When Michigan legalized recreational cannabis, Edith Farrell, the Bank Secrecy Act officer at Union Bank, Lake Odessa, was in staunch opposition. Well-versed in compliance, Farrell was content to analyze customer data and loan activity.
She never expected she’d be the voice advocating for Union Bank to be one of the first in the state to bank the marijuana industry. A trailblazer in the banking community and a champion for the cannabis industry, Farrell is being honored as one of BankBeat magazine’s 2020 “Outstanding Women in Banking.”
Like many who grew up in the 1970s and ’80s, Farrell was well-schooled in the stigma: Dope would fry your brain, stunt your ambition and ruin your life. “I stayed away from it and looked down on anybody who didn’t, and I carried that with me for 30 some years.”
But she kept an open mind. She read the “Cannabis for Dummies” book, and sought to understand the medicinal properties. “Once I actually started looking into it, I did a complete 360.”
Because of her research, Farrell realized that cannabis banking was inevitable.
In 2018, as deposits were generally hard to come by, Farrell went to the board and pitched the idea to take on cannabis clients. They gave her about a month to come up with a project plan.
She presented for three hours to the full board, senior management, the bank’s attorneys, the community bankers association attorneys, auditors and industry specialists. “We couldn’t fit any more people in our boardroom,” she said.
When Union Bank started banking for the cannabis industry in 2019, the responsibility fell on Farrell. At that point, she had to close the books and browsers and get to know the people behind the plant — which she found was the most compelling part of the job.
“I love meeting new customers and hearing their stories of why they got into cannabis,” she said.
There are two strains of cannabis customers, Farrell said. Those who had previously been growing on the black market were called “the caregivers,” because oftentimes they were providing to patients. They didn’t have bank accounts, were completely cash-based, and were conditioned to keep as quiet as possible. “Now that [their money] is going into an actual business account, they’re not used to having to answer questions,” Farrell said.
The other type is what Farrell called “cherry-picked” clients, or those who came from different industries for different reasons. “They especially are not used to having somebody question what they’re doing, because their businesses had always been mainstream, and they normally didn’t have to justify what they’re doing,” Farrell said.
“Once they’re working for the cannabis industry, everything’s going to be transparent,” Farrell said. “Whether it’s for the bank or the customers, transparency is the No. 1 thing [necessary] to be able to manage the accounts.”
In order to increase trust with her clients, Farrell sees herself as their business partner. She keeps up with her clients on Facebook, and takes their calls on weekends. She regularly visits the growing facilities and provisioning centers across the state, and suggests accounting firms she knows are cannabis-friendly.
“Her attention to detail, commitment to transparency and unwavering focus on customer service make her one of the most trusted and admired bankers in the industry by regulators, her team at Union Bank and her clients,” said Jenna Meyer of Shield Compliance, a company that supports banks active in the cannabis industry.
Farrell has helped her clients shift from wire transfers to faster and cheaper ACH payments. Cannabis businesses also can’t get company credit cards, so the bank offers debit cards with higher daily limits. When the pandemic sent marijuana regulators home in March, customers who were used to paying more than $50,000 in cash for their licences had no way to pay electronically. “We would do one-day limits increased to $50,000 or $75,000 — whatever it was they needed to be able to get their license paid for,” Farrell said. “There’s lots of risk there, but we felt we could control it.”
This transparency and service sets them apart, not only to their customers, but as an example for other bankers.
“Edith is … extremely generous with her time, sharing her knowledge at conferences and other industry events to help other bankers begin and refine their cannabis banking programs,” Meyer said.
After Farrell spoke on a digital panel to thousands involved or interested in the marijuana industry, dozens of customers, vendors, and banks were quick to ask for help. “My LinkedIn was blowing up for days,” she said.
There have been times when the pressure and novelty of the industry shift has been overwhelming, but the stories, relationships and perspectives have been settling.
One particularly softening story was a client who lost his wife to breast cancer. Toward the end of her life, cannabis was the only thing that could get rid of her pain. This client quit his job to commit to the business, hoping to offer the same comfort to others.
There have been a lot of stories like that, Farrell said. “Just normal people who had a family member with MS, or some other type of situation, where cannabis helped.
“I want to make sure that this industry is treated respectfully and just like every other customer,” Farrell said.