliance.
They do the same thing for theMRB marijuana related business
program that we have here.
So we're, you know, thoroughlyreviewed every year.
(31:29):
They hold us to the sameregulations.
as BSA, making sure we're filingwhat we're supposed to be
filing, we're reviewing whatwe're supposed to be reviewing,
CIP, due diligence, all of thatstuff is getting done.
So
SPEAKER_03 (31:44):
Kevin, why are so few credit unions involved in
this?
I mean, if you have a posterchild like Bright Hat, which is,
they're not in the moneylaundering business as far as I
SPEAKER_00 (31:59):
know.
Definitely not, definitely not.
SPEAKER_03 (32:03):
I mean, they're even members, I'm sure, of the
Defense Credit Union Coalition.
So it's, I mean, upstandingmembers.
So why aren't more credit unionsinvolved?
SPEAKER_02 (32:16):
I think there is, you know, the way I describe it
is if I had a dollar for everytime I got the Heisman in
talking to anybody aboutcannabis banking, you We'd be
wildly profitable because manytimes you'd say, I'd like to
talk to you about cannabis, andthat hand would come right out
and say, eh, we wouldn't evenget to the second word, the verb
(32:40):
of banking.
A lot of folks worry aboutreputational risk, and I
understand that.
They feel that they will losemembers because they're
facilitating this.
It's a binary decision.
It's one of those third railwords that when you put that out
there for certain segments ofthe population.
(33:02):
And no amount of education isgoing to change their opinion.
And that certainly translatesinto some of the thoughts and
the moral compasses that certainexecutive teams and or board
members have.
And it's enough for us to judgeor question those components.
But I think that when theyapproach it with an open mind
(33:24):
and they see that they can dothis safely, and in compliance
and maintain the structure oftheir 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 broaderway?
So, you know, you follow Megan'sjourney, right, from 2018 to
(33:45):
where they eventually went withautomating the system because
they can grow and scale at amuch faster and more
inexpensively rate, you know,lower your expenses and increase
the return, you know, thosedecision points come there.
And so, you know, it's reallyall over the map.
But, you know, at the end of theday, it comes down to three
(34:07):
things.
Why would you do it?
Okay.
You have to have, you know, givethem the business and the
financial reasons to do it.
They have to understand thatthey can do this.
Just because cannabis isfederally illegal, it is not
federally illegal to bankcannabis.
But those ideas get conflatedtogether.
And then if they decide the whyand they realize they can, then
(34:31):
they look for the how.
And that's where Green Checkcomes in.
But we do help them with the whyand the can from an education
perspective.
SPEAKER_03 (34:40):
I personally like that.
The financial institutiondoesn't have to touch the cash.
This is a cool feature, I think.
I mean, if I were at a creditunion, I'd have a nightmare of a
guy coming in with a shoppingbag filled with cash.
Man, I can't deal with this.
(35:03):
No way, no how.
And he has armed guards withhim.
Oh, wow.
I really can't deal with this.
UNKNOWN (35:09):
Yeah.
SPEAKER_03 (35:10):
But if that's taken away, then what's the difference
between doing this and workingwith a winery in Arizona?
And there are quite a fewwineries in Arizona, all of
which I'm sure are banked.
I don't really see thedifference at this point.
SPEAKER_02 (35:26):
What did you have to go over, right?
When you were having theseconversations internally, what
were the things that you had tonavigate through?
SPEAKER_00 (35:35):
Yeah.
And that's what I was just aboutto say is that I agree with
everything that Kevin is sayingand And I'm sure that in the
beginning, we had the same fearsand the same concerns that a lot
of financial institutions havewho haven't gotten started, who
haven't taken the leap.
And a lot of it is, well,there's not a lot of regulations
(35:55):
out there or there's not a lotof 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 youstep-by-step what you have to do
doesn't mean you can't take theleap and go for it.
You have to be able to haveprocedures and policies.
(36:17):
You have to be able to back upyour decisions.
You have to document everything.
And you have to be willing tochange.
If something doesn't work, yougot to pivot, make a change, do
something new.
And I mean, we had all thosesame fears.
Reputational risk, of course.
Everyone is concerned aboutreputational risk because you're
a credit union and you're herefor the community.
Well, if you make a bad decisionand the community doesn't like
(36:40):
it, that's a really big risk.
So I mean, all of these risks ofthe unknowns, risk of failure,
what if we try this and itdoesn't work and we fail?
