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A Conversation with Nicole Perry: A Cannabis Banking Program Built for Change

We sat down with Nicole Perry, Vice President and Treasury Management Officer at Michigan-based Dart Bank.


As the first financial institution in Michigan to serve cannabis customers after the state legalized adult use in 2018, Dart Bank has learned that you can never become complacent because the industry is constantly changing. Nicole Perry, Vice President and Treasury Management Officer, is a certified cannabis banking professional (CCBP) in Dart's Specialty Banking department. In this interview, Nicole shares her enthusiasm for banking this industry and offers valuable advice to financial institutions interested in getting involved.



Why did Dart Bank decide to get involved in the cannabis industry?


Nicole Perry: We got into the industry because we saw a niche and knew we could be of service to legal cannabis companies in need of banking. Our CEO, William Hufnagel, is extremely forward-thinking. He did a lot of research on the cannabis industry and concluded we could support this community. We anticipated adult-use legalization would happen in the state, so we got started early, first by having conversations with our Board of Directors and then with federal and state banking regulators so that we could be prepared to move forward. We have been going strong ever since and expanded our program with lending in September 2019. There's a huge demand for financial services, and we are incredibly proud to support the industry.


"There's a huge demand for financial services, and we are incredibly proud to support the industry."

What advice do you have for other bankers?


NP: The most important advice I can give is to do your due diligence about what the entire industry entails, and the compliance requirements associated with it. Being transparent and maintaining a great relationship with your regulators is so important. We had great conversations with state regulators and the FDIC about getting into this industry, as we're a federally regulated bank and state charter. It took us about six months to a year to get everything in place where we felt comfortable being able to support this industry from a compliance standpoint.


We also realized early on that we must be good educators. There's so much confusion and misinformation, so it's important to have experts – bankers, consultants, lobbyists, compliance professionals like Shield, and others – out there talking about cannabis banking. This helps customers understand that when we seek information and ask questions, we're just trying to be compliant and stay within the rules and regulations of banking something that's federally illegal.



How do you handle the constant change facing the industry?


NP: We built our cannabis banking program on the premise that anything could change at any time and developed our policies and procedures with this in mind. Our plans take everything into account – from changes to local ordinances to changes in federal policy. We're prepared for things to change at the flip of a switch, and we're ready and willing to have those conversations about how to move forward.


Can you tell us about your compliance program?


NP: Sure. We were introduced to Shield Compliance long before launching our program, and they've been an important partner ever since. Shield gives us the ability to verify licenses against various state databases, and we're able to connect to Metrc, the seed-to-sale tracking system, through the State of Michigan. This is huge because we can compare our customers' books to the state's records and see any discrepancies or red flags. It's also given us the ability to answer any questions from our regulators, auditors, or internal colleagues about our program.


We have also invested in our talent. We created a specialty banking department to serve our cannabis customers, and we have three credentialed certified cannabis banking professionals, including our BSA officer, the specialty banking manager, and myself. This creates more even more value for us because our customers have access to a team of individuals who understand their industry and the business of banking.



What has the State of Michigan done to create a welcoming environment for cannabis banking?


NP: The state's Marijuana Regulatory Agency (MRA) has worked hard to create partnerships with the financial institutions serving the cannabis industry. It also works closely with various industry groups, such as the Michigan Cannabis Industry Association and state banking associations, to understand the trials and tribulations that we go through to bank cannabis and how we can work together to create a safe and compliant industry. Because Michigan has not limited the number of licenses it will issue, we can anticipate more businesses coming into the industry that will need to be banked. I think Michigan has done a good job of normalizing this industry and creating a positive experience for participants in this space.



What do you see for the industry when you look into your crystal ball?


NP: Well, I see more competition, for one thing. I think there are many financial institutions working on cannabis banking programs here in Michigan, and I wouldn't be surprised to see five to ten more enter the industry in the next 18 months. I anticipate they'll be state-regulated or state-chartered financial institutions jumping in, and not necessarily the big national banks quite yet. I also don't see out-of-state banks getting into this industry for a while because they're looked at a little bit differently in the auditing process, and there's more risk for them. But eventually, I expect this will change too.


Again, I think it's all about education. Public acceptance grows as more and more people talk about it and articles are written about the benefits of cannabis. We already see tax dollars going back into communities, and I think the more cannabis is normalized, the more positive change we will see.




Partnering with experts to inform board members, assess risk, and evaluate and implement compliance technology will help financial institutions create the foundation for an effective and competitive cannabis banking program.