December 14, 2018

New Haven company takes legal pot to the bank

Photo | Contributed
Photo | Contributed
Green Check Verified CEO Kevin Hart.
PHOTO | Flickr via Dank Depot

Marijuana entrepreneurs are seeing green in the region.

The state announced this week that nine new dispensaries would open in Connecticut as part of the medical-marijuana program, and Massachusetts has raked in more than $7 million in recreational pot sales in just three weeks. But all this new business means all this cash — and banks have been leery of wading into an industry with complex legal and regulatory issues.

Enter Green Check Verified, a New Haven software company with a solution for legal marijuana businesses seeking banking services. Green Check's product — a web-based application that that offers real-time access to banking, compliance monitoring and reporting, and transaction verification, among other services — is currently being rolled out as a pilot in several states.

The company scored an important endorsement earlier this month when the Credit Union League of Connecticut announced a partnership with Green Check Verified to provide cannabis-related banking services.

"Credit unions are looking for the right tools to provide much-needed services to this industry," Christopher Whalen, the group's vice president for marketing, said in a statement. "With a focus on enhancing the success of our credit unions, Green Check is the right fit to help Connecticut's credit unions serve this space now and into the future."

'Piles and piles of cash'

For Green Check Verified CEO Kevin Hart, the "cannabis space" was an obvious market for a tech-based solution that leveraged his team's expertise in financial software, compliance and point-of-sale tracking. The idea for the product came when Hart read of the struggles of legal pot entrepreneurs nationwide to deal with an influx of customers, but limited access to traditional banking.

"I just saw piles and piles of cash and the frustration around these owners," Hart said. "You have these two very highly regulated industries — cannabis and banking — that would love to be able to work together, they just simply didn't know how to do it. That's what technology enables. We connect them using the technology that removes the barriers and creates the educational awareness opportunity and connections that fuels business growth on both sides."

Hart's team of 13 software engineers and banking experts in New Haven spent three years developing and fine-tuning their product — three patents on the technology are currently pending. His team includes several graduates of Southern Connecticut State University, Hart said, adding that he found New Haven a great place to recruit tech and finance talent and to develop his company in "stealth mode." "We formed this nucleus of knowledge — it's local and it's exciting," Hart said.

Following the rules

Green Check's innovations include software that adapts to the complex legal and regulatory rules around legal marijuana, which vary dramatically from state to state and are constantly evolving. Green Check's approach centers around strict adherence to regulations, from federal patient-privacy rules around medical marijuana transactions to banking rules intended to combat money laundering.

"We never intended to work around the banking system," Hart said. The company's challenge: "How do you work within the bank, how do you get a compliance officer so comfortable that they can bank the cannabis space that they go to their business development people and say go get me accounts?"

Potential customers include both medical marijuana dispensaries and "bud boutiques" that cater to the recreational trade. Oklahoma alone has 743 legal-pot outlets under its medical-only marijuana program, Hart added.

Green Check may soon be courting more customers closer to home: Legalizing recreational marijuana is a top priority for progressive Democrats in the upcoming legislative session, and Gov.-elect Ned Lamont during his campaign touted the potential tax windfall for the state from legal pot.

"It is another source of revenue for the state,'' Lamont said during a Sept. 12 debate, as reported in the Hartford Courant. "All of our neighbors have legalized marijuana. We [can] do this carefully [and] regulate it."

Learning from mistakes

Technology like Green Check's product can help states reap the maximum benefit from legal marijuana sales, Hart said. He cited the case of California, which is taking in only 20 percent of expected tax revenue on legal pot because of restrictive banking regulations. Connecticut should learn from that example as it moves toward recreational legalization, he cautioned.

"Connecticut should not make same mistake as California… We want to be a partner for states to make banking for this industry what it should be so that all sides have the opportunity that they expected out of this," Hart said.

Looking forward, Hart is preparing to unveil his product at a national legal-pot industry conference in January. He expects to hire two new employees a month for the next six months as the company ramps up, and Green Check is also looking for a larger office space in New Haven.

"We're excited about our future," Hart said. "We've been very thoughtful and methodical as to who we are and what we do and we're very excited."

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