Tuesday, June 12, 2018

Was a major merger why Orlando's First Green Bank stopped doing business with marijuana dispensaries?

Posted By on Tue, Jun 12, 2018 at 4:09 PM

click to enlarge PHOTO VIA ADOBE IMAGES
  • Photo via Adobe Images
After a short foray into handling Florida's medical cannabis cash, First Green Bank of Orlando decided to quit the game in January because, it would appear, they had the chance to cash out on their own.

It was a minor mystery when word first trickled out – why did First Green suddenly announce that they’d no longer handle the sticky green industry’s sticky green, when the bank was wading into uncontested, potentially lucrative financial territory in Florida?

That question was (we think) answered Monday, when Seacoast Banking Corporation of Stuart announced that it would pay $133 million to acquire First Green Bank, which accounts for $731 million in assets, according to a news release.

Seacoast is a staple of the Florida business community – one that’s been around since at least the Great Depression – and traditional banking has stayed well away from any contact with the cannabis industry (as well as most cash businesses). It seems that First Green was forced to cut ties with cannabis when the merger with their staid new friends became a reality. According to the Palm Beach Post, the two banks have been discussing the merger since last year.

The federal regulatory system is leery of any dealings with the cannabis industry, even for banks in states that have legalized weed, due to the federal prohibition on marijuana. 

In 2014, a deputy attorney general sent out a memo laying out a set of standards for banks that do business with the marijuana industry under each state's own respective law. If money from organized crime somehow made its way into a weed business’ account, they were essentially told to be ready for a quick and painful financial crucifixion by the feds.

That means few bankers want to venture into such an affair with weed.

So when Seacoast was finally set to acquire First Green, one shade of green spoke louder than the other.

Oh, how money (and weed) talks.

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