An Oregon bank is openly offering service to the marijuana industry in Colorado at a time when banks here are lurking mostly in the shadows.
MBank, based outside Portland, is part of a growing number of financial institutions, mostly Washington-based credit unions, that are banking openly with marijuana businesses.
But it is the first to venture across state lines and the only bank to announce publicly that it is serving Colorado marijuana businesses.
The bank said it also is taking marijuana-related deposits in Washington, the other state where recreational pot is legal and has been serving Oregon-based medical marijuana dispensaries since September.
While some industry analysts see its announcement as somewhat brazen, considering pressure from regulators to keep any participation with the marijuana sector quiet, MBank officials say they’re confident it’s a good idea.
“It’s a bold maneuver and not one for a lot of folks to take on,” MBank president and CEO Jef Baker said Tuesday. “We looked to regulators, both state and federal, to help us come to the conclusion that we can do banking in this sector.”
The $165 million bank, in business since 1995, is putting trust in what it said is “tacit approval” — bank-speak for acceptance that isn’t in writing — from the Federal Deposit Insurance Corporation.
“We had to vet the program and expose ourselves to additional audits,” Baker said. “But to be sure, we’ve put together something that meets without objection, though not necessarily specific approval.”
An FDIC spokesman said the agency does not comment on bank operations.
MBank partnered with Guardian Data Systems to hook marijuana businesses. Already about five in Colorado have established accounts, Baker said, with about 30 other applications pending.
“Finding access to traditional banking services has been one of the most daunting challenges faced by owners and operators in our industry” said Lance Ott, principal at GDS, which is handling the preliminary screening of account applicants.
“To date, there has not been a permanent (federally) compliant solution to the cannabis industry. With this partnership, cannabis industry operators no longer must shield the nature of their business from banking institutions,” he said.
Only medical marijuana is legal in Oregon, although voters in November approved recreational sales to begin in July.
Federal regulators have offered guidance to bankers willing to work with the industry, mostly by requiring a restrictive set of rules and filing reports about account-holder transactions. Bankers balked at opening their doors to the industry, at least publicly.