Public Funds & Cannabis Banking: Big Wins for Credit Unions in Washington Legislature

3/27/18

After signing Public Funds legislation, Washington Governor Jay Inslee congratulates the bill’s sponsor, Rep. Steve Bergquist, and hands the pen to NWCUA’s Paula Sardinas. Photo courtesy of Washington State Legislative Support Services.

In a historic moment March 22, Washington Governor Jay Inslee signed a credit union priority bill into law, which will give local governments smarter options for their public funds deposits. Currently, those municipal governments’ deposits in credit unions are capped at $250,000, limiting their ability to make competitive choices.

The new law opens doors for municipalities in 34 of the state’s 39 counties to local financial service and better returns on tax dollars.

“This is a watershed moment for local governments, which asked us to pass this legislation, and for the credit unions that want to step up and serve them,” said Paula Sardinas, Northwest Credit Union Association (NWCUA) Vice President, Legislative Affairs for Washington. “Local governments need choice in the marketplace, to ensure they are depositing in institutions that offer the best rate of return on taxpayers’ money—and very often, that’s a credit union.”

“For me it’s about access,” echoed Rep. Steve Bergquist (D-11), the bill’s sponsor. “Our businesses have access to credit unions or banks. Communities should have that same access. You should have the right to choose, as a public entity, to go to your credit union or to your bank. I think it drives competition and it helps everybody.”

Under the new law, municipalities will be able to deposit unlimited public funds above the $250,000 insurance limit, into credit unions located in counties populated by 300,000 or fewer people.

The law takes effect in early June.

Credit unions accepting unlimited public funds deposits will collateralize the funds. Your Association is now working with state regulators, the State Treasurer, and credit unions, to implement the process.

“We deeply appreciate the efforts of the Washington Governmental Affairs Committee and of our member credit union advocates’ fierce advocacy,” said Sardinas. “Free and fair markets can only thrive when consumers and the municipalities protecting their tax dollars have choice. Now, they will.”

A Step Forward for Legal Cannabis Businesses’ Access to Financial Services

Earlier in the month, Governor Inslee signed landmark legislation exempting financial institutions that provide services to legal marijuana-related businesses, researchers, armored car services, and laboratories, from any state criminal law.

As of the end of 2017, 1,856 legal marijuana businesses were operating in the Evergreen State, generating over $1.4 billion in sales and $315 million in tax revenue. Still, federal law and Justice Department policies saddle the financial services industry serving legal canna businesses, with layers of regulatory red tape. As a result, the businesses are operating in a high-cash environment.

As the bill’s sponsor Sen. Ann Rivers (R- 18) said in a recent KOMO TV interview, “It adds to the public safety component, but also to the tracking component of all the money we are seeing.”

The new law is “going to get more and more cash off the streets and help the state and federal government monitor the better,” according to Russ Rosendal, CEO of Seattle-based Salal Credit Union.

Salal and two other Washington credit unions have taken on the risks of serving legal canna businesses, and advocates for the new law believe other financial institutions will now offer services.

The legislation was supported by a coalition including your Association, the Washington CannaBusiness Association (WACA) and The Canna Organization of Retail Establishments (CORE).

Editors’ note: If you have questions about the 2018 Washington legislative session, or recommendations for the 2019 policy agenda, contact Paula Sardinas by emailing psardinas@nwcua.org.

Posted in Advocacy News.