Kevin J. Hart, Founder and CEO, Green Check VerifiedKevin J. Hart, Founder and CEO
It’s about time we dispel some widespread myths related to the cannabis industry and banking. When we think about these two highly regulated industries, it is often hard to wrap our head around the idea of cannabis-related businesses (CRBs) banking with reputable institutions— these two seem to be very different worlds that are forbidden to do business with each other. There is a common misconception that it is illegal to bank cannabis, which deters some financial institutions from participating. In reality, however, nothing could be further from the truth.

Given that the use of cannabis has been legalized in 35 states and the District of Columbia, it is safe to say that every cannabis business deserves the ability to bank confidently, and every financial institution, be they a bank or credit union, deserves a chance to grow with the cannabis industry. However, despite the so-called “green rush” exponentially taking over the U.S., financial services available to CRBs are rather limited due to the complicated state laws and federal guidelines. In addition, CRBs are deemed “high risk” accounts, and the lingering ambiguity around the origin of their funds and whether they are legitimate or not, poses an additional risk on financial institutions (FIs). It then becomes imperative that in order to provide financial services to CRBs, FIs need to assess the inherent risks around the same, and accordingly implement an effective cannabis banking program to manage burdensome compliance obligations.

“We Already Have The Most Complete End-To-End Solution From Account Enablement, Account Onboarding, Transaction Monitoring, To Fincen Reporting, And Now We’re Extending That To The Next Level With Account Monitoring”

As the “connective tissue” that bridges the gap between CRBs and FIs, Green Check addresses these unique challenges around cannabis banking. Through its purpose-built cannabis banking software and service solutions, Green Check provides CRBs access to sustainable and affordable banking relationships while simultaneously offering FIs the necessary tools they need to reduce regulatory burden and mitigate compliance risks associated with cannabis banking. From planning to scaling, consulting, and training services tailored to an institution’s cannabis banking program, Green Check equips FIs with the dedicated support and guidance necessary to safely and efficiently engage with this high-risk industry via their fully integrated software platform.

Rewind to the Beginning

So, what exactly sparked this unique idea to bridge two highly volatile and heavily regulated industries?

It all goes back to the time when Kevin J. Hart, the brain behind Green Check, was approached to launch a point-of-sale system for the cannabis industry back in 2015. As he started researching the industry and meeting with different cannabis operators throughout the country, he understood that CRBs are in dire need of compliant and reliable banking services, and FIs have their hands tied because the stakes are high.

It was this fundamental problem that Hart wanted to uproot from the core. Given his prior experience in high volume point of sales, technology, and complex supply chain solutions, Hart decided to focus on creating a banking platform for the cannabis industry. “I’ve always loved abstract problems especially when it appears that all the pieces simply won’t fit. I became enthralled by the opportunity of solving the deep-rooted problem of bringing together the two highly regulated industries—banking and cannabis—that would love to work together but don’t know how, and sought to engage them in a meaningful way,” asserts Hart, the Founder and CEO of Green Check.
This idea became the seed from which Green Check was germinated.

We Have Digitized All The Relevant Rules And Regulations Required For A Compliant CRB To Be Able To Purchase, Sell, And Bank Their Business While Providing The FIS With The Data They Need To Make Their Operational Account And Reporting Decisions

Hart explains that for any business to succeed, they need to answer three critical questions: What are they doing differently from others? Is it relevant? And is it sustainable? Not every business can say “yes” to all three. “Green Check can because of our brilliant team, I’m so fortunate to be part of this group, and the solution we have built. It is important to align your thinking and abilities with the market needs to always steer ahead of the competition,” states Hart. Design models and theories have proven time and again that the better the design, the better the product. The more time spent in design and thinking, the less time one needs to spend everywhere else after the initial phase. “That is why we spent three years designing the company without writing a single line of code, which has allowed us to enter the market very fast and scale quickly. We were prepared and now FI’s are too” he notes.

