As of April 10, 2015, MBank has announced that they unfortunately have to close their banking services program for those in the cannabis industry, but this not a story of failure, it’s one of admirable progress. Jef Baker, CEO of MBank (OTC:MBNC), is not turning his back on the industry. He’s continuing his mission, he’s pursuing his goals, and he’s not giving up. Being in the cannabis industry, we have to realize that there will inevitably be bumps in the road and it’s businessmen like Jef Baker who make it even more apparent to all of us that we have to aspire to greatness to make a lasting mark in this changing time in history. Here’s our dialogue with Jef to get an insight of what’s next for MBank…
Give us a little background of your current situation with MBank.
Well, we got into the cannabis space starting around February 2014 with this burning desire to try and help an industry that was completely underserved from a banking perspective. We wanted to be a bank that could help and serve people in a way where no one was really stepping up to do that. We’re excited to be part of the solution and that’s something a lot of us wanted to do. We got into that process, did a lot of homework, did a lot of research, and built out a program that we thought we could effectively run inside a regulated bank, inside of a regulated institution.
We started going down that path and in about September of 2014, we were able to open up some accounts. We worked directly with grow operations, dispensaries, and ancillary businesses that support those companies, and we opened up bank accounts for them. We probably opened up somewhere between 75 to 100 accounts over a 6-month period and we got to a point, working through the process closely with our regulators and internal staff, where we started to understand and realize that the level of compliance needed to properly maintain a program like this is just unachievable at a small bank like ours. We recognized we couldn’t properly serve this industry on a go-forward basis, and so we unfortunately had to publicly announce yesterday that we have to close our cannabis banking program. So, over the next 60 to 75 days or so, we will work hard with customers to transition them to another solution.
In a previous interview with us, you said that “creativity and innovation are at the heart of overcoming the odds.” What advice can you offer to other entrepreneurs about knowing when to move on from their current opportunity?
Well, let’s see… If you looked at this particular situation, this is not a failure of our customers; it’s not a failure of MBank. In fact, we’re very much hopeful that what we’ve done so far will provide education, awareness, and the foundation for a process to bring banking to the cannabis industry. We all see that there’s a huge need for this and the system needs to understand how to go about providing solutions and a lot of change needs to occur in the meantime. I believe our involvement, even if it was for a short period of time, has added tremendous value and will hopefully have a positive impact on helping solutions be developed in the near future.
I believe our involvement, even if it was for a short period of time, has added tremendous value and will hopefully have a positive impact on helping solutions be developed in the near future.
I would be quick to say that you look at this, and while it’s tough and unbelievably frustrating for ourselves and our customers, in the big picture, I think this is progress and this part of facilitating real necessary change. I would encourage people to look at the effect of the situation: This is a long battle and these kind of things need to occur to help feed that change that will eventually allow banking to become mainstream for the cannabis industry. That’s how I would like people to view this situation. I think when you’re in a regulated environment like we are, you have to do what you can do, and there’s a time and place where you have to move on, change your course, and be responsive to all the constituents that go into managing a bank: shareholders, regulators, management, board members, etc.
I think the situation will dictate what you can and can’t do and when you have to shift gears and move in a different direction. For us, our strategic planning, our mission, is all about serving the underserved and finding opportunities where banking services are either nonexistent or poorly represented, and that’s where we want to be and that’s where we want to try and provide value. We know that’s a great strategic plan. It helps everybody – in terms of the customers, in terms of the opportunity for return for our shareholders, and for our society in general.
What we’re trying to accomplish is not going to change. Who we are and what we’re trying to be is much the same, and we’re looking forward to continuing to be entrepreneurial and innovative and help people where we can. This is simply a minor setback, but once again, I think we’re going to look back at this and feel like we were part of a process to facilitate change in this industry.
The heart of the entrepreneurial spirit is to keep moving forward. What’s your next step?
