Photo | Zachary Comeau
The Cannabis Control Commission has awarded more than 100 licenses.

When 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 fledgling marijuana industry that, without proper banking services, included people stuffing backpacks full of cash they couldn’t deposit.

Thanks in part to GFA, that’s less likely to happen in Massachusetts. The 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.”

The untapped legal marijuana market was undoubtedly 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. There 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.

Tina Sbrega, CEO and President, GFA

“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. “There’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 followed through the growing, testing and retail processes. What was missing was an ability for growers, shops and anyone who received income from marijuana operations to deposit their money.

“There 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. The Cannabis Control Commission hopes to have more, said Hoffman.

“This is an incredibly important issue for us,” he said.

The 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. They 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 Partner Colorado subsidiary that’s now working with GFA’s own subsidiary to serve the Massachusetts industry. Safe Harbor works with financial institutions in Arkansas, 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 Enforcement 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. Roughly 20 banks and credit unions are serving Colorado’s marijuana industry, she said.

“The 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.

“The board was very cautious and very alert to what the risks might be,” she said.

Photo | Zachary Comeau
Cultivate in Leicester was one of the first two recreational marijuana facilities to open in Massachusetts.

That concern was both legal and moral, with a concern for both the credit union’s reputation and its ability to ensure it was carefully monitoring where deposits were coming from. GFA was clear with vendors on its plans. One vendor decided to stop working with it because of worries about federal laws, Sbrega said.

For how much potential banking exists in an industry that still has a waiting list for pot shops looking for state approval to begin operations, GFA remains the only Massachusetts financial institution where businesses, their employees and related businesses who rely on the industry can reliably deposit their money without fears of having accounts closed. Questions about federal law remain too big of a hurdle for many, Sbrega said.

“The big challenge we’re seeing is the dichotomy between federal and state law,” Sbrega said. “You’d be foolish not to be worried about it. We monitor it daily.”

CORRECTION: Colorado has roughly 20 banking institutions serving the marijuana industry, not 20 that are members of the Colorado Bankers Association.