Sundie Seefried sees herself as a pioneer who's pushing her Denver-based credit union — and by extension, the financial services industry — into uncharted territory. Her customers and fans view her as more of a savior acting in the public good by helping take cash off the streets. And the bankers who would be her competitors? For now, most are watching and waiting.

Seefried, who is the chief executive of the $300 million-asset Partner Federal Credit Union, has done something few bankers dare: launch a program to openly serve the fast-growing marijuana industry. Even though pot has been legal in Colorado since 2014, it remains illegal under federal law and frowned upon by much of society. That makes it a dicey business for banks.

"It's the most interesting thing I've ever done," Seefried said. "The question I get most often is, 'How do you deal with the discrepancy between federal and state laws?' It's a real Pandora's box."

Think of it as reefer madness, banking style. The intersection of marijuana and financial services is filled with enough it's-legal-but-it-isn't ambiguity to make it a problem for everyone involved — marijuana-related businesses, the government, financial institutions and society at large — and the sense of urgency around finding a solution is growing.

To date, 25 states and the District of Columbia have made it legal to purchase or possess medicinal marijuana, while four states — Alaska, Colorado, Oregon and Washington — have legalized sales of recreational or "adult use" cannabis to anyone of age.

As many as a dozen states are expected to have marijuana legalization initiatives on their ballots this fall. The list includes Florida, where advocates are taking their second stab at winning the 60% of the vote required to make medical marijuana legitimate, and California, where a second bid to legalize recreational cannabis (medical is already legal) is given good odds to win.

All this activity has laid the groundwork for a boom. Sales of legal cannabis hit $5.7 billion in 2015, with the tally expected to rise to $7.1 billion this year and $22.8 billion by 2020, according to the Arcview Group, an investment and research firm. Throw in revenue from paraphernalia and the numbers are much higher.

"This is an industry that's going to grow at a 31% compounded annual growth rate between now and 2020," said Arcview CEO Troy Dayton. "It's a tremendous opportunity for small business owners, and potentially for banks."

As the industry continues to expand, anecdotal evidence suggests more growth-hungry bankers are intrigued. But many consider it an insurmountable barrier that marijuana remains an illegal, Schedule 1 drug under the Federal Controlled Substances Act.

Since the banking system is a federal endeavor, it technically can't be used to facilitate transactions for something that's against federal law. In other words, businesses that make their money from marijuana sales are not allowed to have bank accounts.

But locking this industry out of the banking system creates some bizarre dynamics. Marijuana-related businesses, or MRBs, are shunned by credit card issuers and processors. That leaves them with no alternative but to take in piles of cash, which they then cannot deposit in a bank.

MRB owners have been known to regularly lug around thousands of dollars in duffel bags and pay their vendors and employees with money orders or thick bill-filled envelopes. Many feel compelled to hire armed private security forces to keep watch over their outlets (and safes) 24/7 for lack of a better alternative. Business is booming for armored-car services.

Pot facilities have been robbed and owners victimized. Owners have been known to take large sums of cash home or stash it in off-site hiding places. In 2012, the owner of a California medical-marijuana dispensary was tortured with a blowtorch and had his penis cut off by kidnappers trying to learn where he kept his cash. But he had no stockpile to give up. Just this June, a security guard was shot and killed at a dispensary in Aurora, Colo., a Denver suburb.

"When you have the perception that there's a lot of cash on the streets — that you could be one or two people away from a hoard of cash — it's going to attract a criminal element," said Chris Myklebust, Colorado's state banking commissioner. "It's a public safety issue."

The Department of Justice realized shortly after Colorado legalized recreational sales in 2013 that barring a fast-growing industry — one that sells drugs, no less — from the banking system was both potentially dangerous and detrimental to government anti-money-laundering efforts. In 2014, it created a guidance workaround, which makes it clear prosecuting banks for serving the industry isn't a priority.

"Having a billion-dollar market frozen out of the formal financial system is counterproductive," said John Vardaman, a former DOJ attorney who co-authored the guidance. "It opens the door to corruption and fraud, because you can't track the money."

The DOJ's "Cole memo," backstopped by guidance from the Financial Crimes Enforcement Network, or FinCEN, permits financial institutions to accept deposits from MRBs, provided they monitor those clients for compliance with state law, the DOJ guidance and the Bank Secrecy Act, and file specialized suspicious activity reports when warranted.

"In effect, the Department of Justice and FinCEN have issued a road map to banks for how to successfully evade the law," said Vardaman, who is now general counsel for Hypur, a provider of technology solutions for cash-intensive businesses. "It's something you don't see every day ... very confusing."

