High time? First-of-its-kind 401(k) for legal cannabis firms launches
This new pooled employer plan opens the door to retirement planning for 500,000 employees across 47 states.
Following passage of the SAFER Banking Act last year that was intended to allow cannabis firms more access to banking and financial services, as well as employer-sponsored retirement accounts, the North American Companies Council has announced that it now offers a 401(k) Pooled Employer Plan (PEP) to its member businesses. This new initiative is designed to exclusively serve cannabis-related entities across the country.
The NACC PEP is the country’s first fully vetted and transparent 401(k) solution for legal cannabis companies. To date, it is the only fully vetted retirement savings option for this industry.
“Retirement savings is an important benefit for businesses and their employees,” said Jeff Mayhall, Board Member, NACC. “The NACC wanted to ensure its members had access to a transparent retirement plan solution to ensure the financial wellness of its employees. We have spent years developing a retirement offer that would support the legal cannabis business.”
“Our goal was to open the doors for the approximately 500,000 employees who were eager to save for their retirement,” said Shawn West, Founder & ERISA Director of CuraFin Advisors, the PEP’s 3(38) investment manager. “This solution eliminates the barriers those employees were facing and allows them to start planning for their future.”
Over the last 10 years, 47 states have legalized some form of medical or recreational cannabis. Due to the conflict between state and federal laws, many financial institutions do not provide services to state-sanctioned marijuana businesses due to the federal classification of marijuana as a controlled substance.
As a result, these employers and their employees are blocked from accessing bank accounts and securing lines of credit, as well as retirement plans.
Related: The power of pooled employer plans: A guide for advisors and small businesses
“It took commitment from all the service providers to launch this PEP,” said Pete Swisher, Managing Partner of Group Plan Systems, the Pooled Plan Provider for the PEP. “All parties had to think differently about the solution to make sure it would work.”