The Customer Effect

How Florida’s First Green Bank provides banking services for the medical marijuana industry

  • Florida's First Green Bank is one of a few financial institutions that offer banking services to legal marijuana businesses.
  • The bank says banking medical marijuana businesses ultimately helps patients get medications, and allowing a multibillion-dollar industry to have bank accounts cuts down on the risk of robberies and other criminal activities.
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How Florida’s First Green Bank provides banking services for the medical marijuana industry

As medical marijuana explodes, businesses still face the dilemma of where to store their cash.

Medical marijuana is legal in 29 states plus the District of Columbia. Most banks won’t touch it due to legal concerns, pointing to federal law that prohibits them from working with marijuana businesses. Florida’s First Green Bank’s svp Lex Ford contends that taking deposits from legal marijuana businesses is not federally illegal. It’s offered financial services to medical marijuana businesses for the past year to support its values-based mission.

“We’re a local bank with a global mission in reducing the carbon footprint,” said Ford. “This a way to help people get the medications they need and keeping cash off the street.” First Green reportedly has $30 million in deposits from marijuana companies.

The market for medical marijuana is growing across the U.S. The legal cannabis market was worth an estimated $6.6 billion in 2016, and it’s expected to reach $24 billion by 2025, according to New Frontier Data. Still, it’s estimated that 70 percent of legal cannabis businesses operate as cash-only enterprises, leaving them with the logistical hurdle of having to stash large amounts of cash and vulnerable to theft, as shown by reports of armed robberies at dispensary sites. To Ford, doing business with medical marijuana companies is a way to cut down on that risk while helping patients.

Medical marijuana as a treatment first became legal in Florida in 2014. It’s used for some patients who suffer from epilepsy, chronic muscle spasms, cancer and terminal conditions. The state has nine licensed providers, including two that got licenses last week. Ford said the bank decided to offer financial services to medical marijuana providers after First Green founder Ken LaRoe’s wife suffered brain injuries from a biking accident that resulted in seizures. Medical marijuana treatments helped her, and Ford said that inspired LaRoe to get First Green’s management team on board to offer banking options for legally operating marijuana businesses.

The mechanics of how a bank can do business with a sector that’s so closely watched requires significant work for a bank. First Green said it took two years to develop a compliance platform, and it had to dedicate six employees to overseeing medical marijuana banking operations. Medical marijuana businesses are offered checking accounts, with monthly costs for businesses that could be thousands of dollars per month, depending on how many dispensaries they have. But if most payments they receive are in cash, it’s more complicated than just hauling a bag of cash to deposit at the bank.

“That puts the bank employees at risk for robberies, so we’d rather not have it come to the bank,” Ford said.

Instead, an armored car company brings the cash to an off-site vault, and it gets shipped to the Federal Reserve Bank, after which the bank credits the business account with the amount. Cannabis business accounts are carefully monitored as well.

“We know what’s going through these accounts to the dollar to make sure there’s no money coming in or going out that shouldn’t,” said Ford.

As for payments, Ford said the bank has been working to modernize the payment infrastructure for business customers to stem the reliance on cash. The bank partnered with CanPay to offer an app that lets business customers to pay for purchases with the app through bank transfer.

Ford said at least one other institution in the state offers financial services to legal marijuana businesses and notes recent reports that bigger industry players may be quietly banking with the marijuana industry despite public denials. He said it’s important to be upfront and honest about it since offering banking services to the medical marijuana industry serves the public good.

“Why shouldn’t the providers of medicine have access to banking?” he said. “There’s also a public safety issue not to bank all this cash — it doesn’t make sense that someone should sit there with a multimillion-dollar vault that they can’t put into a bank.”

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