The guidance is a half-step too short for most institutions, which worry about the expense and risk of doing business with an industry the feds still deem illegal. There is no regulatory handbook on banking pot, nor is there much in the way of established best practices.

FinCEN's eight-page guidance says a bank must certify that its MRB customers are complying with DOJ priorities to keep pot from being sold to minors or crossing state lines, for example, but offers no specifics on how to do that.

"No bank can assert with any certainty that none of those things will ever happen, and nobody knows what a bank's legal liability would be if it does," said Don Childears, CEO of the Colorado Bankers Association.

"We suggest that banks don't go an inch into this business until they get a clear go-ahead from their own legal counsel," he said. "Quite honestly, I can't imagine a lawyer telling a bank that it's good to go."

Banks that decide to get involved with these types of businesses tend to err on the side of caution, which ratchets up the costs. Monthly fees for marijuana-related banking services vary greatly around the country, from less than $1,000 in Oregon to close to $10,000 on the East coast, according to Andre Herrera, Hypur's executive vice president.

Even so, the field is already littered with banks that have jumped in, only to get out again due to compliance costs.

MBank, a $175 million-asset institution in Portland, Ore., began banking MRBs in 2014, citing the opportunity to "meet a need, while at the same time enjoying additional revenue opportunities." A year later, it shuttered the program.

"They overdid things," sending investigators into every marijuana business on a regular basis, said Robert McVay, a partner with Harris Moure, a Seattle law firm that works with MRBs. "The compliance costs got to be too much for them to bear."

Things aren't much clearer for federal banking regulators, who can feel caught between policy and law. Some have been known to quietly discourage bankers from entering the business, citing legitimate security concerns: Small banks taking in large amounts of cash deposits make for attractive robbery targets.

Regulators grudgingly work to meet the spirit of the Cole memo, but with the emphasis on grudgingly. There's a sense that they're holding their noses in the process, not wanting to permit some sort of precedent-setting back door run around federal law.

As the Federal Reserve Bank of Kansas City wrote in a recent court filing defending its decision not to grant a master account to Fourth Corner Credit Union, a new Colorado state-chartered institution intent on banking pot dispensaries and growers, "transporting or transmitting funds known to have derived from the distribution of marijuana is illegal."

Existing Colorado institutions with MRB clients "haven't been criticized, but they haven't been given the green light either," Childears said. "They're in that yellow-light phase. As long as they color within the lines, they can continue."

Even banks that choose not to serve the cannabis industry face risks. Dispensaries and growers that make money directly off of weed are considered MRBs, but so are ancillary businesses — makers of greenhouse lighting, marketing firms, packaging producers and the like.

Childears tells of one bank that recently cut ties with a solid long-term customer who owns a strip mall with a dispensary as a tenant. "The bank is unwilling to take the risk of someday getting nailed for a BSA violation," he said. "It's a very conservative view of the law, but if you're worried about compliance it's easy to conclude it's not worth banking that client."

Underlying the cautious approach is a nagging worry that the DOJ's guidance could be overturned by a future administration, leaving banks that serve MRBs vulnerable to prosecution or financial losses. In one frequently mentioned scenario, Donald Trump wins the November election and appoints New Jersey Gov. Chris Christie, an outspoken legalization critic, as attorney general.

"If a Christie DOJ started cracking down on marijuana, it could cause a lot of financial turmoil for these banks," McVay said.

While no bank has actually gotten in trouble for banking the industry — and legal experts say it's reasonable to think that the past guidance would protect banks against prosecution — a policy change would at the very least make the hefty expenditures required to set up marijuana-related compliance wasted money.

Such fears already keep banks from lending to MRBs. "Law trumps guidance," said Ernie Panasci, a Denver-based partner at the law firm Stinson Leonard Street. "If the federal government decides to crack down, you'd be stuck with a borrower that lacks the cash flows to pay you back."

Throw in softer factors — moral objections to legalized pot, the potential reputation risk from serving drug-oriented businesses, and the distaste many bankers have for playing the role of bad cop — and most have concluded that marijuana isn't worth the effort.

Until marijuana becomes legal on a national level, "I don't think we will be able to bank this industry," said Ron Tilton, a regional president of FirstBank Holding Corp., a $15.6 billion-asset banking company in Denver.

Coping in Colorado

Nowhere are the challenges and opportunities of legalized marijuana illustrated more vividly than Colorado, where cannabis sales hit $1 billion last year, generating $100 million in state tax revenue, most of which went toward school construction, regulation and public safety programs.

