The role of a custodian is important, especially in the cannabis industry. The custodian is the gatekeeper to the trust account, they hold the assets of the plan take contributions into the trust, and allow assets out of the trust. They are responsible for ensuring that your employee’s retirement funds are secure, managed according to ERISA laws, and available when needed.

A custodian may choose to exclude a market segment like the cannabis industry due to the complex and ever-changing federal regulations. The ongoing legal ambiguity creates heightened risk for financial institutions, and many prefer to avoid these challenges. Additionally, a custodian is required to complete SARs reporting on assets in a cannabis entity plan. If they are unaware of the fact that you are a cannabis entity, then they are beaching their responsibility and can be held accountable. If a custodian resigns from a plan, the business must quickly find a replacement, or it can trigger a plan to lose its tax-qualified status with the IRS. If a plan loses this status assets can be deemed as taxable income by the IRS leading to substantial tax burdens and penalties for each employee in the plan.

If this happens to you, timing is imperative. You need to seek out a new custodian and ensure they are willing to do business in the cannabis space. Hiring a qualified ERISA lawyer and finding partners who a familiar with this niche space is important. They can guide you through the maze of complexity to move your plan to a new custodian, or set of providers that specialize in these types of programs.

When the approvals come from Executives like the Chief Legal Officer, Chief Compliance Officer, and Chief Executive Officers you can find confidence that the program has been thoroughly vetted adding to its ability to withstand market and regulatory pressures and more importantly offering a stable foundation for your employees’ retirement futures.

A Multiple-Employer Plan (MEP) is an older type of retirement vehicle. Requires a MEP Sponsor who is generally a third-party service provider like a payroll company, or benefits broker. The MEP Sponsor takes a Fiduciary role in the plan and allows each employer to join it. Each adopting employer is still responsible for their audit if over 100 employees. All fee breakpoints are generally based on the adopting employer’s assets and participant counts. If you are a benefits broker, financial advisor, or payroll company, consider the significant administrative burden, cost, and fiduciary liability associated with Sponsoring a MEP plan. A Pooled-Employer Plan (PEP) became available with SECURE 1.0. The PEP was enacted to solve for many issues that plagued the older MEP legislation. Single Plan Administration: With PEPs a new role was introduced called the PPP (Pooled-Plan Provider), this is an Operational Fiduciary whose primary function is to provide oversight to all of the other providers under a fiduciary standard of care. The PPP has expertise in ERISA, Fiduciary and Administrative Process, and Fee Reasonableness. No Individual Audits: The adopting employer is no longer required to do a plan-level audit; this is done at the PEP level. This was intended to save the PEP adopter time and money with this audit requirement. Cost Efficiencies: Many of the fee breakpoints are at the PEP level, allowing the adopting employer the advantage of reducing costs over time as the aggregate plan assets and size increase.

Green Path 401k has a first-to-market fully transparent retirement solution for the cannabis industry. Our plan is supported and approved for use with a coalition of trusted financial institutions; Vanguard, CuraFin Advisors, Mid Atlantic Trust, First Citizens Bank, PCSRetirement, and Green Check Verified to name a few. This unified backing ensures our solution is fully transparent and designed for long-term stability, even as other custodians and financial providers exit the market. Additionally, these partners are best in class at what they do. This means that you get a top-tier solution for your HR staff and employees. Operating in this space can be hard enough, choose the GreenPath 401(k) and hit the easy button for a change.

Mid Atlantic Trust - Providing custodial work to the plan as it does for many of the plans in the United States. CuraFin Advisors - A leading Investment Fiduciary who serves as the 3(38) Discretionary Investment Fiduciary to the plan. Green Check Verified - Providing cutting-edge support for AML, FinCEN, and OFAC compliance. The NACC - This 501(c)(6) Not-For-Profit Association is the cornerstone partner that cleared the compliance hurdles for our provider partners. Each cannabis business will be invited for membership after completing the required AML, FinCEN, and OFAC compliance screening.

We started by finding best-in-class partners for each provider role in the GreenPath 401(k) Plan. Then, we obtained approvals and written contracts from each provider partner’s executive teams.

We built this program to be inclusive. If you have a trusted financial adviser who provides you with amazing support, they can keep their role by providing education, investment advice, or support. CuraFin Advisors can sit in the background in the 3(38) role, enabling your adviser to continue their work with your team and employees.

The PEP 401k model provides simplicity, reduced risk, and potential cost savings. With GreenPath 401k, your business can enjoy these benefits while being part of a solution specifically designed for the cannabis industry. We’ve done the hard work, don’t you deserve to hit the easy button!?