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8 Worcester Business Journal | February 4, 2019 | wbjournal.com CULTIVATE PHOTOS: ZACHARY COMEAU GFA Federal Credit Union is the first in Massachusetts to offer banking services to the industry with $24M in revenue & counting BY GRANT WELKER Worcester Business Journal News Editor W hen GFA Federal Credit Union studied the Colorado recreational marijuana industry, the Gardner institution didn't see a market a bank would easily choose to get involved with. But GFA saw opportunity in the mayhem of a fledg- ling marijuana industry that, without proper banking services, included people stuffing backpacks full of cash they couldn't deposit. anks in part to GFA, that's less likely to happen in Massachusetts. e Gardner credit union is the first in Massachusetts to serve the state's recreational marijuana industry, putting the small institution at the forefront of a market already with $24 million in sales since the first pot shops opened on Nov. 20. "Certainly we didn't wake up one way and say 'We're going to do it,'" said Tina Sbrega, CEO and president of GFA. "We did our due diligence for 18 months." e untapped legal marijuana market was undoubt- edly a draw for GFA, but serving the industry has been a labor-intensive task requiring close monitoring of each account to safeguard against money laundering or other wrongdoing. ere are so many checks, in fact, it takes four to six weeks for a marijuana retailer just to open an account with GFA. GFA leaders see themselves as enabling a safer industry – a market they are clear about not explicitly endorsing. "We're trying to legitimize a legitimate business," Sbrega said. Serving a clear need A lack of formal banking services for the marijuana industry concerned Steven Hoffman, the chairman of the state's Cannabis Control Commission, during the two-year process from when marijuana was legalized at the ballot box in 2016 to when the first stores opened. "It is a public safety issue," Hoffman said. "ere's no getting around that." Hoffman and the commission staff talked to state banking groups, not to twist their arms into serving the industry necessarily, but to show how closely the industry was being tracked. Each marijuana plant, for instance, has a unique barcode allowing it to be fol- lowed through the growing, testing and retail process- es. What was missing was an ability for growers, shops and anyone who received income from marijuana operations to deposit their money. "ere are a lot of banks looking at this as a very significant industry," Hoffman said. So far, only GFA has taken any deposits. Another, BayCoast Bank of Swansea, has voted to serve the industry but has not yet done so. e Cannabis Control Commission hopes to have more, said Hoffman. "is is an incredibly important issue for us," he said. e Massachusetts marijuana retailers contacted for this story did not want to comment on the issue. Help from Colorado GFA hasn't had to figure out the marijuana industry alone. Long before the credit union's decision to take the leap, GFA officials visited Partner Colorado Credit Union, which serves one of the country's largest state marijuana industries with more than $1.5 billion in annual sales. ey met with credit union leaders while there and bought for each of GFA's directors a book explaining the lessons of the industry. GFA "gets the benefit of the four years of learning that we've learned," said Katrina Skinner, the interim president and general counsel for Safe Harbor, the Part- ner Colorado subsidiary that's now working with GFA's own subsidiary to serve the Massachusetts industry. Safe Harbor works with financial institutions in Arkan- sas, California, Florida and Michigan. Among the toughest challenge is a lack of clear guidelines, Skinner said. A memo created by the Obama Administration in 2013 gave some clues, as did pointers from the federal Financial Crimes Enforce- ment Network. Neither, however, gave the kind of confidence banks and credit unions would receive from a new federal law on what banking institutions should or shouldn't do, said Amanda Averch, the communications director for the Colorado Bankers Association, which has roughly 20 member institutions serving the industry. "e bottom line is that serving the industry remains illegal for banks to do because of federal law," Averch said. Without more assurance, banks remain hesitant to start serving the industry, Averch said. Roughly a third of the bankers association's members were interested in doing so, a third weren't sure, and a third wouldn't serve the industry even if it were federally legal. "Certainly, there was hesitation because banks are naturally risk-averse," Averch said. Unanimous decision When Sbrega, GFA's CEO for the past decade, pitched its directors on serving the industry, she said, she decided the credit union would only make the move if the vote to do so was unanimous. It was. "e board was very cautious and very alert to what the risks might be," she said. at concern was both legal and moral, with a concern for both the credit union's reputation and its Marijuana banking "We're trying to legitimize a legitimate business." Tina Sbrega, CEO and President, GFA Culivate in Leicester was one of the first two recreational marijuana facilities to open in Massachusetts.