The Denver area alone has some 200 dispensaries and the market is already consolidating. There are chains, with names like Green Solution and Starbuds, and a robust "seed-to-sale" regulatory tracking system run by the state. The industry even has its own local "newspaper," the Cannabist, published by the Denver Post, which features everything from the latest industry news to reviews of pot strains with names like "Banana Kush" and "Durban Poison," as well as a growing array of marijuana-infused edibles and oils.

When it comes to finding a banking relationship, MRBs here are doing much better today than in the past. Dispensary owner Tim Cullen said most of his peers who want a bank account can find one, which wasn't true a year ago. Even so, just 12 Colorado banks serve the industry, by the CBA's count. About 40% of MRBs remain unbanked, according to U.S. Rep. Ed Perlmutter, a Colorado Democrat.

While some of the customers might be stoners, the people running MRBs are often sharp entrepreneurs. Cullen, a clean-cut, 44-year-old father of two, left his job as a high school biology teacher six years ago to grow medical marijuana, and today is co-owner of Colorado Harvest Co., a thriving, three-store chain that last year did 94,000 transactions and $7 million in sales — all of it in cash.

Sitting in a glass-walled office overlooking his shop's sales floor on Broadway Avenue, a bustling commercial street not far from Denver University, Cullen nods to the steady stream of customers — many of them in their 40s and 50s — who have stopped in.

Cullen said there's a bit of a gold-rush feel to the industry, but also no shortage of concerns. His biggest frustrations center on managing an all-cash business in a digital world. Over the past six years, he has burned through 14 different checking accounts in a near-constant struggle to manage his business' cash receipts.

For a while, he managed to maintain an account under the name of a third party, but the bank eventually figured it out. There was a two-month bankless period when he kept large amounts of cash in his safe and hired armed security to monitor it.

Another time, he chartered an armored-car company to shuttle his cash to a small-town banker two hours south of Denver who had launched a marijuana banking program. After a few months, the banker reconsidered and shut down the program.

No bank will give him a loan. "The business expands by buying buildings with briefcases full of cash," he said. "We're fighting 70 years of propaganda and negative stigmatizations by the federal government."

Last year, Cullen opened an account with Partner, gladly paying roughly $2,500 a month in fees for the privilege of having a deposit account at the credit union. "The bottom line is you need to have a checkbook to be a business," he said.

Colorado lawmakers have done what they can to help, creating a state-run financial cooperative in 2014, and chartering a credit union to serve the industry last year. "We didn't get very far with the Federal Reserve on either of them," said Andrew Freedman, the state's director of marijuana coordination.

The true solution would be for Congress or the Drug Enforcement Administration to remove marijuana from the list of Schedule 1 drugs, though no one expects that to happen anytime soon. An alternative, in the form of "safe harbor" legislation that would explicitly permit financial institutions to bank MRBs if they followed state law, died in committee last year. This June, an amendment that would have prevented federal regulators from pursuing enforcement actions against banks just for working with MRBs was stripped from a bill.

None of this uncertainty has stopped Seefried, who said she was nearing retirement when Partner's board decided it wanted to "make Colorado a safer place" by banking marijuana businesses.

Eighteen months after launching its program, Partner has 70 MRB clients running about $500 million annually through the credit union. "That's cash that could be on the streets changing hands, and now is running through a bank, being accounted for and reported," Seefried said.

But the program is labor-intensive and stressful. Nine of Partner's 40 employees are devoted full time to tasks related to serving the pot industry, even though it accounts for just 5% of deposits at any given time. They do quarterly on-site visits with clients to review operations and cash flows, and reach out to them more regularly to keep tabs.

Partner charges 0.3% per-month on incoming funds — $3,000 for $1 million in deposits — with a $3,500 cap. "We tell our clients it's a compliance program, not a service program," Seefried said.

To allay regulators' safety concerns, Partner never actually touches its clients' cash. Instead, an armored car delivers cash from a dispensary or grower to a vaulting facility. "They vault it, count it and then take it to the Federal Reserve," where it is credited to the credit union's account, Seefried said. "We never see the cash."

It helps that Partner's primary federal regulator, the National Credit Union Administration, seems more open to serving MRBs than its bank-oriented counterparts. Even so, Seefried said she constantly worries that regulators will have a change of heart and close the program down.

One comfort is that her efforts are making the community safer. "What I'm banking on is that no one wants to be responsible for putting that money back on the streets," she said.

In the end, the struggles banks face in serving the marijuana industry are mostly about stagnation and congressional inaction. As Freedman rightly notes, few are openly hostile to the notion of banking marijuana, but neither are they motivated enough to change things.

As more states legalize marijuana for medical or recreational use, advocates are betting that congressional indifference will morph into wider concern and, ultimately, lead to change that makes it possible to bank the industry without fear.

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