Sacramento-based financial technology company NatureTrak Inc. has signed up Northern Redwood Federal Credit Union in Humboldt County to use its tracking software to validate cannabis-related business deposits.
Humboldt County has been a major cannabis region for 50 years, long before legalization, and it is now home to major legal growing operations.
“They are banking the largest producers in Humboldt, so that’s good for us,” said Jontae James, CEO and founder of NatureTrak.
Based in Arcata, the credit union had $27.2 million in assets as of Sept. 30 and about 3,200 members, according to the National Credit Union Administration, the federal regulator of credit unions.
“They are super small, but they have a lot of clients that are doing a lot of business,” James said.
This is NatureTrak’s fifth financial institution client, and James said he anticipates signing two more by the end of the year.
NatureTrak’s platform accesses licenses in state and local databases and checks that they are valid for the transactions being done. It also creates receipts along the way from grower to processor to distributor and eventually retail sales. All those receipts are meant to create an audit trail that can help make financial institutions comfortable in banking cannabis-related businesses.
The cannabis industry has struggled to access the financial system because, even though state law allows growing and selling cannabis, it is still illegal under federal law. NatureTrak is paid by the bank or credit union for its software. All the tracking, verification and record-keeping gives a provenance to the money from state-regulated cannabis transactions, which could help allay the federal government's primary concern about money laundering.
“We’ve been providing services to cannabis customers for a while now,” said Jenna Cardoza, CEO of Northern Redwood Federal Credit Union, in a news release. She said the 65-year-old credit union realized it needed “a more robust technology solution to manage these high-risk accounts. NatureTrak’s compliance and risk management solution allows us to effortlessly manage our cannabis accounts and provides us the ability to better meet the needs of our customers.”
NatureTrak’s platform automates what would otherwise be lengthy documentation if done by bank or credit union employees manually.
Asked what would happen if federal law eases on cannabis, James said it would probably increase NatureTrak's business.
“If the law changes, it makes compliance even more important,” he said. “And more institutions will jump in.”
NatureTrak has eight employees and another eight contractors. James declined to disclose the company's revenue..
