Independent Banker - December 2019 - 69

Trailblazer
Twin City Bank: A leader in
banking cannabis
Twin City Bank in Longview, Wash., has been
serving marijuana-related businesses for
more than five years, making it a veteran in
such a new-and quickly growing-industry.
By Katie Kuehner-Hebert
win City Bank in Longview, Wash., has
been banking marijuana-related businesses
(MRBs), also referred to as cannabis-related
businesses (CRBs), for five years with the encouragement
of state regulators and guidance from
the Cole Memorandum and the Financial Crimes
Enforcement Network
(FinCEN).
Name: Twin City
Bank
Assets: $58 million
Location: Longview,
Wash.
T
In the spring of 2014,
Neil Zick, the $58 million-asset
community
bank's CEO, and Judy
Bartlett, its chief operations
officer and compliance
and Bank Secrecy
Act (BSA) officer, attended
a meeting with speakers from FinCEN, the
Washington Department of Financial Institutions
and the Washington State Liquor Control Board,
now known as the Washington State Liquor and
Cannabis Board. The purpose of the meeting?
To discuss how the agencies were going to help
banks serve companies that grow, process and/or
sell marijuana ahead of the July 2014 opening of
newly licensed MRBs in Washington state.
" The agencies laid out the framework for what
information they would be able to provide that
would help us in our compliance effort to monitor
the activity of whatever customers we decided to
take on, " Zick says.
Buoyed by the support of these agencies,
Twin City Bank executives and board members
discussed the possibility of serving MRBs. " We
thought it was a way to garner more deposits and
increase revenue for the bank through service
fees, " Zick says. " The board didn't have any moral
issues with banking marijuana customers, so
we proceeded to start organizing our thoughts on
how we were going to do this. "
The board decided to get into the business
slowly, initially authorizing just 10 MRB accounts
and limiting the total dollars within those accounts
to 20% of the bank's overall deposits. Twin
City Bank then developed a specialized payment
structure that involved a higher-than-normal service
fee. Finally, in July of 2014, Twin City Bank
opened its first MRB account with a retail marijuana
dispensary. Zick adds: " We started getting
inquiries from other MRB retailers, as well as
from producers and processors. "
Quick stat
$1.37
billion
The value of
Washington
state's cannabis
industry in 2017
Source: Washington State
Liquor and Review Board
Learning cannabis compliance
Twin City Bank's compliance program relies on
guidance from the Cole Memo, published in 2013
by James Cole, then the U.S. deputy attorney general.
While then-attorney general Jeff Sessions
rescinded the memo in 2018, FinCEN and Washington's
Department of Financial Institutions
are still using the guidelines in their oversight of
banks serving MRBs, Zick says.
" You have to be able to monitor all of the red
flags of violations that were listed in that memo,
such as selling to minors, " Bartlett says, adding
that banks " have to have proper policies and procedures
in place to track the sales. "
Another guideline laid out in the memo is tracking
proceeds from MRB sales to be sure that cash
being deposited from the sales aligns with what is
being reported, Bartlett says.
" It took time to set up our compliance program
in the beginning, and we made adjustments in
2015 when medical marijuana became legal, as
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Independent Banker - December 2019

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