Two Vancouver Island cannabis growers say they were recently told they were losing their access to a local credit union in British Columbia, although the savings institution denies any official policy shift.
Two micro cultivators shared with StratCann that they both recently received a phone call from a representative of Island Savings Credit Union telling them their accounts would be closed as the institution would no longer be serving the cannabis industry.
However, a representative for Island Savings, a division of First West Credit Union, says they continue to work with the cannabis industry and are only closing accounts they deem as not being compliant with federal law.
“There has been no change to our policy regarding serving the cannabis industry and we continue to offer banking services to business members in this sector where they comply with applicable laws and regulatory requirements,” noted the representative, pointing to a guideline posted in November 2021 by the BC Financial Services Authority, a Crown agency responsible for the supervision and regulation of the financial service sector.
The report notes that the BCFSA “will apply additional scrutiny on accounts and transactions linked to cannabis businesses in line with our Supervisory Framework.”
“Credit Unions establishing deposit accounts or conducting other financial transactions with cannabis businesses are exposed to elevated risk overall. Given the potential for illegal and illicit activities associated with cannabis production and distribution, including money laundering, cannabis businesses are subject to stringent government control and regulations which are not applied to other consumer goods.”
Island Savings is a division of First West Credit Union, based in British Columbia, with more than 40 locations in the province under Valley First, Island Savings, and Envision Financial.
However, both Philip Tapley, the owner of Craft Kings Cannabis, a micro cultivator in Sooke, BC and Katy and Shawn Connely, the owners of Sea Dog Farms, a micro cultivator in Saanichton, BC, say they were told over the phone that the credit union was no longer doing business with any cannabis companies, although for different reasons.
Philip Tapley says he received a phone call from Island Savings’s VP, Randy Bertsch on June 8, telling him they were closing his account in 60 days.
“He told me they were getting out of the cannabis industry because it was too onerous,” explains Tapley. “He assured me it had nothing to do with us personally, they just want out of the cannabis business.”
He says he was so confused by the call that he even suspected it might have been fraudulent or some kind of joke, leading him to call his own representative at Island Savings, who confirmed it was legitimate, and that the credit union was moving out of serving cannabis companies.
Tapley then received a letter from First West dated June 7, stating his account was being closed for “not meeting the necessary risk standards”, without any mention of an institution-wide policy change.
“When I originally received the phone call, the first thing they said was ‘we’re going to be sending you a letter, but we just want to assure you that this isn’t anything that you’ve done, this is a policy across the board, so we wanted to get a head start on that and assure you of that. You will be receiving a letter and what’s really happening is we’re getting out of the industry’.”
The micro cannabis grower says he’s disappointed and is now hoping to move to another bank—Ottawa-based Alterna Savings and Credit Union, which operates accounts for numerous cannabis businesses in Canada, from retailers to cultivators and processors.
“I’d like to bank with someone where this is a good percentage of their portfolio, not another small bank,” continues Tapley. “I need someone who takes this seriously and won’t just drop me again in a few months.”
Shawn and Katy Connely, who operate Sea Dog Farm on Vancouver Island, say they were expecting the call, not only because Katy saw a post by Tapley on social media about the call he received, but also because they had heard earlier this year the provincial credit union was going national.
“As soon as I heard that, I figured if they go federal they will have restrictions on cannabis-related companies being involved there because of the international nature of what they do,” says Shawn Connely.
Like Tapley, Katy Connely says they were told there was not a problem with their account, either over the phone or in-person when they visited their local Island Savings branch.
We’ve been paying fees for two years and deposited one check, so that’s not the reason,” she notes. “It’s impossible that we were not compliant with our activities with that bank account.”
“He (the person they spoke with on the phone) said it’s not an issue with our account, the organization is moving in a different direction, not once did he say there was anything questionable about what we had done.”
Connely adds that she’s especially frustrated because they had done business with Island Savings for several years and recommended them to other cannabis businesses, especially other micro cultivators like Sea Dog Farm.
As an outdoor grower, she explains, they have only needed to deposit a check a few times now, since they only have one harvest a year, and have also faced challenges selling their product into provincial markets.
Last year’s harvest was the first successful sale into the market and they’ve only received one payment for that so thus far.
“We’ve been paying bank fees for two full years because we were told we had to have the account, and then as soon as we started putting checks in, they cancelled us. This is not fair.”
A representative for Island Savings responded to a request for clarification on the dispute by noting that they don’t share details relating to specific members, prospective members or employees for reasons of confidentiality and privacy.
“I can confirm there has been no change to our policy regarding serving the cannabis industry and we continue to offer banking services to business members in this sector where they comply with applicable laws and regulatory requirements.”