The State Regulator’s View of Cannabis Banking
My name is John Gadea and for 13 years I was the Director of the State of Connecticut’s Department of Consumer Protection Drug Control Division where I designed our medical marijuana program from the ground up and then ran it for its first 4 years. My responsibility was to make sure that all sales in the state were conducted in compliance with the rules and regulations we set up, that there was no diversion of product to those without medical licenses, and to ensure that medical patients had sufficient access to the medication they needed. When I worked at the state we managed that through the Prescription Monitoring Program (PMP) which was used to track all prescription medications, but that information was only available to healthcare providers and law enforcement – never to financial institutions.
Though it was not my focus when I worked at the state, it became clear to me that one of the biggest challenges that marijuana businesses faced in Connecticut – and nationwide – was getting access to financial services. Because marijuana is federally illegal many banks and credit unions were unsure if they could offer bank accounts and stay in compliance with state and federal law. Sound familiar? I understood the challenges they faced because they paralleled my own when I wrote the medical marijuana regulations. We ensured compliance by keeping scrupulous records that proved all sales were done in compliance with the regulations, but financial institutions didn’t have access to the PMP, or data from point of sales, so how could they do the same thing?
That’s why, after retiring from a career at the state, I joined Green Check Verified. It was clear that banks and credit unions needed to be able to demonstrate to federal and state banking regulators that the funds that marijuana businesses deposited into their institutions were derived from legal sales. Green Check Verified took a similar approach to the one we took with the PMP – but in this case we take data directly from the marijuana business’ point of sale and run those transactions against the rules in the state where the sale took place. Just taking total dollar amounts and summaries wasn’t enough – we needed to be able to show that the person to whom the marijuana was dispensed was of age, that they were not purchasing above their legal limit, and provide all other key data points that can demonstrate that the sale was legal at the time of purchase, for that person, in that dispensary, in that state.
That’s not just for Connecticut – it’s for every state that has a legal marijuana program, both medical and adult (i.e. recreational). Green Check does that – we’re the only ones that do – and I’m responsible for making sure that those rulesets, what we call the Compliance Rules Engine, is always up to date.
Things in the cannabis industry change all the time. In fact, since I wrote the regulations in Connecticut the state has added new eligibility rules and doubled the number of dispensary licenses. So it doesn’t make sense to expect a compliance officer at a bank or credit union to stay on top of these changes when they have so many other things on their plate. With Green Check they don’t need to because my team of compliance experts monitors every state and is dedicated to make sure that we’re constantly auditing the Compliance Rules Engine. That’s how our partner financial institutions have confidence that every dollar deposited into their institution is the result of a state-legal sale, and that’s what makes Green Check the only solution on the market that gives them the data they need to confidently bank marijuana businesses.
