Brattleboro Savings & Loan is headquartered on the town’s Main Street.Photo by Kevin O’Connor/VTDigger

This summer, Brattleboro Savings & Loan and the Vermont Federal Credit Union entered Vermont’s burgeoning recreational cannabis banking business, clearing regulatory hurdles to serve new businesses in Vermont. A total of 4 financial institutions to try to overcome.

With the first retail outlets set to open Oct. 1, some cannabis business owners, especially small growers, are moving out of state to meet their needs, even as they have more choices. said he was looking for Others say it will only operate on cash for the time being.

Dan Yates, president and CEO of Brattleboro Savings & Loan, said the bank began opening cannabis business accounts in June. The bank currently serves five businesses and growers, one retailer, while another nine or ten businesses are waiting for licenses from the Cannabis Control Board before their accounts can be activated. increase.

The Vermont Federal Credit Union has been accepting accounts for cannabis businesses since July, said Doug Fisher, the bank’s chief administrative officer. As of this week, the credit union has opened accounts for 53 recreational cannabis companies, he said.

“I’m excited about the opportunities it might offer,” Fisher said.

The Vermont Employees’ Credit Union has the longest history of serving cannabis businesses, with all five existing dispensaries as customers, said Greg Huysman, director of business lending. This year, the credit union has opened 80 new accounts for recreational cannabis businesses, he said. Most of them are growers.

VSECU members are currently voting on a proposed merger with the New England Federal Credit Union, the fourth financial institution on the list.

Yates said, if all goes well, Brattleboro Savings & Loan hopes to become the go-to banking institution for cannabis businesses south of Route 4. But for now, the bank is limiting its cannabis customers to those in Windham and eastern Bennington counties. , with a branch in Winhall.

“If it’s too far from that market zone, I’m not going to bank it for the time being, but we’ll see,” Yates said. “It’s about dipping your toes in the water before you dive completely into the water.”

Supports multiple banks

Cannabis remains illegal under federal law, and Vermont’s regulatory environment is new. As a result, Yates said Brattleboro S&L estimates he needs one full-time employee dedicated to complying with federal regulations for every 15 accounts. Brattleboro S&L now has one employee who is familiar with relevant federal law, and a full-time assistant who also monitors cannabis accounts.

Staffing all the new accounts was also difficult for VSECU. Credit unions have suspended the opening of new cannabis accounts.

Huysman said: “Our success has been more than we can currently handle, so we need to have more resources in place, after which we plan to resume recruiting cannabis members.”

The impact of that decision is being felt by producers and retailers across the state.

Anna and Josh McDuff, owners of Rutland retailer Mountain Girl cannabis, were able to get an account with VSECU, but grower and retailer Scott Sparks was not.

Sparks said he had banked with VSECU for two other businesses, but was turned down when he applied for an account for a cannabis cultivation business. So he went to Brattleboro Savings Loans, where he will also be banking a cannabis retail business.

Discuss the effects of the merger

Merger commentator and former VSECU board member Jerry Diamond believes the decision to suspend acquisition of new recreational cannabis accounts was made out of fear that federal regulators would call off the proposed merger. .

Noting that banks and credit unions had to prepare two years after Congress made it legal, Diamond said, “The reason they’re suspending new account openings is because they don’t have enough people.” It’s literally not true to say that they didn’t.” Selling recreational cannabis.

Huysman vehemently disputes this. That concern wasn’t a factor, he said, noting that the New England Federal Credit Union already has several cannabis businesses as customers. doesn’t change that at all,” Huysman said. “More resources will be available to handle more cannabis businesses.”

Andrew Subin, a Burlington attorney representing cannabis businesses, currently refers clients to the Vermont Federal Credit Union and Brattleboro Savings and Loans. He said the pending merger was keeping customers away from the remaining option, the New England Federal Credit Union.

John Dwyer, president and chief executive of the New England Federal Credit Union, dismissed the concerns. He said federal regulators had already approved the merger, and the credit union had concluded that it could continue to provide cannabis banking services if the merger were successful.

More Banks, Fees Still High

Subin also said the New England Federal Credit Union is referring customers elsewhere because of “exorbitantly high fees.”

“I don’t think the fees are high,” Dwyer countered. “These accounts are most commonly the type of accounts that require regular reports that require reporting, and we have priced them to recognize the costs associated with that support.” declined to disclose specific fees.

Brattleboro Savings & Loan charges various monthly fees to producers, manufacturers, retailers, wholesalers, test facilities, and companies with integrated licenses. The amount billed also depends on the size of the business, Yates said.

So far, the southern Vermont newcomer appears to offer the most competitive rates, Subin said.

However, the biggest determinant of cost is the size and complexity of the business structure.

Burton grower Karen Devereux said she and her husband opened an account with the Vermont Federal Credit Union after VSECU turned them down. Devereux and her husband grow 125 outdoor plants and her 1,000 square feet of indoor plants fall into the smallest category of growers.

For growers of that size, the credit union charges $100 a month to open an account, Fisher said. However, customers with multiple types of licenses will be charged many times that amount.

Devereux and her husband are also seeking manufacturing and retail licenses.

“It’s very expensive,” she said. “It costs $2,000 a month to open a bank account.”

According to Huysman, VSECU charges a variable rate based on the amount of deposits made by customers. For smaller customers, it’s his 1.5% of deposits, he said.

Dave Silverman, a Middlebury attorney who represents cannabis businesses, said he has kept clients away from VSECU over the past few months because he felt the fee structure was too high.

But for Weiss Schamp, a small cannabis grower with a banking business in a town in Georgia, it’s cheaper than the fixed fees charged by other credit unions and banks.

“For small farmers, it’s better to do it on a percentage basis instead of a flat rate,” Schamp says.

Alternatives are still popular

Despite the growing number of options, some Vermont cannabis companies are looking out of state for banks.

The GFA Federal Credit Union in Massachusetts has a subsidiary, Lighthouse Biz Solutions, which accepts applications from Vermont companies with cannabis licenses, Silverman said. (GFA was unable to schedule an interview in time for this article.

Dama, a San Francisco-based financial company, works with Lead Bank, a national digital community bank based in Kansas City, and other banks to serve licensed cannabis businesses. Dama’s account executive Charles Weiler said the company has about 20 Vermont customers.

“Their fees are significantly lower than the credit unions here in the state,” said Dama user Lauren Andrews, who has applied for a retail license for Capital Cannabis’ Montpelier store. “The fixed costs of running a cannabis retail store are so high that wherever you can save money, you have to do it,” she said.

And then there’s cash.

Small producers have the option of not opening a special bank account at all. Subin said some small producers choose not to deposit in banks.

“Many producers say, ‘I’m not going to pay $1,000 or $1,500 in bank fees each month,'” says Subin. “I will keep this cash in my home safe and use it to buy groceries and clothes for my children.”

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