When Florida’s medical marijuana industry was first starting out a few years ago, business owners faced a dilemma: Where could they find a bank to take their millions?
For a marijuana distributor, opening a bank account isn’t as easy as it is for the rest of us. The federal government still considers cannabis an illegal substance without medicinal value, so most banks haven’t been willing to take their money — even though 29 states have legalized the drug for medical use, and some for recreational use. And these businesses would be handling too much cash to stash it under a mattress.
Then First Green Bank, a Central Florida community bank that operates only in this state and doesn’t require a federal charter, stepped in. By this summer, it was handling accounts for six of the state’s seven licensed producers of medical marijuana.
But now, in a move that underscores the volatility of the state’s nascent market, First Green has announced that it is closing the accounts of its cannabis clients and won’t be handling their money past early January.
Initially, the announcement — which comes just a few months after the bank celebrated being the first in the state to handle medical marijuana clients — sent some clients scrambling. But the bank has apparently found a new institution willing to take its place, and companies that spoke to the Miami Herald say they’re confident that Florida’s 40,000 card-carrying medical marijuana patients won’t notice any hiccups.
"There will be no interruption or change in operations as far as patients and members are concerned," said Jake Bergmann, CEO of Surterra Holdings, a medicinal marijuana operator and a First Green client.
Bank executives declined an interview and would not explain why they’re canceling clients. But the Herald has learned that the decision is due to a looming acquisition by a larger financial institution concerned about assuming the risk that comes with handling medical marijuana money.
"It’s an important initiative for us to act as a safe harbor for professionals in the cannabis industry," First Green Bank said in a statement. "However, we have made the tough business decision to end our medical cannabis business practices and have an alternative solution for banking in place for our customers in the industry."
Though most banks won’t touch the business, roughly 400 institutions across the country take on marijuana clients under guidelines established by the U.S. Department of Treasury’s Financial Crimes Enforcement Network. And like any business, marijuana companies rely on financial institutions to protect their money and facilitate transactions.
In Florida, where only 13 companies are licensed to grow marijuana — and only seven can actually sell it — the importance of having a financial partner becomes even more pronounced given the amount of money each company is working with. With First Green backing away, some companies will be transferring tens of millions of dollars.
"Most of the public policy challenges with medical marijuana laws stem from the conflict between state and federal law, and here’s a glaring example of that," said Ben Pollara, executive director for Florida for Care, the organization that backed the campaign to legalize an expanded medicinal marijuana system in the state last year. "On the basis of how much money you’re talking about, you can’t be someone shuffling cash from bank to bank. Florida allows 25 stores [per license]. Trulieve has a dozen locations. That’s a major deal if all the sudden overnight their bank goes ‘Here’s your pile of cash, get out.’ "
The bank’s clients were caught off-guard by the news. But they don’t expect the change to be that abrupt.
Several First Green marijuana clients say multiple banks are lining up to take the bank’s place. Trent Woloveck, president of The Green Solution National, one of the state’s marijuana operators, said the company has already found two partners willing to handle its money and accept wire transfers.
No one would name the banks that are taking on Florida’s marijuana clients, saying that unlike First Green Bank, the institutions have wished to maintain a low profile.
"The industry and the patients will be fine," Woloveck said. "First Green is giving a transition period and several other banks have already stepped up in Florida to fill the need. Medical cannabis banking has become much more accessible over the past few years; it is not nearly as burdensome as it was even a year or two ago. Thankfully, the taboo and stigma has lifted and more and more banks are ready, willing, and able to take medical cannabis funds in legal states."