As CEO of one of Colorado’s first financial institutions to serve the marijuana industry, Safe Harbor FinancialSundie Seefried remembers the days when business owners paid cash for million dollar tax bills.
“It was crazy,” she recalls. “That’s why we got into this, though, it’s those stories and the safety factors that those business owners had to deal with.”
Just over eight years later, Safe Harbor has processed more than $11 billion in transactions and is set to join a NASDAQ-listed company.
Northern Lights Acquisition Corp., a New York-based company, just announced that it will pay $185 million to acquire Safe Harbor from parent company Partner Colorado Credit Union. The deal includes $70 million in cash and $115 million in Northern Lights stock, with Seefried expected to retain his role after the deal closes.
Due to the federal plant ban, the majority of marijuana retail transactions are cash-based. The federal government has taken a hands-off approach to banks serving state-legal marijuana businesses trying to deposit the money, but other financial actions have been largely limited to local and regional institutions, which are more willing to operate under the risk of technical failure. federal drug laws.
Founded shortly after Colorado voters legalized recreational marijuana in 2012, Safe Harbor Financial intentionally started slowly to comply with state and federal guidelines, but grew with the industry itself. Annual filings started at $153 million in 2015 and grew to around $4 billion in 2021, according to the company.
Safe Harbor primarily handled deposits for the pot industry in its early years, but has since expanded into more financial services, including commercial lending and corporate merger processing. After Safe Harbor integrates with Northern Lights, Seefried expects more services for marijuana businesses to become available.
“Once our Colorado customers got support for their depository services and they weren’t trading cash all the time, they started getting licenses in other states,” she says. “We want to add investment services, brokerage services and the same kind of services that our customers get kicked out of banks for.”
According to Seefried, about 60 Safe Harbor customers are Colorado businesses; once the deal is done, Northern Lights plans to expand Safe Harbor’s reach outside of Colorado.
“Safe Harbor is one of the only multi-state financial services organizations to successfully navigate the highly regulated cannabis banking industry, providing services operators in other industries take for granted,” Northern Lights said in a statement. statement announcing the agreement, adding that Safe Harbor “is uniquely positioned to evolve.”
Navigating a market that is still federally illegal has never been easy, Seefried points out, but the rapid evolution of legal pot and differing state laws have made his job increasingly difficult. difficult as marijuana industry mergers and acquisitions increased. “Every time that changes, we have to change our risk mitigation strategies, and that will continue to be difficult as long as the market continues to merge.”
Colorado Congressman Ed Perlmutter’s SAFE Banking Act would protect banks and financial institutions that serve marijuana businesses from federal law enforcement. The legislation has passed the US House successfully a few times, but has yet to be heard in the Senate. Although Perlmutter isn’t seeking re-election in 2022, Seefried thinks another House member will pick up the slack and she’s optimistic about SAFE Banking’s chances.
“I think it has a chance. There are so many priorities in Washington right now, so it’s hard to say,” she adds. “I’m one of those hopeful people.”
If the marijuana bank is ultimately licensed federally, Seefried isn’t worried about the national banks taking over the business. She likens marijuana banking to financial services for the alcohol, gambling, and gas station industries, all of which operate with large amounts of cash.
“I still think smaller community banks and credit unions will have an advantage doing this,” Seefried said. “If you ask ten major banks if they offer money-intensive services, I would say maybe two actually offer them.”