Sundie Seefried looks at the evolving cannabis banking landscape

(This story first appeared in the September-October issue of MJBizMagazine.)

Sundie Seefried burst onto the cannabis industry scene 10 years ago as the CEO of Partner Colorado Credit Union, where she launched Safe Harbor Financial, a program to service the new marijuana businesses popping up across the state after voters legalized adult use.

Safe Harbor garnered dozens of marijuana business clients in its first two years, and on April 20, 2016, Seefried published “Navigating Safe Harbor: Cannabis Banking in a Time of Uncertainty.”

The book became – and remains – the ultimate blueprint for safe and successful marijuana banking, establishing Seefried as a cannabis industry pioneer.

In 2022, Seefried spun off Safe Harbor into its own separate business entity and took the company public on the Nasdaq stock exchange.

Today, Safe Harbor serves more than 600 marijuana business clients in 40-plus states and has executed well over $20 billion in transactions.

In June, Safe Harbor launched a lending program with loans typically ranging between $5 million and $10 million and lending rates of 8%-13%.

Seefried spoke with MJBizMagazine about what the next decade holds for Safe Harbor and cannabis banking overall.

She also will be speaking at MJBizCon on Dec. 5 about the impact of the SAFER Banking Act; get your tickets now.

What impact has the cannabis industry downturn in recent years had on Safe Harbor and its clients?

The fast legalization across the country has caused a lot of trouble, but so has the M&A activity.

Operators overindulged in investor money and, at some point, they had to tighten their belts – and that’s what we’ve seen them do.

As far as we’re concerned, we kept up with the emerging markets as they legalized, and that allowed us to pick up the same business across state lines.

We’re now taking money in over 40 states across the country.

Why and how did you start the lending program?

I wanted to do that right from the start, but the regulators were not comfortable with it.

It got to the point, finally, in about 2019, that we started talking with regulators and said, “We have all these clients. They need access to capital. Access to capital through debt is safer for us to take because we know where the money’s coming from.”

Remember, everything the regulators look at is illicit business. I’m saying this is the safest way to get money in their pocket, other than investors.

I made a case to the regulators that the money was good. So, we started very slowly and really walked the regulators through it, just like we had to do with cannabis banking.

We were able to launch a program and have over $50 million on the books.

We are conservative. We underwrite like a financial institution, so our loans are not projection based. They are based on real estate and assets.

We’re comfortable with it. The reason that we have to write like a bank is because it sits on the bank balance sheet, and the bank has to be very comfortable with our underwriting.

What kind of impact has potential rescheduling of marijuana had? Are you seeing more activity or optimism from your clients?

Optimism is always there.

But rescheduling is not only good for the industry. It rolls up to us at Safe Harbor, the financial institution, because that will give them more money on their bottom line to service debt. It will qualify a whole lot more cannabis entities to go and get debt.

Taking 280E (of the Internal Revenue Code) away is a great thing for debt servicing.

If they get to reschedule to Schedule 3, there’s going to be more investor interest in the industry.

And investor funds are a great thing to flow through the industry. It benefits us in the long run, because we’re in the deposit business.

What are the chances of the SAFER Banking Act passing, and how will it impact Safe Harbor and its businesses?

It won’t impact us too much because we’ve been doing it without SAFE Banking for 10 years now.

In our situation, we’re pretty solid in what we do.

The regulators understand what we do. The companies understand it might gather more interest in terms of financial institutions coming to the market, which means it would benefit the companies themselves.

However, it is not the beginning of easy banking for cannabis, because (the Bank Secrecy Act) is what really drives the workload. Bank Secrecy drives the pricing.

Not too many financial institutions want to set up a function that specializes in cannabis and understands it and makes sure no illicit activities go on.

And we all know that there is an illicit market operating in plain sight, and that really makes it difficult for the cannabis industry.

Banking is going to be that one factor that helps eliminate the black market and really legitimize those who are licensed and doing it the correct way.

I don’t think it will change much unless they revise Bank Secrecy. But in terms of revising Bank Secrecy, it gets revised quite regularly, but it only gets more difficult.

It is the biggest question that regulators look at when they come in: Are you protecting the financial system? Are you making sure every dollar that you allow to flow through your financial institution is good money from licensed entities?

That’s not something that’s going to go away because they created the SAFER Banking Act – not just for cannabis but for any illicit activity.

Bank Secrecy is one of the regulations financial institutions fear the most, because you can get fined hundreds of millions of dollars. You can get fined for every report that you don’t do correctly, and that makes it difficult for financial institutions.

What do you think the cannabis industry will look like in 5-10 years, and how will Safe Harbor adjust?

We’re in a present landscape that is just going to continue to grow.

There’s going to still be M&A. But for me, it’s more important that businesses don’t all get acquired.

I hope that we keep boutiques, and we keep mom-and-pop shops.

But they need that relief of rescheduling, because it’s tough to do business in this market.

And if they don’t get some kind of relief, then we’ll see more M&A activity that will destroy some of the smaller markets.

What’s difficult in this market is the intoxicating hemp products out there.

That is what makes our clients a little nervous, and I can’t blame them.

It makes us a little nervous because we can bank hemp products, but we can’t bank intoxicating hemp products that are not regulated.

Some of our clients who are in cannabis are saying, “Well, if others can do it without being regulated, I should get into the hemp business and do intoxicating hemp and have a whole new market out there.”

If our clients get into the hemp business, we’re really clear with them: Until we have clarity, like we got with marijuana, like we’re starting to get with psilocybin, we can’t bank that industry.

We’re very transparent with our clients and saying it can get us into trouble as your financial institution.

It can harm the entire program if we’re not being very careful with the regulatory environment on the financial end.

So, we do not and continue not to bank delta-8 THC and those derivatives.

Tickets to see Sundie Seefried speak at MJBizCon are available here.  

This interview was edited for content and clarity.

Omar Sacirbey can be reached at om***********@mj********.com.