The decision to stop banking medical marijuana companies was a difficult one for Ken LaRoe at First Green Bank in Orlando, Fla.
First Green is closing all accounts with cannabis clients after certain investors expressed unease with the strategy, said LaRoe, the $652 million-asset bank’s chairman. He has been a vocal proponent of the business after medical marijuana helped his wife recover from a bicycle accident.
“It’s been awful just because we have to do it,” LaRoe said.
“We can’t pick our shareholders — they’re from all different political spectrums,” LaRoe added. “Our board was completely behind it … but we’ve been getting a lot of blowback from our shareholder base. After much deliberation, we decided we were going to have to get out.”
The recent decision by Attorney General Jeff Sessions to rescind a 2013 memo that helped fuel the pot industry was the final straw for First Green, which began notifying clients on Jan. 5. All but one of the bank’s medical marijuana clients has been informed.
First Green’s state regulator asked the bank early on to implement a “kill switch,” that required it to close its cannabis accounts within 24 hours due to any relevant federal action, LaRoe said.
“That’s a really tall order, but we built it into our policies,” LaRoe said. “We didn’t have any choice [after the Sessions decision]. It’s so depressing.”
First Green brought its first medical marijuana depositor on board in August 2016. It had about 40 clients in the cannabis industry, with 140 accounts, though LaRoe said the business had not produced much profit for the bank.
“I don’t want to look back in retrospect and say it was a mistake,” LaRoe said. “It was a great learning experience.”
The decision to stop banking medical marijuana businesses was first reported by the Miami Herald, which attributed the decision to a pending sale to a larger bank that was wary of the strategy.
“That’s total conjecture,” LaRoe said of a looming sale, though he reiterated that First Green remains interested in an eventual merger with another values-based bank.