Sundie Seefried seems on the evolving hashish banking panorama

(This story first appeared within the September-October subject of MJBizMagazine.)

Sundie Seefried burst onto the hashish business scene 10 years in the past because the CEO of Associate Colorado Credit score Union, the place she launched Protected Harbor Monetary, a program to service the brand new marijuana companies popping up throughout the state after voters legalized grownup use.

Protected Harbor garnered dozens of marijuana enterprise shoppers in its first two years, and on April 20, 2016, Seefried revealed “Navigating Protected Harbor: Hashish Banking in a Time of Uncertainty.”

The e-book turned – and stays – the last word blueprint for protected and profitable marijuana banking, establishing Seefried as a hashish business pioneer.

In 2022, Seefried spun off Protected Harbor into its personal separate enterprise entity and took the corporate public on the Nasdaq inventory change.

Right this moment, Protected Harbor serves greater than 600 marijuana enterprise shoppers in 40-plus states and has executed properly over $20 billion in transactions.

In June, Protected Harbor launched a lending program with loans sometimes ranging between $5 million and $10 million and lending charges of 8%-13%.

Seefried spoke with MJBizMagazine about what the subsequent decade holds for Protected Harbor and hashish banking general.

She additionally shall be talking at MJBizCon on Dec. 5 in regards to the influence of the SAFER Banking Act; get your tickets now.

What influence has the hashish business downturn in recent times had on Protected Harbor and its shoppers?

The quick legalization throughout the nation has triggered plenty of bother, however so has the M&A exercise.

Operators overindulged in investor cash and, sooner or later, they needed to tighten their belts – and that’s what we’ve seen them do.

So far as we’re involved, we stored up with the rising markets as they legalized, and that allowed us to select up the identical enterprise throughout state strains.

We’re now taking cash in over 40 states throughout the nation.

Why and the way did you begin the lending program?

I wished to do this proper from the beginning, however the regulators weren’t comfy with it.

It acquired to the purpose, lastly, in about 2019, that we began speaking with regulators and mentioned, “We now have all these shoppers. They want entry to capital. Entry to capital by means of debt is safer for us to take as a result of we all know the place the cash’s coming from.”

Bear in mind, all the things the regulators take a look at is illicit enterprise. I’m saying that is the most secure solution to get cash of their pocket, aside from buyers.

I made a case to the regulators that the cash was good. So, we began very slowly and actually walked the regulators by means of it, identical to we needed to do with hashish banking.

We have been capable of launch a program and have over $50 million on the books.

We’re conservative. We underwrite like a monetary establishment, so our loans usually are not projection based mostly. They’re based mostly on actual property and belongings.

We’re comfy with it. The explanation that we have now to put in writing like a financial institution is as a result of it sits on the financial institution steadiness sheet, and the financial institution needs to be very comfy with our underwriting.

What sort of influence has potential rescheduling of marijuana had? Are you seeing extra exercise or optimism out of your shoppers?

Optimism is at all times there.

However rescheduling just isn’t solely good for the business. It rolls as much as us at Protected Harbor, the monetary establishment, as a result of that can give them more cash on their backside line to service debt. It should qualify a complete lot extra hashish entities to go and get debt.

Taking 280E (of the Inner Income Code) away is a good factor for debt servicing.

In the event that they get to reschedule to Schedule 3, there’s going to be extra investor curiosity within the business.

And investor funds are an excellent factor to move by means of the business. It advantages us in the long term, as a result of we’re within the deposit enterprise.

What are the probabilities of the SAFER Banking Act passing, and the way will it influence Protected Harbor and its companies?

It received’t influence us an excessive amount of as a result of we’ve been doing it with out SAFE Banking for 10 years now.

In our state of affairs, we’re fairly strong in what we do.

The regulators perceive what we do. The businesses perceive it’d collect extra curiosity when it comes to monetary establishments coming to the market, which suggests it might profit the businesses themselves.

Nonetheless, it’s not the start of straightforward banking for hashish, as a result of (the Financial institution Secrecy Act) is what actually drives the workload. Financial institution Secrecy drives the pricing.

Not too many monetary establishments need to arrange a operate that focuses on hashish and understands it and makes certain no illicit actions go on.

And everyone knows that there’s a bootleg market working in plain sight, and that basically makes it troublesome for the hashish business.

Banking goes to be that one issue that helps remove the black market and actually legitimize those that are licensed and doing it the right approach.

I don’t assume it should change a lot except they revise Financial institution Secrecy. However when it comes to revising Financial institution Secrecy, it will get revised fairly recurrently, however it solely will get harder.

It’s the greatest query that regulators take a look at after they are available: Are you defending the monetary system? Are you ensuring each greenback that you just enable to move by means of your monetary establishment is sweet cash from licensed entities?

That’s not one thing that’s going to go away as a result of they created the SAFER Banking Act – not only for hashish however for any illicit exercise.

Financial institution Secrecy is likely one of the rules monetary establishments worry probably the most, as a result of you will get fined a whole bunch of thousands and thousands of {dollars}. You will get fined for each report that you just don’t do appropriately, and that makes it troublesome for monetary establishments.

What do you assume the hashish business will seem like in 5-10 years, and the way will Protected Harbor alter?

We’re in a gift panorama that’s simply going to proceed to develop.

There’s going to nonetheless be M&A. However for me, it’s extra vital that companies don’t all get acquired.

I hope that we maintain boutiques, and we maintain mom-and-pop outlets.

However they want that reduction of rescheduling, as a result of it’s robust to do enterprise on this market.

And in the event that they don’t get some sort of reduction, then we’ll see extra M&A exercise that can destroy a few of the smaller markets.

What’s troublesome on this market is the intoxicating hemp merchandise on the market.

That’s what makes our shoppers just a little nervous, and I can’t blame them.

It makes us just a little nervous as a result of we are able to financial institution hemp merchandise, however we are able to’t financial institution intoxicating hemp merchandise that aren’t regulated.

A few of our shoppers who’re in hashish are saying, “Properly, if others can do it with out being regulated, I ought to get into the hemp enterprise and do intoxicating hemp and have a complete new market on the market.”

If our shoppers get into the hemp enterprise, we’re actually clear with them: Till we have now readability, like we acquired with marijuana, like we’re beginning to get with psilocybin, we are able to’t financial institution that business.

We’re very clear with our shoppers and saying it will probably get us into bother as your monetary establishment.

It could hurt the whole program if we’re not being very cautious with the regulatory atmosphere on the monetary finish.

So, we don’t and proceed to not financial institution delta-8 THC and people derivatives.

Tickets to see Sundie Seefried communicate at MJBizCon are out there right here.  

This interview was edited for content material and readability.

Omar Sacirbey might be reached at omar.sacirbey@mjbizdaily.com.