Cannabis and Fires: Can this Bank Make Money in Northern California?

February 7, 2018

Jim Brush was named President and CEO of Summit State Bank in April of 2016. He has served on the Summit State Bank board of directors since 2009 and most recently was the Chair of the bank’s Loan Committee. Prior to joining Summit, he had a CPA tax practice in Healdsburg for many years. Mr. Brush graduated magna cum laude with a Bachelor of Science in accounting from Golden Gate University. Mr. Brush is involved in the Healdsburg community and currently serves as the President of the Healdsburg Museum & Historical Society. He’s also a member of the Sonoma County Assessors Appeals Board, Treasurer for the Healdsburg Greyhound Booster Club and on the board of MyHBGTV.

In his exclusive interview with the Wall Street Transcript, Mr. Brush details how his bank deals with the idiosyncrasies of banking in Northern California.  “The interesting thing is, here we are, with the federal government directly collecting tax from the cannabis industry all across the United States where it’s illegal. Whether it’s medical or recreational, they have rules and regulations where you must declare what you’re making and then pay tax on that. We have our state government that is permitting it and doing business directly with them. The pseudonym given to the region, “Emerald Triangle,” hosts the Emerald Cup, which is held at the Sonoma County Fairgrounds. And for the event, our county leases its fairgrounds to about 25,000 people who attend and are interested in smoking as much as they can.”

The local economy has a huge exposure to this industry.  “It has been estimated just in Sonoma County alone that it’s 10% of our economy. Right now, it’s a cannabis-based economy, and that’s before the legality of recreational use. So it is everywhere.”

Unfortunately, Mr. Brush is having issues with the legality of this industry:  “Obviously, California has had medical use for quite a while. It is a difficult subject. As a bank, especially publicly traded, we will not bank cannabis as long as it is an illegal federal substance.”

The bank has continued to focus on its traditional values.  “It is not unusual for me, the Chief Credit Officer and the Chief Lending Officer to meet with the customer and, along with the lending officer, to listen to their story and then to structure loans based on their unique set of circumstances, rather than on a generic basis. Our competitive edge is that our customers have access to the decision-makers who know their business and the market, which translates to a more personalized deal and ultimately to a more satisfied customer. So that’s our advantage on the loan side.”

Read more of how Jim Brush, CEO of Summit State Bank, navigates the local economy in this complete interview in the Wall Street Transcript.