Transparency key to banking medical marijuana says financial industry veteran
As applicants get closer to finalizing their applications, one financial wiz and compliance wonk is imploring applicants of one thing: talk to your bank.
“Whether you are touching the plant or not, get with your current financial institution,” Tom Lorenz of Avenir told Greenway.
Lorenz said the Information Age makes it incredibly easy for institutions to know if any of their account holders are involved in the state’s newest and fastest-growing industry, making that conversation required for anyone who is entering the industry. The State will be publishing a complete list of all owners of licensed facilities, including holders of de minimus percentages.
“Your home mortgage could be at risk, your checking and savings – they could be at risk,” Lorenz, who touts decades of financial experience from Wall Street and around the world, from consulting to small business to Fortune 500 companies, said. “You should tell your banker!”
“Compliance” is a terrifying word for many in a federally-illegal business, but it’s one Lorenz said is not so bad. “It is not as cumbersome as assumed.”
Lorenz cited a neighboring state bank who shouldered a large part of the medical marijuana industry, yet only increased assigned employees to medical marijuana accounts by 1.5 full-time people.
“It is not cost-prohibitive to bank medical marijuana,” Lorenz said. “You need to know the components and things to look for and provide the training to competently monitor transactions. We can help with that.”
The wiz says banks and banking regulators are well-equipped to handle high-risk clients. In fact, financial institutions are required to have a risk-based system in place NOW. Medical marijuana facilities should be banked similarly to other cash-intensive businesses, such as convenience stores, bars, restaurants, pawnshops, precious metal and stone dealers, and even some insurance agencies.
“It comes down to competency,” Lorenz said. “In a brand new industry, you need to know what is normal and how to monitor the financial velocity and the like and be able to detect potential diversion. Competency is available. The benefit of being the 33rd state to legalize medical marijuana affords Missouri knowledge and history. That is what we bring to the table.”
Lorenz said there are many resources to bridge the gap between facilities and banks, but that often, the simplest solution is the best. “Go talk to your bank.”
Financial institutions are obligated to monitor for money laundering and the funding of terrorism, something where cash-intensive businesses are considered high-risk typologies.
“You cannot third party your risk away, this is the bank’s risk,” Lorenz said. “Even if someone is doing the onboarding and monitoring, the risk is still on the bank. Avenir provides that competency to detect that risk.”
Lorenz said long-time customers are the perfect candidates for banks to learn the industry. Applicants who provide banks with full transparency and disclosure, including copies of applications, are going in the right direction.
“Missouri needs banks to step up and say ‘I know you, you’re the perfect candidate to bank medical marijuana,’ and we can help with that,” Lorenz said.
Lorenz has been actively working around the state with banks, regulators, and MoCannTrade to develop uplift for medical marijuana banking. More information about Avenir can be found at goavenir.co.
