Stacy Litke, VP of Banking and Financial Services for GreenCheck – Interview Series

Despite the cannabis industry experiencing massive growth into states and markets once thought impossible, many of the industry’s businesses have immense trouble finding access to proper banking and financial services. Due to the stubborn Schedule I status of cannabis and the various federal laws on cannabis and anti-money laundering laws, that lack of access is a commonly occurring problem. Since 2017, GreenCheck has been closing that gap of access via their network of financial and business service institutions that are actually able to work with cannabis businesses. For a better understanding of these issues and the services that GreenCheck provides, mycannabis.com had the pleasure of speaking with Stacy Litke, VP of Banking and Financial Services for GreenCheck.

What were your first roles in the financial services industry, and what initially interested you in working in this vast industry?

I’ve been working in financial services since high school. My major in school was computer programming, and I wanted to use that skill with financial systems. Related to that, I was able to get a co-op job working every other week at a local bank doing Operations work my junior year and the career stuck. Through the years I spent most of my time around Operations and Technology, but also spent time in Lending and Retail Banking. My interest in the cannabis industry started much later in my career and life. Shortly after I turned 50 I decided I wanted to make more of an impact with my job and be a bit of a change maker. That’s what led me to supporting the financial services needs of the cannabis industry.

What were some valuable skills you learned during those first few years, and what were the major differences between businesses within the industry and the financial services industry back then and today?

Because my early years in banking were around Operations and Technology, I got to see the big picture as the money moved around, and what accounts looked like in the various systems. That foundation was a great learning experience, as I got to understand all the plumbing and not just how to get water from the faucet. In terms of differences, there are a multitude of them, most of which I got to be a part of, like rolling out new products like IRAs and debit cards, or launching websites, online banking and even mobile banking which didn’t exist when I started.

In terms of the cannabis industry, I was new to banking when the Money Laundering Control Act of 1986 was introduced and the monitoring for proceeds from illegal drug sales became a requirement, so for the entirety of my career money from cannabis sales and customers who brought those funds to the bank were always de-banked, no exceptions. Seeing the cannabis industry make progress as a legitimate industry, and being a part of the progress on the financial services side, has been particularly satisfying to me.

While serving in the Application and Product Manager roles with COCC, what were some regular issues/problems that your banking and credit union clients faced? How did you provide a remedy to those frequent issues?

That was such a challenging role, and I loved it. During that time I had three teams that supported our Financial Institution clients around Deposit Operations, Loan Servicing and Electronic Banking. Together we supported a variety of questions and how-tos, nightly production or report issues, helping clients with new releases, system conversions, or troubleshooting issues with one of our many third party interfaces. There were two keys to being able to remedy those issues. First and foremost you had to triage constantly. An issue had to be understood quickly to determine overall impact in terms of the number of financial institutions, and whether or not their end users were impacted, and if so what percentage.

Said differently, an issue impacting thousands of our clients’ customers not being able to use their debit card got a very different response than an issue from one financial institution who had a particularly thorough examiner taking issue with language on a bank statement. The second key to resolving issues was building strong relationships. When you’re working on an issue that involves multiple internal teams, an external vendor along with their teams, and your clients, you need clear communication, documented requirements, conflict resolution skills and you have to be in a position to ask favors… of all of them.

Of the many roles you’ve held throughout the financial services industry prior to working for GreenCheck, what do you feel were the most noteworthy and/or important?

They were all noteworthy and important to me and my career, but I’ll call out two of my favorites. My years working in Electronic Banking were great for building my technology related experience. When you’re rolling out brand new platforms, you get exposed to a lot of the inner workings like how platforms interface and talk to one another, share data, and how to manage and optimize the user experience. The other role that I loved was the role of Technology Consultant with NBS.

In that position I spent time with financial institutions that were reviewing vendors and systems, helping them define their requirements, find the right technology for their needs, and eventually converting them to the new system. Sometimes it was one platform, sometimes it was a core system and all the ancillary systems impacted by that core. I also had the opportunity to work closely with executives on their overall strategy around new technology, including new product offerings. The clients that I got to work with in this role were the most progressive, forward thinking teams in banking who were always looking for ways to improve efficiency, their bottom line, or the customer experience.

When serving the very illustrious role of SVP of Operations for the nearly billion-dollar institution that is MountainOne, what were your regular duties, and how would you say it prepared you for venturing into cannabis?

I joined MountainOne just as they were starting a core conversion process, and that was my primary focus for the first year or two – getting the bank through the conversion and rebuilding our processes and teams around the new technology. The role had oversight into a number of different teams, including Deposit Operations, Loan Servicing, Electronic Banking, Collections, Branch Operations and our Call Center – again, going back to the plumbing analogy, we were the pipes that brought the water to everyone else so regular duties involved making sure we were accurate and efficient, as well as adaptable to the bank’s overall operational needs.

It was also the first opportunity I had to be part of the Executive team that managed the bank. Being part of that Executive team and learning about balance sheet management is a big part of what prepared me for venturing into cannabis. I saw first hand how the relationship between cannabis businesses and community based financial institutions could be a mutually beneficial relationship and it was the research I did on this topic that first sparked my curiosity about working in the world of cannabis and financial services.

