The U.S. cannabis industry relies on cash, creating safety and security problems that Kansas City-based Bison State Bank hopes to solve though a new partnership.
With only $71.8 million in assets, Bison State Bank is one of the smallest local banks. But it sees a growth opportunity by providing cash management to the U.S. cannabis industry, a business with $42.98 billion in annual revenue, according to data from Statista.
It’s working with Pennsylvania-based National Secure Transport, a nationwide secure cash management and logistics provider. The company now acts as an official cash-in-transit and virtual branch vendor for Bison State Bank. National Secure Transport picks up cash from businesses, then transports it in an armored car, delivering and depositing it directly at the Federal Reserve Bank.
“This allows us to bring our products and services, which we believe are incredibly competitive, to our clients across the country,” said Ryan Wiebe, executive chairman and owner of Bison State Bank. “It avoids a situation where a general manager is hopping into a car with a backpack full of cash and driving to the bank. Banks don’t like to keep large sums of cash on hand … We’ve eliminated the cash, which is the most dangerous piece for all the parties involved.”
Once the cash is deposited at the Federal Reserve, Bison State Bank handles the enhanced due diligence and compliance required for a bank to knowingly handle money from an operation that is legal under state laws but not federal laws. The Bank Secrecy Act has money-laundering provisions that must be carefully followed. The federal Financial Crimes Enforcement Network also requires banks to file Suspicious Activity Reports for all cannabis-related business.
At that point, it’s up to the U.S. Attorney General to enforce federal cannabis laws, but U.S. Attorney General Merrick Garland has made it a policy not to prosecute cannabis businesses that follow state laws. The policy has been in place since the Cole Memorandum was issued in 2013, outlining the process banks should take with state-legal cannabis operations.
Of more than 200 chartered Missouri banks, Bison State Bank now is one of about a dozen willing to provide banking services to the cannabis industry.
“Because there is a lack of participating institutions willing to bank the cannabis space, this allows us to bring banking products and services to clients across the country,” Wiebe said. “This is a massive opportunity for us to grow.”
The cost associated with entering the cannabis banking market is high, Wiebe said, requiring more full-time employees to handle compliance and keep the bank safe. It’s not something banks can dip their toes into.
“All the expenses associated with this are exponential, so just gaining $20 million in deposits isn’t going to be sufficient,” Wiebe said. “You barely cover at that rate. So you just can’t minimally participate. You have to fully participate and be involved in it. We are, so we do expect some significant growth from this. We intend to bring our products and services nationwide to states that allow it.”
