A greenhouse at Cannavative Group
When Chief Martin Brody, Roy Scheider’s character in the 1975 movie Jaws, first lays eyes on the massive shark while spreading chum at sea, he utters one of cinema’s most enduring and iconic lines: “You’re gonna need a bigger boat.”
It’s kind of the same for banking executives at Greater Nevada Credit Union after expanding a 2020 pilot program that provided banking services to cannabis-related businesses in the Silver State. After taking more than 40 clients since the program's inception, GNCU realized it needed to invest in larger counting machines to handle the heavy volume of cash generated from its CRB customers.
“With the high volume of cash that is counted and put into smart safes at these locations, we had to have higher-capacity recyclers and counters,” said Michael Thomas, senior vice president of marketing for Greater Nevada Credit Union. “But innovation happens when you have good partnerships.”
It’s a partnership that’s received a robust welcome from many Nevada-based cannabis related businesses. Due to the murkiness that remains at the federal level regarding marijuana — it’s listed a Schedule I drug at the federal level despite being approved for recreational and medical use in 19 states and the District of Columbia — large payment processors and financial institutions have stayed on the sidelines of the bud business, leaving CRBs without any traditional business banking solutions.
Pot sales, meanwhile, remain a cash-only business at the dispensary level — and there’s no shortage of greenbacks flowing through pot shops across the state.
According to the Nevada Department of Taxation, statewide cannabis sales in July of 2022 were just shy of $72 million. Total taxable sales on cannabis products for the fiscal year ended June 30, meanwhile, topped $965 million. Total taxable sales for cannabis in Washoe County for that same time were north of $126 million.
Michael Thomas
Thomas said Greater Nevada Credit Union enacted its pilot program in 2020 to provide a banking solution to dispensaries, growers, wholesalers and other cannabis-related businesses.
“We were approached by both state and federal elected officials back when recreational marijuana was first approved in the state, and we identified that it would be a challenge to bank with these cannabis-related businesses,” Thomas told NNBW. “We worked from Day 1 to develop a viable solution. The pilot program started with just a handful of clients, we expanded it in 2021, and today we feel like we can promote it more aggressively to let these businesses know that there’s an established institution that is committed to providing (banking) services to their industry.”
The benefit for cannabis-related businesses is profound — the days of employees running around town paying bills from duffel bags stuffed full of cash are gone. The ability to write checks for invoices has been life-changing, said Zara Ehasz, director of finance for cannabis cultivation and production company Cannavative Group, which is headquartered at Lear Boulevard in Stead.
Although business banking services come at a steep price, convenience trumps cost.
“It was so incredibly difficult to pay everyone in cash,” Ehasz said. “It took a full-time person just to process cash, and constantly and running around paying our vendors was a complete nightmare logistically.”
Ehasz said paying Cannavative Group’s monthly utility bill was particularly difficult.
“Our NV Energy bills are sometimes $30,000 a month,” she said, “The only way to pay NV Energy was to go to an ATM they made available for cannabis customers and feed the machine $20 bills one at a time.
“It would take a person several hours of sitting in front of the ATM just to make a payment for an invoice. The ease to just cut a check is worth the extra thousands of dollars.”
The fee structure and range of services available to CRB’s is much different from traditional business banking customers, Ehasz noted, with business banking services costing Cannavative Group thousands of dollars each month.
Its monthly account fee is $350, Ehasz said, and cash deposits are subject to a .75 percent fee with a $4,000 monthly cap. Wire and ACH transfers have additional fees, and CRB’s also must pay fees to the cash couriers who collect and transport money from dispensary partners to GNCU.
Zara Ehasz
“We pay around $7,000 to $8,000 a month for banking,” Ehasz said. “But it still beats the former methods. We are very grateful, but it is incredibly expensive and cost-prohibitive to smaller companies.
“Having a local bank has completely changed our lives in a positive way, but we still don’t have access to traditional lending or business credit cards for our checking account.”
Despite having a flush checking account at a state-chartered credit union, Cannavative Group must use a DBA on its checks so key vendors can accept its money – the Nevada Department of Taxation and the state Cannabis Compliance Board included.
“They aren’t able to take our money because they bank with traditional financial institutions,” Ehasz said. “They can’t take money from cannabis-related businesses unless we use DBAs.”
Greater Nevada’s Thomas said his institution’s CRB banking solution allows customers to deposit funds, process payroll, and pay taxes. The program provides an onramp to mainstream financial services for an underserved customer base.
“We are very proud that we were able to step in even as the situation at the federal level has pushed some players out of being able to feel confident of providing a (banking) solution,” Thomas said. “The reality is that this industry has some very unique needs.
“If the federal issues work itself out and it becomes federally recognized so more banks can enter this space, it’s still important that Nevada-based businesses understand that not only are they supporting a financial institution that can provide a solution for them, but we have also made inroads to provide solutions for employees of the cannabis industry,” Thomas added. “We are providing financial literacy and financial education solutions to those employees because in many cases due to their place of employment they were unable to find financial solutions.”
Thomas said the main reason GNCU feels confident in its ability to provide banking services to CRBs is because it worked closely with regulators at the state level and other lawmakers who developed Nevada’s marijuana regulations to understand what GNCU needed to do to comply with cannabis industry regulations.
Greater Nevada employees have visited with CRB customers on site and attended industry events to learn more about customers needs, Thomas noted. The GNCU cannabis banking program has grown organically since its launch, he added.
“The landscape has changed, and there are more (financial) providers now than when we started our pilot,” Thomas said. “This is not just for growth’s sake for us, it’s about making sure these businesses have access to the mainstream services we offer to businesses.
“We also are looking keenly at the lounge industry, and when all the regulations are in place, those businesses will have options,” he added. “Growth is not the goal; it is to provide a better solution to an industry that is providing taxable revenue and employment