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A Conversation with Oklahoma State Bank: Managing the Cannabis Banking Learning Curve (Part 2)

As one of the earliest providers of cannabis banking services in Oklahoma, Oklahoma State Bank understands the compliance and operational requirements associated with serving the legal cannabis industry.

Since launching its cannabis banking program in January 2020, Oklahoma State Bank (OSB) today serves over 300 cannabis-related business customers. In the second of a two-part series, Delene Gilbert, Director of Cannabis Banking, and Ann Roberson-Keawe, Vice President and Operations Compliance Officer, share some of the challenges OSB faced when launching its program and offer advice for prospective cannabis bankers.

What were some of the hurdles you encountered when you launched your cannabis banking program?

Delene Gilbert, OSB

Delene Gilbert (DG): Oklahoma is a very unique market. Up until recently, we operated under a system that offered unlimited licenses for medical marijuana dispensaries. When we decided to get into the cannabis industry, we first turned to other state programs to understand the market opportunity. We then based our projections on these other markets, which in hindsight was a mistake because what works well in other states didn’t necessarily translate to our cannabis program. We quickly learned that while looking at other markets was informative, there’s really no other market to which we can compare ourselves.

With the benefit of hindsight, what advice would you offer bankers interested in entering the cannabis market?

DG: My advice to every single financial institution is to have a cannabis banking policy in place whether you accept it or not. It’s important to be very transparent and clear about your position on cannabis because it is inevitable that these funds will find a way into your financial institution. I also think every bank needs to know and understand that if they do choose to bank cannabis businesses there is a learning curve because you don't manage your traditional business account the same way you manage your cannabis account. Institutions need to understand how to properly educate their customers so that they know what the process is.

Ann Roberson-Keawe

Ann Roberson-Keawe (ARK): I would add that it’s important to account for how you are going to staff your program. As you onboard customers you've got to ensure that you're tracking documents, monitoring and preparing SARs, and doing everything that's required of this high-risk customer. As your program grows and you onboard more customers, your staffing needs will grow too.

How would federal cannabis reform impact your program?

DG: Given the situation with cannabis licensing in Oklahoma, I think we’ve experienced a lot more competition in the market here than you may see in other states. That said, I don't anticipate that the federal legalization of marijuana or passage of the SAFE Banking Act is going to quickly allow for banks to adopt whatever the new guidance is and start actively banking cannabis businesses. I think it's still going to take a lot more persuasion and due diligence for financial institutions to feel comfortable banking cannabis.

That said, I don't anticipate that the federal legalization of marijuana or passage of the SAFE Banking Act is going to quickly allow for banks to adopt whatever the new guidance is and start actively banking cannabis businesses.

ARK: I was a bank auditor for over 13 years, which gives me a good perspective on the risk that a lot of the smaller community banks are willing to take on. Cannabis is always going to be a high-risk business, which is likely to keep many of the smaller banks on the sidelines. Larger banks may have the resources to serve this industry, but here in Oklahoma, a lot of people are dedicated to their smaller community banks. It will be interesting to see what kind of competition we are faced with in the coming years.

Any final words for prospective cannabis bankers?

DG: Something that benefits us and would benefit any bank or credit union considering getting into the cannabis banking space, is to create a network of trusted professional contacts for additional services that a cannabis business might need – like CPAs, attorneys, etc. It’s important to get in the minds of cannabis business owners and understand their needs and the issues they’re facing outside of banking. It enhances the customer experience we deliver and protects our customers at the same time.

Partnering with experts to assess risk, evaluate and implement compliance technologies, and develop policies and procedures will help financial institutions create the foundation for an effective and competitive cannabis banking program.

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