Given that proper access to banking and financial services for cannabis businesses can oftentimes be in quite disarray compared to other industries, what still interested you about working for GreenCheck?

If you haven’t already come to this conclusion after reading about my career path, I’ll point out that I like to tackle disarray, sort through it, find solutions, and reorganize it into something useful and efficient. So the fact that it was a problem to be solved was actually pretty appealing to me and Green Check was out there figuring it out. It was also something that I hadn’t done before, and it fit nicely with my desire to be more impactful with my career, particularly as someone who has long believed in the benefits of all kinds of plants for human protection and healing.

From your experience serving as VP of Banking Programs, what are the most frequent and widespread issues that your cannabis clients experience when it comes to banking and other very necessary financial services?

In my time here at Green Check, I’ve seen it become easier for operators to find a cannabis friendly financial institution, and I’ve seen the pricing come down for accounts as well, so that’s less of an issue than it used to be. Even so, I still hear of cannabis operators who don’t have a banking relationship because it’s too costly for them, or they’re still using personal accounts with big banks, holding their breath each day that they don’t get caught and have their account closed. One issue I see a lot for the industry is that everything they do is far more expensive, which means they don’t have a lot of extra cash on hand, and paying their bills and getting paid is a challenge. And while some of our financial institutions are coming around to the idea of lending, that’s just 5% of the 10% willing to work with the industry. This means an operator can’t just run out and easily get a line of credit to help them with cash flow like most other businesses do. Getting reasonably priced capital out into this space is going to be vital for its success.

How do financial services and technology such as Green Check simplify overall operations while also increasing security and guaranteeing compliance with both state cannabis regulations and whatever financial regulations may be relevant?

Let’s start with technology, since it enables financial services in this space. In order to comply with the guidance issued by FinCEN for banking the industry, financial institutions need to demonstrate that the funds they’re allowing into the financial system are from state legal sales, not the illicit market. This takes some work, and the early pioneers who first took the risk of banking in this space did all that work through spreadsheets, faxed reports, emailed documents, and lots of ticking and tying to make sure it all made sense for “normal and expected activity”. Our technology integrates directly with the sales systems for the cannabis industry and pulls together all of the necessary data from the cannabis side and the banking side into easy to read monitoring reports and peer group analysis that make that job a whole lot easier.

Our platform also creates efficiency for the operator who can upload one set of required due diligence documentation to share with multiple service providers, and the system has automation for keeping tabs on license status and media monitoring. While we don’t eliminate the work to be done, we do make it a whole lot easier, efficient and consistent. In fact, our technology will give the BSA team about a 5X lift in account capacity, and we provide some really relevant and valuable data to the business development team so that they can grow their relationships with this market segment.

The banking relationship is, of course, the foundation for the rest of the financial services. It is far easier for an operator to manage payroll, pay creditors, obtain loans, when they have a solid banking relationship and can move money, or show their sales and cash flows. Which is not as easily done with a pile of cash in a vault. Over the past couple of years, we’ve found that other financial service providers can also find value in our platform, such as using onboarding tools, automated monitoring and sales and industry data. And when they’re all connected in one place through our marketplace, it makes it even easier for the operators to find and work with the best cannabis friendly providers in this market.

Suppose some iteration of the SAFER Banking Act or another similar piece of federal legislation were to pass out of both houses and be signed by either President Trump or his successor. How would that impact current financial service institutions that work with cannabis businesses? How would that change the FDIC-related prohibitions about working with cannabis businesses?

SAFER Banking would put into writing what is already happening in practice, which is financial institutions are not being shut down or put under consent orders, and banking professionals are not being prosecuted for money laundering, just because they’re banking cannabis. Those written protections will likely make some number of financial institutions more comfortable working with the industry, broadening access and likely lowering fees, but SAFER Banking doesn’t change the status of marijuana as a controlled substance, so not much else would change regarding obligations. I do expect that some sort of banking focused legislation will prompt regulators to provide more consistent guidance for financial institutions. Today, it can be somewhat different by regulator and region depending on each regulator’s and examiner’s interpretation of the FinCEN guidance and best practices. There may also be other financial services players that leverage the protections in SAFER Banking to break into the industry, like nationwide armored car providers, and major card networks, but that remains to be seen.

What would be far more impactful to the industry is to create a legislative framework that would allow marijuana to be classified as a legal, regulated product, with oversight and restrictions similar to that of alcohol or tobacco.

To be clear though, there are no specific “FDIC-related prohibitions”. The prohibition issue arises from anti-money laundering laws, and the discrepancy between the Federal and State legal status of marijuana. At the federal level, any money from the sale of marijuana is not permitted to enter the financial system, as it would be considered money laundering. That is consistently applied across all banking regulatory agencies and not specific to FDIC. FinCEN guidance issued to all financial institutions back in 2014 spells out the path for financial institutions to work with the industry, regardless of their primary regulator.

Thank you for joining us, Stacy! For more information on GreenCheck and its services, please visit its website.