The “green” in First Green Bank no longer refers only to its founders’ mission to offer discounted loans for electric cars and solar panels.
Now, it’s also about supporting Florida’s nascent medical marijuana industry.
The Orlando-based bank, which opened its first South Florida branch in Fort Lauderdale last year, says it’s the only Florida-based financial institution that is willing to serve the fast-growing medical pot business.
First Green’s corporate officers know the bank is treading where few others dare to go, in Florida or elsewhere. That’s because although marijuana is now legal for medical use in 29 states and for recreational use in eight states, the drug remains illegal under federal law.
First Green’s competitors remain on the sidelines, industry experts say. They are either concerned about the potential that the Trump Administration’s might pursue prosecutions and asset seizures, or unwilling to endure the costs of complying with disclosure reports required during the Obama Administration.
Chartered in 2009, First Green Bank was founded with a mission of promoting environmental and social responsibility with low-interest loans on electric cars, solar systems, and LEED-certified construction projects.
Now it serves six of Florida’s first seven state-licensed medical marijuana businesses, including Trulieve, Surterra and Green Solutions, and expects to capture the rest of the market as it comes online. Five businesses were recently granted licenses and five more will be awarded in October, founder and chairman Ken LaRoe said in an interview.
“I suspect we’ll have the entire industry by [the fall],” he said. “Also, we’ll focus on the ancillary industry — physicians, attorneys and fertilizer guys.”
Added Lex Ford, senior vice president: “We’re the only real game in town.”
So far, 15 dispensaries have opened around the state. That will change quickly with new state regulations allowing each licensed business to open up to 25 dispensaries.
Because dispensaries cannot accept checks or credit cards, patients must pay by cash or through an electronic wallet called CANPAY.
First Green contracts with an armored pickup service that collects the cash from the dispensaries and ships it to a Federal Reserve vault.
“It never comes back to the bank except by electronic transfer,” Ford said. “We never touch the cash.” The arrangement prevents dispensary employees from being targeted by robbers and helps verify to authorities that illicit money isn’t being laundered through the operations, Ford and LaRoe said.
LaRoe said the bank has yet to make money on servicing marijuana businesses, but expects to as the industry grows.
For LaRoe, the decision to serve and promote the industry was a personal one. “My wife developed a seizure disorder and she was able to be cured with cannabis,” he said. “It’s a miracle drug.”
First Green accepted its first deposit in July 2016 from Surterra, one of the first growers licensed by the state. Since then, about $35 million of roughly $630 million deposited with the bank has been marijuana-related, LaRoe said.
Before opening the bank to the industry, the officers sought direction from the Federal Deposit Insurance Corporation and the Florida Office of Financial Regulation.
Because marijuana remains illegal under federal law, those two entities could only point to guidance issued by the Justice Department in 2013 and 2014 clarifying the federal government’s law enforcement priorities related to pot and requiring banks to file regular reports of all marijuana transactions as “suspicious activities.”
“They can’t quite approve it,” LaRoe said. “All they can do is bless it.”
Enforcement priorities cited by the Justice Department included preventing marijuana use by minors or on federal property; barring involvement of firearms or by criminal gangs; keeping legal pot out of states where it’s still illegal; preventing drugged driving; and preventing use of state-sanctioned marijuana activity as a cover for other illegal operations.
Banks were instructed to alert the government if they suspect violations of any of those priorities in marijuana-related banking activities.
Meanwhile, the department stressed that none of its guidance could be construed as a legal defense to any violation of federal law, nor did it create any enforceable rights.
Through March 31, just 368 depository institutions — a fraction of the roughly 14,000 banks and credit unions in the U.S. — offered services to the pot industry, according to a recent Treasury Department update.
Some banks that entered the market have since pulled back, concerned that the required “Suspicious Activity Reports” could make them targets of potential federal prosecutions.
Some pulled out after discovering “the cost of serving the account is probably greater than the amount you would be taking in,” said Rob Hunt, a Colorado-based attorney and consultant for marijuana entrepreneurs and investors.
Florida’s laws require marijuana businesses to be “vertically integrated,” meaning a limited number of companies are licensed to cultivate, process and dispense. That makes complying with reporting guidance easier than in states with hundreds of separate entities, LaRoe said.
Kim Rivers, chief executive officer of Trulieve, one of the first five licensed medical marijuana businesses in the state and operator of dispensaries in Miami and eight other locations, said her company is grateful First Green Bank is willing to work with the industry as the regulatory framework evolves.
“We knew from the beginning that this business is different and highly highly regulated,” she said. “We give First Green any and all information asked for. We have a very transparent relationship with them and support their efforts to be above board and in compliance.”