When Green Check first started, the mere idea of getting a deposit account for most CRBs was a stretch. “At that time, we strongly believed that by creating the platform and processes necessary to provide such facilities, the opportunity to expand beyond “simple” banking services such as business checking, could exist,” says Hart. “FIs don’t want to damage their reputational risk or incur financial penalties and CRBs don’t want to overpay or put their hard-earned money with someone only to see it disappear. We always believed that we would be able to create a marketplace for CRBs where we would be able to expand access to more financial and business services,” he adds. In parallel, we have created opportunities for the FIs to connect with these businesses via expanded banking services—cashless ATM solutions, on-premise safe banking, CRB employee accounts (all services), ACH, asset management, interest-bearing accounts, and even business lending. To this end, Green Check’s approach was different from the beginning as it exclusively focused on “how to work within the banking system, not around it!”

All-in-One Cannabis Compliance Platform

In order to provide value to both sides of the equation—FIs and CRBs, Green Check focuses on three key facets that are of critical importance: account onboarding (identifying high-risk businesses), transaction monitoring (“let the good money in and keep the bad money out, even good business might make mistakes”), and all the regulatory reporting required (FinCEN, SARs, CTRs and the evolving task of handling multiple CRB accounts.) Today, Green Check delivers the only RegTech platform to FIs nationwide that enables transparent, verifiable, compliant banking for the cannabis industry.

Right from the beginning, Green Check has been focused on making it as easy as possible for the FIs not only to attract the CRBs but also onboard them. What’s more, the company doesn’t charge CRBs anything—“we remove that friction”. Using Green Check’s online portal, CRBs can easily submit their initial and ongoing documentation and provide the necessary information needed for the account opening. Additionally, Green Check’s automated document renewal workflows help keep each account up to date.
On the other hand, FIs dealing with concerns around risk assessment, concentration ratios, and liquidity strategies while entering a completely new line of business need superior visibility into all the accounts and the details to scale their cannabis banking program. Green Check gives them the “atomic level” detail required to monitor the account and all the activity that happens before any money can be deposited on a daily basis, with the necessary security and confidentiality required. The web-based cannabis banking platform has been designed to help FIs successfully launch, manage, and scale a complaint cannabis program with exceptional visibility. Green Check’s account onboarding feature lets them standardize their enhanced due diligence process and automate the maintenance and upkeep of the account documentation.

Green Check’s patent-pending Compliance Rules Engine (CRE) lies at the heart of the platform. It takes away the need to manually review sales and inventory data and automatically runs each transaction through a database of rules drawn from the existing federal guidance and state statutes and regulations that govern all cannabis programs. It analyzes the data flowing through each cannabis business and identifies any exceptions to the applicable regulatory requirements for that license type. “We have digitized all the relevant rules and regulations required for a compliant CRB to be able to purchase, sell, and bank their business while providing the FIs with the data they need to make their operational account and reporting decisions,” says Hart. “Our integrated, horizontal process of data gathering and sharing makes the platform work for both sides,” he adds.

Singularly Focused on Connecting the Cannabis and Banking Industry

Green Check’s core differentiation is its active engagement with clients on product suggestions and needs. The company follows a strict “stick to a two-week sprint cycle for the product” policy to constantly deliver new features and functions. Clients are made aware of these changes via direct product announcements and Green Check’s monthly newsletters. “We are in touch with all our clients continuously via the system, i.e., phone, email, and events. WE LISTEN and have created a real communal atmosphere for everyone with the goal to make the industry better,” informs Hart.

Considering that apart from account monitoring, transaction monitoring is also a major challenge for FIs, Green Check aims to get to the root of this problem and eradicate it. “We’re the preventive measure as opposed to the detective measure that current core systems provide. We already have the most complete end-to-end solution from account enablement, account onboarding, transaction monitoring, to FinCEN reporting, and now we’re extending that to the next level,” says Hart. Green Check is working collaboratively with its clients to build full account monitoring capabilities, which would provide FIs with the business intelligence and complete visibility at a granular level into all of their CRB accounts.

Hart believes that the cannabis industry is full of great, intelligent, and passionate people. He mentions, “They are masters of their crafts, true artisans, and entrepreneurs who shouldn’t have to work so hard to have access to these essential services.” Against this backdrop, Green Check has a series called “Demystifying the Cannabis Entrepreneur,” featuring some of its CRB clients’ history and journey. “We really enjoy sharing their stories, and these articles also help financial institutions get a better glimpse into this new marketplace. So, as we play a role in connecting these industries, you will find a lot of happy faces in these businesses that are Green Check Verified too,” concludes Hart.