I think there's a lot of thingsthat Keep people from taking the
leap, and it's a lot less to dowith it's illegal, and it's a
(37:04):
lot more to do with the risk ofreputation, the risk of failure,
the risk of the unknown, stufflike that.
SPEAKER_03 (37:11):
Have you had any cases of employees whom you
wanted to work in your group whodeclined?
SPEAKER_00 (37:18):
No, we have.
SPEAKER_03 (37:20):
Because of marijuana, not for other issues.
SPEAKER_00 (37:22):
No, I think we have the opposite.
People find out.
Yeah, we do a lot of shadowingand people are very interested
in what we do and how we do itand why we do it.
Your
SPEAKER_03 (37:34):
group, you sit around watching Cheech and
Chong.
SPEAKER_00 (37:38):
Okay, that's
SPEAKER_03 (37:39):
cool.
Hey, can I sign up for that job
SPEAKER_02 (37:41):
too?
No, actually it does become arecruiting tool.
SPEAKER_00 (37:47):
Yeah.
SPEAKER_03 (37:49):
Now, have you turned down any businesses that have
wanted to be your customer ormember?
SPEAKER_00 (37:58):
Yes, we have one or two.
We have not turned down verymany at all.
SPEAKER_03 (38:02):
And why did you turn them down?
I'm not asking you forspecifics, really.
I'm more interested in general.
What would lead you to say, no,thank you.
We don't think we're the creditunion for you.
SPEAKER_00 (38:15):
Yeah.
So we, again, we're very open.
For the most part, we want toaccept everyone.
I believe with both of thebusinesses, it was the same
issue.
And that was that they wanted toown their own ATM and we do not
allow that.
And they were not willing to geta third party to own that ATM
for them.
So that was pretty much when wewere like, well, if you really
(38:38):
want to own the ATM, we can'tbank you.
You're going to have to findsomewhere else.
UNKNOWN (38:41):
Yeah.
SPEAKER_03 (38:41):
So you put ATMs in marijuana stores in Ohio?
SPEAKER_00 (38:46):
Mm-hmm.
Okay.
I mean, we don't.
Right, Pat doesn't.
But we allow our businesses tohave ATMs in their stores, yes.
SPEAKER_03 (38:53):
And what kinds if you don't allow them to have
their own?
SPEAKER_00 (38:57):
So they would just have to contract with a
third-party ATM provider.
That ATM provider would then putthe physical ATM in...
the dispensary, and then theywould service it.
They would fill it.
They would maintenance it.
They take care of everything.
The store just kind of holds theATM and gets the rev share off
of it.
SPEAKER_03 (39:17):
And why won't RightPath put its ATMs in these
places?
SPEAKER_00 (39:23):
That's something that we're considering.
Again, we're always looking athow we can better serve our
members, what our options are.
In the beginning, that justwasn't a priority for us.
We knew that they could get ATMsfrom third parties.
So it wasn't, you know, a bigpush for us to do that for them.
Again, you know, never saynever.
We're always changing things.
(39:45):
We're always upgrading.
We're always, you know, tryingto do our best for our members.
So, you know, it's always apotential, but it just wasn't
something that we decided in thebeginning to do.
I
SPEAKER_03 (39:56):
just remember the one time I was in a dispensary,
they did have an ATM that was ofuncertain origin, as far as I
could tell.
And from travels abroad, I havea horror of uncertain origin
ATMs.
I just won't come near them.
I didn't go near that oneeither.
For all I know, it's perfectlylegitimate.
I just say, no, I ain't going totouch this.
(40:18):
So, Kevin, what's it cost thecredit union to get involved
with you and what's involved inthe process?
SPEAKER_02 (40:27):
We have pretty standard pricing for everybody.
You know, there's an MSRP rackrate, if you will.
as you start to enter.
And if your program is going togrow and scale, obviously those
become negotiationconversations.
But the first thing we like todo is make sure that the
financial institution iseducated and they have their
(40:52):
eyes wide open on that why.
So we start with a programreadiness evaluation that's
really geared towards helpingthe financial institution, their
board, and everybody associatedwith them, insurance coverage,
et cetera.
Megan went through it, so sheknows that you're going to do
(41:13):
this and you can do this.
Nobody like shelfware, you know,technology company doesn't enjoy
it.
And certainly nobody ever wantsto 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, youknow, that sort of engagement.
And we look at policies,procedures, risk assessment,
(41:35):
liquidity strategies, scale ofthe program.
What does staffing have to looklike?
