USF Credit Union launches cannabis banking program

For financial institutions, taking on clients in the cannabis industry is anything but a “chill” process.

There’s complex regulatory and compliance issues, murky legal grounds and the weight of political and moral pressures on either side of the argument. But as the industry keeps expanding, entities that pull it off have an early seat at the table for a relatively untapped market.

Tampa-based USF Credit Union, with some 75,000 members and more than $1.2 billion in assets, is the latest of only a handful of financial institutions in Florida, and nationwide, to launch a cannabis banking program.

Called Verde, USFCU’s program launched this summer after numerous surveys of current members and discussions with the credit union’s board of directors. 

Yet even though the program is in its infancy, USF Credit Union COO Richard Sellwood says its proven successful in a region ripe with cash-only cannabis companies looking to protect their assets. Sellwood adds that getting into this line of business, while unusual on its face, follows a credit union cred: to serve and work with underserved markets. 

To ensure the program stays in compliance with state and federal laws, USFCU partnered with Bonita Springs-based fintech company Green Check Verified. Green Check connects financial institutions and legal cannabis businesses in need of banking services, then uses regulatory software to guide both sides through the compliance process and stay within federal and state guidelines.

“There’s risks,” Sellwood says. “We have to do our due diligence and that will include everything up to site visits, taking a look at how the operations are run and ensure they are entirely compliant, making sure they have good security practices, going through the state licensure process to make sure they’re fully legitimate, and of course partnering with Green Check.”

Risky revenue

Verde works with cannabis-related businesses, including those distributing hemp and CBD. But working with a cannabis-related business is a complicated process that requires ongoing monitoring, as ownership and other components of production can change over time, says CEO and co-founder of Green Check Kevin Hart. Financial institutions, especially big national banks, take a big risk with auditors and regulators. Additionally, federal anti-money laundering laws prohibit banks, credit unions and other financial institutions from handling money that comes directly from criminal activities, such as cannabis sales.

“It’s never just about the account opening,” Hart says. “It’s all the ongoing monitoring, not only of the account, but all the financial transactions that occur within the account, making sure the sources of those funds are from legitimate sales. You can’t sell your homegrown legally out the front door if you brought it in illegally through the backdoor. So It’s a complex process.”

Follow the rules

Over the years, several federal and state regulatory agencies have released guidance memos for financial institutions looking to bank cannabis, an underserved market that could easily boost assets and deposits. Yet the practice still remains a legal gray area.

A bipartisan group of attorneys general from 28 states, Washington D.C. and three US territories sent a letter to congressional leaders July 24 expressing support for the Secure and Fair Enforcement Regulation (SAFER) Banking Act.

That legislation provides a safe harbor for financial institutions seeking to provide services to cannabis-related businesses in states where it is legal. The House has passed it seven times but has never passed the Senate. The legislation has yet to be introduced in either chamber this session.

Banks must follow both federal and state laws. And even though Florida approved medical marijuana in a 2016 amendment, possessing, using, growing and selling marijuana recreationally remains a federal offense. That means financial institutions are subject to regulatory sanctions if they serve marijuna-related businesses. Financial institutions must also file Suspicious Activity Reports when they serve cannabis-related businesses, even in states where it is legalized.

In the letter, states attorneys say the SAFER Banking Act would prevent state governments from forfeiting hundreds of millions of dollars in tax revenue generated by the cannabis industry.

Currently, 39 states, three territories and Washington, D.C. permit the use of cannabis products for medical purposes. In addition, 24 states, two territories and Washington, D.C. have enacted measures to regulate cannabis for adult use. In 2024, legal cannabis retail sales reached $30.1 billion — a 4.5% increase over last year’s sales, the letter says —and industry experts project that U.S. annual sales of regulated cannabis could reach $34 billion by the end of 2025. Nationwide, regulated marijuana businesses provide about 425,000 jobs.

As of September 2024, approximately 830 financial institutions nationwide out of roughly 12,000, 6.9%, were actively serving the cannabis industry, according to the Treasury Department’s Financial Crimes Enforcement Network. Of those, roughly 20 banks, credit unions and other financial institutions are active in Florida, according to industry information portal floridastatecannabis.org.

While legislation to clear up the complexities stalls, Hart keeps moving forward.

“Candidly, if the American banking system wanted to handle cannabis, marijuana and other high risk industries they would do it,” Hart says. “It’s just not going to happen anytime soon and if it does happen you’re just going to have more rules and regulations to follow.”

USF Credit Union, too, is ready to follow the rules as they come, Sellwood says.

“Credit unions like to talk about serving the underserved,” Sellwood says. “This is a group that is quite literally the underserved, with very limited access to financial services and we want to create a partnership that will last a lifetime with a degree of loyalty and mutual benefit that can carry forward into the future. We want our clients to say, ‘Hey, USF Credit Union was there for me when no one else was.’”