Last week we hosted Part three of our cannabis banking webinar series which answered the question, “How do I it?” Hundreds of bankers joined us for a look into the day-to-day implications of launching and implementing a cannabis banking program. I spent the last week collecting attendees’ feedback so I could summarize it here.
To start, I was thrilled to learn that the majority of attendees found value in part one and two of the webinar series, and they tuned in for part three to help connect the dots and their own cannabis banking plans.
Some attendees had already developed their policies and procedures, while others were still looking for the best way to conduct an initial risk assessment. Regardless of progress, the overall takeaways from this webinar seemed consistent. I’ll summarize these key learnings below, and encourage anyone who missed the webinar to check out the recording HERE.
- Plan, Plan, Plan, Then Execute
The number one takeaway was the importance of proper planning prior to launching a cannabis banking program. The importance of early conversations with key stakeholders was a consistent theme we discussed during the webinar and in the conversations that followed. Whether it’s your BOD, your key vendors, your auditors or examiners, no one wants to be caught off guard. Having formal and informal discussions at every step of developing your program is key. Next, make sure you have properly documented your institution’s key goals and milestones. Without a clear set of mutually agreed upon goals, you and your team may find yourselves struggling to map your action steps to the goals they pertain to. Being able to tie your decisions back to your strategic, financial, and operational goals make it much easier to substantiate them come exam time, while also providing a helpful lens through which to view and measure success.
- Leverage Your Existing Resources
Another key takeaway from this webinar was that many institutions already have all the resources they need to develop and deploy a cannabis banking program. Obviously this assumes an appropriate scale and velocity to the program, but there’s clear evidence showing that an institution’s existing business development and compliance/BSA teams are capable of executing a successful cannabis banking initiative. With this in mind, it’s important to ensure that each internal stakeholder has a clear understanding of their role in the program. Not only does this ensure that every piece of the program is accounted for, but it also gives you an opportunity to evaluate which team members are currently stretched thin - and which may have additional bandwidth. In particular, the initial program development will require some upfront investment of time and attention, which is why it’s so important to make sure the individuals or team leading the charge has all the right tools to be successful. To that end, Green Check’s compliance team has developed a Cannabis Readiness Assessment tool to help you identify the current controls you already have in place to mitigate the inherent risks in banking cannabis (you can schedule a personalized readiness assessment HERE).
- Another Line of Business
What stood out to me during my conversations with some of our attendees was the realization that cannabis banking is just another line of business, which brings a sense of familiarity to the exercise. Just like launching any new line of business, there are a number of common actions that are involved. More specifically, the impact to the institutions compliance management system is fairly standard. All new lines of business require an initial risk assessment, new or updated policies and procedures, and employee training on those procedures to make sure the controls outlined in them are enforced. Of course, with cannabis there are some more complex considerations that must be taken into account, knowing that your institution already has the muscles it takes to roll out a new line of business can be quite powerful in demystifying this entire process.
- Launching = Time for Feedback
The last key takeaway was one that came from attendees that had already launched their cannabis banking programs. Everyone knows the importance of proper planning and execution, but not every project goes exactly according to plan. More often than not, there are small (or large) pieces that are overlooked, assumptions that are made, and new data that becomes available to lead you to reevaluate various aspects of your project.
When you launch your program, you’ll have the first real opportunity to test parts of your program like whether or not your product and service offering is in line with customer expectations, or if the customer profile you outlined in your program turns out to be accurate or not. These early learnings are not indicative of any weakness in your program, but rather an excellent indicator that you’ve reached yet another milestone in your cannabis banking journey!
Regardless of where your institution lands on the cannabis banking spectrum, it’s important to remain focused on where the market is and where it is heading. This emerging industry presents a very real opportunity for any institution looking to grow deposits and non-interest fee revenue, while also providing much needed services and community benefits. This isn’t to say cannabis banking is for everyone, but we hope this webinar series has been helpful for those institutions that are building or managing a cannabis program.