First and foremost, we need to ensure that we have a solid foundation at our bank. We have to focus internally. We have to ensure that we are incredibly strong, stronger than we have been previously, to provide us the platform and the privilege to be entrepreneurial. I think we’ve discovered, through this process, that we need to be better and we need to be stronger internally in terms of compliance and in terms of management. Our focus is going to be inward for a period of time and then it will be the springboard to allow us to jump into that next entrepreneurial strategic plan designed to help people and solve problems. We have a couple of options lined up, but for now, the focus has to be internal and making sure that we’re as strong as possible at our core.
What is the highlight of what you’ve accomplished at MBank?
I think just being able to participate in the industry and in the media to try and highlight and educate how much need there is for banks to step into this space and not only provide basic banking services, but to just share with the country how wonderful these people are who need these services. There are wonderful people in this industry! They deserve respect and they deserve to be treated like business people. We wanted to not only provide basic banking services, but to provide basic respect to this growing industry.
For me, I think the most fulfilling part of this is that we got to participate in history changing in front of our eyes, right? We’re watching this industry become more and more mainstream, more and more acceptable and accepted, and even while it’s still going to have its bumps, bruises, and challenges like we’re experiencing, I’m going to look back and feel like we had the unique opportunity to be at the forefront of helping set an example and be a part of demonstrating the solution that’s needed. I think we’ll feel like we played a major part in developing this process and that alone feels good.
Being a business professional in this industry takes courage? What other attributes do you think we need to persevere in the industry?
Right. Ok, from the banking perspective, you absolutely need to continue to seek creativity and innovation. Banking in itself is very set in its ways – it’s very traditional, it’s slow to adopt change, and this is something somewhat new in terms of acceptability and adoption. It’s going to take people that can see where we’re headed, people that are passionate and excited about wanting to do the right thing! We all see the tremendous problems being created by the lack of banking for this sector and so I think it’s people that have that passion if you will, and have that drive, that are the kind people we need in this. I think what we need to see is a lot more progressive people in the banking system and in the regulatory world. I truly believe that this is what we need in order to make the necessary changes and to make this acceptable for everybody involved. Those are the things I think that are so important to seeing a real positive change.
MBank has supported many cannabis related businesses in its term. What have you learned? What do you wish others knew about these business owners?
You know, it’s like what I said above, I really feel that they don’t get the respect they deserve. People are so quick to judge others and quick to stereotype. And at MBank, I’ve been struck over and over and over again by how many wonderful, bright, caring people are in this industry, and that these are normal people that are no different from any other industry. I feel like they often get disrespected and treated poorly because of the field that they’re in. That, to me, is just so unacceptable and just so distasteful. These are good human beings and they deserve all the respect in the world!
And at MBank, I’ve been struck over and over and over again by how many wonderful, bright, caring people are in this industry, and that these are normal people that are no different from any other industry. I feel like they often get disrespected and treated poorly because of the field that they’re in.
All of us that are providing services to them need to understand and remember that it’s because of them that we get to exist. They’re our customers so we should be humble and we should feel lucky that we have the opportunity to serve them. I just feel like there’s a lot of folks out there that end up being a little bit judgmental or are stereotyping folks, and it’s just really inappropriate.
We applaud you for your work with MBank, Mr. Baker. Is there anything else you’d like to share with the Cashinbis community?
I’d like to share that just because we’ve come to realize that we can’t provide banking services in our current situation, doesn’t mean we’re not going to continue to support the cannabis industry. We will continue our mission, especially in the state of Oregon, where we’ve been able to be incredibly active with our state legislature and our state government as they work toward to implement recreational legalization. We’re an active resource to the government to try and help educate and develop workable programs that will help meet the industry’s needs. We’re going to still participate. We’re going to help. Fortunately, we have a lot of insight and experience and I think we can still benefit the industry and we can help, even though we may feel we can’t directly help by providing our banking services. We’re not turning our backs on the industry in any way, shape or form, even though we needed to do what we needed to do.