What sort of clients are yougoing to serve, et cetera, so
that everybody's on this thesame level as to this This is
where we're going to start, andthis is where we're going to go.
And then the licensing of thesoftware at SAS, it's simple.
There's red lines associatedwith the agreement, but they're
(41:55):
pretty standard andstraightforward.
And then coming out of that, wework very closely with the team
at the FI to make sure thattheir program's progressing as
it should along the way,especially around the data
integration, et cetera.
So it's a pretty straightforwardand simple process from our
side.
(42:16):
Megan's opinion, again, mattersmore, which is also why we're 6X
bigger than our next closestcompetitor, because we took a
technology approach to solving adata problem that facilitates
banking.
We didn't think about it in theclassic, I'm a banker, how would
I do this?
this, and we didn't build themodel on spreadsheets.
(42:40):
Spreadsheets are not technology.
Again, all respect to BillGates, but spreadsheets are not
technology.
It does not work, especiallywhen you're trying to scale a
complex data problem.
SPEAKER_03 (42:57):
I remember Lotus 1-2-3 was developed by
meditators, so...
SPEAKER_02 (43:02):
I love Lotus 1, 2, 3, by the way.
I love that product.
I
SPEAKER_03 (43:08):
liked it too.
SPEAKER_02 (43:09):
Yeah, it was great.
SPEAKER_03 (43:11):
Now, how many of the conversations that you have with
credit unions results in acustomer for you?
SPEAKER_02 (43:20):
That changes year over year.
I think the posture of thecredit unions and when Rodney
Hood was the chairman of NCUA, Imean, he came right out and
publicly said to the creditunions, serve this industry.
He did a podcast with us andsaid it in a very public forum.
(43:41):
Serve this industry.
You can do this.
And, you know, you arecommunity-based.
It's part of their core, theirmission, their ethos.
Not everybody listened to it.
And then again, also, that was afew years back now, three years
back, more states have comeonline.
Some states are still medicalonly.
Some states are still no.
(44:02):
And I just like alcohol.
I suspect this will not be, evenif it becomes federally legal at
some point in time, this willnot be sold in every state and
certainly every county acrossthe country.
So more and more people areseeing the opportunity They're
seeing public opinion change.
(44:23):
Their boards are changing.
Leadership changes.
I think, you know, steadilyyou'll see people continue to
get engaged with it.
And it is the fastest growingthing.
CPG market segment, it isunignorable when you look at the
sheer dollar volume size.
So instead of standing insidethe vestibule and holding those
(44:46):
aluminum doors shut saying, goaway, we're closed, swing them
open and invite your communitymembers in.
SPEAKER_03 (44:52):
And your technology, I'm assuming, would help a
financial institution avoiddoing things that are legally
questionable.
Am I right?
SPEAKER_02 (45:05):
I would say that.
But again, I'll defer to Megan,you know, because, you know, of
course, I'm going to say thatI'm I'm the vendor.
Right.
So but, you know, we really.
Well, hopefully you're notselling vaporware, man.
Oh, again, that's why Megan'sopinion matters more.
SPEAKER_00 (45:23):
Yes.
And and we had a veryinteresting conversion.
So we started.
with a very manual process.
Our program was all manual.
Like Kevin was mentioningspreadsheets.
We did a lot of spreadsheets, alot of OneNote, a lot of Word
document.
Everything was manual.
(45:43):
I mean, we were trackingeverything.
We were reviewing everything,but our transaction reviews were
on spreadsheets.
Every single transaction went ona spreadsheet.
We reviewed it, we mitigated it,we moved on.
And it was time consuming and itwas difficult Now that we have a
system, most of our stuff isautomated now and it has been
(46:06):
awesome.
It's also freed up our time sothat we can focus on other
things that maybe we didn't seebefore.
Technology is huge in thisindustry and it's been a huge
help for ensuring that ourprogram stays compliant.
We don't have to be nervous.
(46:27):
When it comes to audit time orexams or, you know, are we
monitoring what we need to bemonitoring because we have the
systems in place, we have thecontrols in place and, you know,
we're monitoring well.
SPEAKER_03 (46:39):
Before we go, think hard about how you can help
support this podcast so we cando more interviews with more
thoughtful leaders in the creditunion world.
What we're trying to figure outhere 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?
(47:01):
It's my hope it won't all bemega banks.
It'll always be a place forcredit unions.
That's what we're discussinghere.
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 youcan help.
We need your support.
(47:22):
We want your support.
We thank you for your support.
The CU2.0 Podcast.
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