This commentary was written by M. Jerome Diamond, a three-term Vermont attorney general and a member of the VSECU board from 1997-2015, chairing the board from 2008-2015. Diamond currently lives in Lebanon, New Hampshire.
Last week, the Vermont State Employees Credit Union CEO announced that the credit union was suspending taking new accounts related to the cannabis industry stating that VSECU did not have enough staff to properly service the new growers, manufacturers and retailers that were about to be licensed in Vermont. It was a shocking statement.
Years ago, when I was chairman of the board, when medical marijuana had just been legalized in Vermont (although still illegal by federal law), the board decided that VSECU would provide service to the new dispensaries with the hope that someday Vermont would legalize the use and retail sale of cannabis and the business would grow for VSECU.
Over the years, VSECU grew that business and had 80 businesses it was serving at the time of the suspension.
For the last three years, everyone knew that by October of 2022, the regulated retail trade would begin in Vermont. And the Vermont Cannabis Control Board estimated they would, over time, issue 100 to 300 licenses to growers, manufacturers and retailers, all of them needing a financial institution to conduct business. With VSECU already firmly established as the preferred financial institution for the medical marijuana industry, it stood to reason that when the regulated retail trade began in October 2022, VSECU would be ready to service the lion's share of the new licensees. Instead, the CEO suspended the servicing of new accounts, claiming a lack of staff to properly handle the potential new members!
If that is true, there is no excuse for it. VSECU has had years to prepare for this. If they didn’t budget money for increased staff, they should have taken it from the million dollars they spent for slick flyers and digital advertising to promote its proposed merger with New England Federal Credit Union. And if the lack of staff is the real cause, then it is a case of incompetence by VSECU leadership. But is it the real reason? Or does it have to do with the proposed merger itself?
VSECU is giving up its state charter to merge with NEFCU and will be governed by a federal charter if the proposed merger goes through. Since the growth, manufacture and sale of marijuana is still illegal by federal law, it is no wonder why so few federal credit unions are willing to risk the wrath of federal regulators on this issue and thus take few marijuana-related businesses as members. Could it be that the National Credit Union Administration, which is reviewing the proposed merger with NEFCU has put the kibosh on VSECU expanding this business if they want the merger with NEFCU approved? If so, this is the first of what will probably be many unfortunate surprises VSECU members are going to get with this merger.
Yet another reason to vote NO on the proposed merger!
Read the story on VTDigger here: Jerry Diamond: Incompetence or merger for VSECU?.