As first reported on Slog earlier this month, Verity Credit Union, the only place around here that was publicly banking cannabis dispensary money, changed tack after KPLU outed them. Verity CEO Bill Hayes told me that it was in direct response to the attention received from the KPLU story. "The headline on the interview on KPLU’s website indicated that Verity wanted to be the banker for the pot industry. This conclusion was not an accurate statement of the Credit Union," wrote Hayes. "I realized that I had given the wrong impression during the interview."

Two weeks after we reported the snafu, KPLU covered the story. But nowhere in their story does it say that Hayes attributes his change of heart to the attention received from the original KPLU story. Instead, KPLU reporter Keith Seinfeld, unable to reach Verity, apparently decided to make up a reason for the kibosh:

That changed a few weeks ago after banking regulators in Olympia "invited" Verity executives to come have a chat.

The story goes on to claim that the state's Department of Financial Institutions questioned Verity about their practices and essentially warned them about various federal laws that may prohibit what they are doing. Shocked by the talking to, Verity purportedly changed course and canceled their medical pot bank accounts.

Injecting One Verity-Sourced Fact Into the Record

I was doubtful of that version of events, particularly since Hayes was clear with me that the decision was his alone, taken after the KPLU article focused much unwanted attention on them. I was also kinda bummed that KPLU refused to link to my news break. So I posted a link with this comment:

When I asked Verity head Bill Hayes about this two weeks ago, he told me the change was a direct result of the headline on the original KPLU story.

Which elicited this response from author Keith Seinfeld:

Thanks for the credit Ben, but I don't think you got the full story. Would you expect Mr. Hayes to publicly blame his own regulators? He didn't return my calls or emails on that subject, but I gave him the full opportunity to deny that the meeting with regulators precipitated his decision. Look at the timeline: Verity got a call and had a meeting with their regulators, and made their decision shortly after. The headline on our website was barely provocative, certainly not sensational (and the story not at all). Several people I interviewed spoke about the risks of telling their story in public, but the point they all made was: The public needs to know the consequences of the federal "prohibition" style laws. They don't want to live in secrecy.

Give Verity a nod for being innovative and open-minded, if not entirely transparent. I felt bad they had their wrist slapped (and the clients suffered).

To answer Keith's question, I would not expect Verity to blame state regulators, but I did ask the credit union if the decision was due to outside influences—specifically the National Credit Union Association, or any other outside influence generally—and was told no by Hayes. Rather than expecting anything, I asked Verity and reported what they told me, even though it took me several days to get hold of company executives to confirm the news break.

Checking the Story Sources

Curious if the KPLU claims held water, I contacted the state's Department of Financial Institutions and Verity Credit Union, once again.

"I have no idea where KPLU got that," says Shari Storm, Senior Vice President at Verity Credit Union, when asked about KPLU's claim that a meeting with state regulators led to Verity's change of heart. "It's simply not true. I don't know why they're saying that." Storm tells me that Verity was undergoing a required annual examination by government regulators. "Verity executives didn't go down there. We are having our examination right now, which is what all credit unions have every year. We're talking with DFI, which we do every year."

As part of the examination process, the state asked about Verity's pot banking opinions, because state banking regulators pay attention to industry-related news and the Verity story was big news. But Storm is clear: "No regulators asked us to close those accounts."

"We absolutely did not order them to cancel the accounts," says DFI director Scott Jarvis. He admits that the department asked Verity about their legal interpretations, but says it was more to help both parties with unanswered questions surrounding the federal-state pot conflict. "We're curious, we are your regulator, and we want to make sure you're aware of all the things at play. We do examinations of a lot of organizations, and our exams are generally intended to be helpful."

Beyond making clear that regulators did not ask them to close accounts, Storm says DFI did not sway their decision. "We looked at it again internally, spoke to our attorney, and decided that the fact that it's not legal federally puts us in a precarious position." This is, coincidentally, exactly what CEO Hayes told me earlier this month. Storm continues: "It is a tricky situation for us. We’ve been having a lot of reporters call. We decided to just not comment on it."

Why does this matter?

I don't want to needle KPLU too much. But their follow-up story made the original gaffe decidedly worse. The fact is that Verity employees met with the Department of Financial Institutions for a required annual exam, and DFI employees asked about the KPLU story. From that fact, Seinfeld concludes that Verity's decision to pull the plug on their pot banking practices was a direct result of these friendly questions. It makes it seem like the State of Washington is trying to undermine the banking component required by the now-legal pot industry. Saying the state "invited" them—with quotes around the word invited—makes it sound more dramatic than it really was, like the local mob boss might "invite" you over for a chat.

Jarvis wants to make clear his agency is not working to undermine pot banking, that they aren't as heavy-handed as the follow-up KPLU article makes them sound, and that they want to support the legal cannabis law and the agencies they regulate. "We're not a leviathan coming in from the side to cut you down. We want them to succeed."

That, to me, is the amazing news. State agencies really want this legal pot thing to work. They're trying to figure out how it can work, and they're asking questions of many people. Instead, the KPLU piece makes the story sound like this state agency is working behind-the-scenes to complicate the process. But that's not the reality of the situation, and spreading such nonsense news doesn't help any of the people involved—state agencies, credit unions, dispensary operators, and certainly not the news-consuming voters who passed this historic law.