$35.3M credit union tops JPMorgan for medical marijuana banking contract

Dive Brief:

The West Virginia State Treasurer's Office awarded a tentative banking contract Aug. 26 to Element Federal Credit Union to handle revenue from the state's medical marijuana program.
The bid from the South Charleston-based credit union, which has $35.3 million in assets, was chosen over JPMorgan Chase — the country's largest bank — and a firm named DMTLP, according to Credit Union Times. A fourth bidder removed itself from consideration, the State Treasurer's Office said.
Each vendor has until Sept. 3 to file a written protest of the award, according to the National Law Review. "After the issuance of the purchase order, the State Treasurer's Office and the selected vendor will announce additional information, including long-term goals and interim procedures for medical cannabis banking," West Virginia State Treasurer John Perdue said in a statement.

Dive Insight:

Although West Virginia passed the Medical Cannabis Act in 2017, the medical marijuana program stalled when banks on contract with the state said they would not accept deposits and provide services related to cannabis sales, according to the Credit Union Times.

Marijuana is still a Schedule 1 drug under federal law, and many banks are wary to partner with the industry and its related businesses.

To resolve the issue, West Virginia lawmakers passed House Bill 2538 in March, which requires the state treasurer to select a financial institution to handle banking services for the state's medical marijuana program.

"My staff has worked tirelessly to make this program viable," Perdue said in a statement. "I look forward to awarding this contract and moving forward with a banking process. My main priority is to help people in our state who want this medical option for either themselves or a family member."

The bidding process was the second time the state solicited a request for bids for the medical marijuana banking contract. An initial request for proposals was canceled after none of the bidders met mandatory requirements, according to the Charleston Gazette-Mail.