17 PUB. 11 2021 ISSUE 4 As President and Chief Operating Officer of Shield Compliance, Tony Repanich leads day-to-day operations and is the company’s principal product architect. Having served as a senior executive at a Washington State-based community bank for over 25 years, Tony has in-depth knowledge of the banking industry and the regulatory and compliance requirements for high-risk industries. Today he brings that knowledge to financial institutions serving and considering serving the legal cannabis industry. coverage to transporting and processing cash payments and the attendant branch security. As new businesses enter the industry, you’ll need to have rigorous risk assessment standards and procedures in place to ensure you’re banking legal funds and have a clear line of sight into the business and its beneficial owners. Part of being prepared to meet compliance requirements means developing systems, applications, and onboarding processes that allow you to vet potential customers and access critical customer and transaction data, all while delivering a positive customer service experience. Support Compliance Staff with Technology Investing in specialized compliance technology will help your bank operate more efficiently by automating your processes and engaging your cannabis customers as active participants in their own compliance. Automation also allows your compliance staff to focus their time, energy, and brainpower on judgmental decision making, analysis, and customer service, rather than mundane compliance tasks. Your investment in a compliance platform will also allow your cannabis banking program to scale as the industry grows and new competitors enter the market. Provide Specialized Resources While technology will help make your staff more efficient, you’ll also need to hire or train employees as specialized cannabis bankers who have a deep understanding of the industry. This knowledge will help them better evaluate customers’ cannabis-related business activity to ensure compliance while deepening their customer relationships. Both bankers and customers should expect high levels of transparency in their operations and interactions, which can pay additional dividends down the line, as strong, open relationships yield positive referrals. As a banker, you’ll have a responsibility to ensure your cannabis clients are operating within state guidelines. Having systems and processes to help you reconcile data frommultiple sources can help you do that efficiently and accurately. Be Prepared to Scale As an emerging industry, banks should anticipate ongoing market changes and adapt to remain competitive. Specifically, there is significant interest in how changes to federal cannabis policy will impact banking. While we do not believe the passage of national reform, such as the SAFE Banking Act, would change the compliance and due diligence required for this industry, it would be an important step toward removing the regulatory uncertainty in the market. It would open the door for more financial institutions to serve the industry. With the U.S. cannabis industry projected to reach $41.4 billion by 2025 and strong growth projected for Arizona, you can be certain more financial institutions will be entering this market in the coming years. Increased competition typically comes with more competitive terms for the customer. For bankers thinking about the economics of a cannabis banking program, it is important to consider the upfront costs associated with serving this industry while making sure you are implementing an operational cost structure that allows you to gain the financial rewards of this industry. Most importantly, you’ll want to be ahead of the curve when the business changes and more competition enters the market. w As we’ve seen in other states, a new legal market for adult-use cannabis brings with it a surge of new businesses and new capital.
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