This week we spotlight Joseph Campanelli, President, and CEO of Needham Bank. Joe’s 30 years in the financial services industry – including leading Hartford National into interstate banking, building Sovereign Banks – New England and its entry into commercial baking multi-state acquisitions, and leading the turnaround of Flagstar Bank, raising over $1 billion in capital, position him as a key market leader in cannabis banking.
From your corner of the cannabis industry, what’s the single greatest challenge right now?
For us, the greatest challenge is the enormous loan volume coming from the cannabis industry and rigorous compliance standards. Since marijuana is still illegal at the federal level, many financial institutions are unwilling to serve cannabis business clients, creating a high volume of loan requests for banks that serve this industry.
Although numerous requests are constantly coming in, it is critical to take the time to find a solution for each customer’s unique credit needs. And after determining the appropriate structure, challenges include trying to process the loan request promptly while balancing credit risk, customer expectations, and stringent regulatory compliance standards.
How does your business solve issues related to this challenge?
Needham Bank’s cannabis banking team is led by industry pioneer Paul Evangelista, the first to bank cannabis-related businesses in Massachusetts. Paul is an industry expert and understands the unique nuances of this industry. Needham Bank has built the platform and strategy over the past 18 months and has established an additional team of highly qualified loan experts to meet the growing demand. Our cannabis banking team works directly with our clients to set clear expectations when it comes to loan instruments and when the loan will close. We ensure we effectively communicate with clients so that they know what to expect regarding required documentation, final licensure, and appraisal. And regardless of when and how we ensure federal restrictions are resolved.
Additionally, we pride ourselves on having one of the most professional deal sheets in the market. We spend extra time preparing the deal sheets for our clients so that they are clear and concise, and most reference points are final. By being extremely detail-oriented, we have found that very few changes usually need to be made to the sheets, which keeps the process moving.
Tell us about a situation you’ve encountered that could only happen in the cannabis industry…
Card and point-of-sale payment processing at dispensaries is something quite unique to the cannabis industry. There are many companies that claim they have created a process to use credit cards in dispensaries, but the truth is major card companies do not allow merchants to use their networks for marijuana purchases. Banks do not permit these transactions to hit accounts they hold because if they do, they could be banned by the merchant credit card industry for all clients, cannabis, along with traditional debit and credit transactions. Additionally, the industry is getting closer to using blockchain technology, but if a cannabis client currently accepts transactions this way, they could be rejected from accepting credit cards when credit card processing is finally made legal.
If you could travel back in time by ten years, what would you tell your former self about the industry?
I would tell myself that this is going to be a great opportunity to be part of an exciting and dynamic industry! It has been incredible to work with people who not only believe in the industry from a business perspective but recognize the benefits of cannabis and the products that come from cannabis.
Some people are still skeptical, but new studies are constantly released showing the benefits of cannabinoids for a multitude of serious and chronic illnesses. The products produced from cannabis are significantly healthier than the strong pharmaceuticals that they replace. And from a recreational perspective, it has been great to see people enjoying the legal choice of a regulated product that they know is pure and natural.