Green Check, a compliance software company based in Florida, is transforming the banking landscape for the burgeoning cannabis industry, which generates around $1 billion in legal sales each month. Founded by Kevin Hart, along with cofounders Paul Dunford, John Gadea, and Michael Kennedy, Green Check arose from Hart’s realization of the financial hurdles faced by legal cannabis operations after witnessing a vast vault of cash at Harborside, one of California’s pioneering medical marijuana dispensaries, back in 2016. Although cannabis is legal in 38 states, it remains illegal at the federal level, making it difficult for these state-licensed businesses to secure access to traditional banking services.
The majority of cannabis transactions are conducted in cash due to banks’ fears of federal legal repercussions, leading to complications for an industry that is expected to yield nearly $35 billion in sales this year. Green Check’s mission is to bridge the gap between the cannabis and banking sectors by providing software that adheres to both cannabis compliance regulations and banking anti-money laundering laws. By integrating with dispensaries’ payment systems, Green Check’s platform tracks every dollar and product within the cannabis supply chain, enabling banks to verify that their dealings are compliant with legal standards.
Each month, the company’s compliance engine processes around $1 billion in transactions, representing a significant portion of the U.S. cannabis market. Green Check has successfully sold its software to over 150 financial institutions, paralleling its services to more than 11,000 cannabis companies including major players like Green Thumb Industries and Curaleaf. The operational model allows financial institutions to use the platform for a monthly fee of about $5,000, while cannabis firms gain access to the software at no cost.
As a vital player in the industry, Green Check has found its footing despite the stringent federal regulations surrounding cannabis. Currently, only a limited number of banks and credit unions, totaling around 683, accept cannabis-related deposits due to stringent compliance requirements. Affinity Federal Credit Union, for instance, has only recently begun working with cannabis companies through the Green Check platform, providing essential insights into the complexities of proper compliance in the sector. Notably, any cash derived from cannabis sales must go directly to the Federal Reserve, illustrating a significant operational hurdle for banks.
In the absence of lived legislative changes, such as the stalled SAFE Banking Act aimed at easing access for cannabis businesses to traditional banking systems, Green Check continually adapts to the increased demand for its services. Hart notes that despite offering hundreds of financial institutions critical access to cannabis business accounts daily, resilience remains a cornerstone of the company’s strategy. Should federal legislative progress occur, Hart asserts it would likely result in more comprehensive rules and regulations rather than the opposite, enabling stronger tracking and taxation mechanisms for the government.
Overall, Green Check exemplifies an innovative approach to compliance in a complicated and contentious industry, effectively enabling a burgeoning cannabis marketplace to establish itself within a conventional financial framework. By ensuring regulatory compliance, Green Check not only facilitates financial transactions but commands a unique space where legal business operations can thrive, dispelling the myth that banking cannabis proceeds is impossible. As the situation unfolds and the legal landscape continues to evolve, Green Check is well-positioned to lead the industry through its compliance challenges while capitalizing on the growing demand for legal cannabis banking solutions.
