ANCHORAGE, Alaska -- An Alaska credit union plans to discontinue a pilot program to provide checking and savings accounts to marijuana-related businesses, an official said.
Credit Union 1 will end the program Aug. 30 because critical insurance coverage will no longer be available, The Anchorage Daily News reported Tuesday.
Credit Union 1 announced the program's launch in November to establish financial services for the primarily cash-operated industry.
Marijuana-related businesses cannot continue the program beyond a pilot phase without the liability coverage, said Credit Union 1 CEO James Wileman.
Alaska voters legalized recreational marijuana in 2014. The state generated more than $10 million in marijuana tax revenue from July 2017 to June 2018, according to the state Department of Revenue.
Cannabis businesses often operate in cash because banks and credit unions are wary of taking on clients whose product is still federally illegal, the newspaper reported.
Credit Union 1 was told by its insurance broker that the necessary coverage would not be renewed because of the credit union's cannabis banking program, Wileman said.
Four marijuana-related businesses participated in the program, which did not perform as well as the credit union expected. If the burden of compliance was not so high, it may have been a "more reasonable prospect" for all parties, he said.
If the federal perspective on marijuana-related businesses changes in the future and allows the credit union to reduce its insurance risk, "we will certainly consider exploration of another pilot," Wileman said.