{"id":563,"date":"2022-07-06T00:37:04","date_gmt":"2022-07-06T04:37:04","guid":{"rendered":"http:\/\/alternativeapproaches.com\/wp\/?p=563"},"modified":"2022-07-07T18:33:39","modified_gmt":"2022-07-07T22:33:39","slug":"green-check-wants-to-be-why-your-pot-dealer-can-have-a-bank-account","status":"publish","type":"post","link":"http:\/\/alternativeapproaches.com\/wp\/green-check-wants-to-be-why-your-pot-dealer-can-have-a-bank-account\/","title":{"rendered":"Green Check Wants to Be Why Your Pot Dealer Can Have a Bank Account"},"content":{"rendered":"

As state governments work to make sure that legalizing recreational marijuana doesn’t open a door for illegal drug cartels and\/or the mob, legitimate cannabis vendors have been struggling to obtain services that are essential to running a business.<\/em><\/p>\n

\"Cannabis
SOURCE: Pixabay<\/figcaption><\/figure>\n

At this early stage of the game, it’s not easy being a legal pot dealer in the U.S. No matter how legal you may be in the state where you operate, to federal law enforcement you are a multiple felon — if they want to go after you.<\/p>\n

Although the feds haven’t been going after these newly minted legal dealers (and have indicated they have no plans to do so), their legal status on the federal level has been somewhat problematic, both to them and to other companies that want to do business with them.<\/p>\n

For example, the continuing federal moratorium on dream weed has put the financial industry in a bind, since financial institutions have a federal mandate to not touch money that’s been illegally earned. Early on, as states started legalizing cannabis, this led to complaints from the pot business community, including retailers, wholesales, and growers, that banks were refusing to deal with them, fearful of repercussions from the feds.<\/p>\n

The Dealers and Growers Catch-22<\/h2>\n

This largely left the nascent pot business in the position of being a cash only business, forced to keep large amounts of cash on hand, which is a concern not only to people involved in the pot trade, but to law enforcement, who know that criminals quickly figured out that pot outlets are often, by necessity, a storehouse of cash.<\/p>\n

The IRS is concerned as well, because cash transactions are notoriously easy to hide. <\/p>\n

In an interview back in February, Mike Kennedy, co-founder and chief strategy officer at Connecticut-based Green Check, told me that big national banks like Chase, Wells Fargo, and Bank of America will likely not offer services to legal marijuana businesses for as long as the federal moratorium on cannabis stands. However, he added, it’s a different story when it comes to smaller regional banks and savings and loan associations. He said they’ve wanted to be able to offer their services to the legal pot trade almost since the beginning.<\/p>\n

\"High
Source: Pixabay<\/figcaption><\/figure>“The cannabis industry obviously is growing leaps and bounds, but the community banking industry here in the U.S. is somewhat on the decline,” he said. “These smaller community banks, credit unions, and regional banks — the tier below the the national and multinational banks — are actually very interested in working with new commercial customers, regardless of what industry they work in.”<\/p>\n

He knows this because Green Check, now a six-year-old startup, has developed a proprietary software as a service platform that’s made it possible for regional banks and savings and loan associations to offer banking services to legitimate legal pot operations.<\/p>\n

“There are two real hurdles that the financial institutions have to work through in order to engage with the cannabis industry,” Kennedy said, “but they’re very interested in bringing on new sources of deposits. They’re interested in finding an underserved market segment to which they can offer their products, whether they be depository or financing products.”<\/p>\n

“A lot of these community banks want to do right by the businesses and individuals that are right there in their backyards,” he added. “They want to help get cash off the streets, increase community safety, help these business owners grow and thrive in a market that seems to be stacked up against them everywhere they look.”<\/p>\n

Hurdles to Be Overcome<\/h2>\n

When Kennedy came to the table he brought with him a pedigree that included experience in both technology and regulatory compliance, having spent more than three years at a FinTech company, Continuity (now part of Mitratech), which offers cloud-based governance, risk management, and compliance solutions for banks, credit unions, and other financial services companies.<\/p>\n

“My co-founders and I began looking at this space as an opportunity to bring two highly regulated industries together in a way that neither could understand how to do,” he said. “Even back in 2016, there were some financial institutions that were working with state legal cannabis businesses. They were forced to develop very manual and cumbersome compliance protocols that resulted in higher fees passed on to the cannabis operators, which made it sort of a losing proposition for both sides.”<\/p>\n

Decades of the War on Drugs means that states are legalizing an industry that, especially on the supply side but also in the wholesale arena, has largely been in the hands of organized crime for nearly 50 years. Legalization has required law enforcement and regulators to focus on keeping these organizations from setting up shop under the legal umbrella legalization offers. The fear is that state sanctioned and licensed pot operations can be used by these operators as a way to launder money, either from their pot operations in states where weed remains illegal or from other illegal operations within that state.<\/p>

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