Starting up the Virgin Islands’ legal cannabis industry was far from a turnkey operation, relying on layers of precision planning, market evaluation, and, above all, access to banks willing to work with businesses selling a product that remains federally illegal, industry insiders said.
Along with complicated risk assessments and other technical banking issues come some less theoretical challenges: how to move all that cash.
Credit card companies like Visa and Mastercard are a long way from working with the cannabis industry, said Nicole Perry, director of national sales at CannaFirst Financial, the Mississippi-based institution helping meet the territory’s cannabis businesses’ banking needs. CannaFirst helped several states navigate their unique cannabis banking issues.
Banks on the mainland have three or more choices for moving large piles of cash. In armored trucks and aircraft, these cash-in-transit companies transport cash deposits around as needed — to and from banks and ATMs and federal facilities. In the Virgin Islands, however, there was only one carrier, Perry said Tuesday. The emergence of a potentially-robust all-cash industry could overwhelm that single carrier.
“The biggest thing that we would have to overcome is the cash aspect of it,” Perry said, “because it’s really cash heavy and it’s an island territory.
Most mainland cannabis shops allow debit card purchases, which is something akin to a cash transfer. Other options include so-called cashless ATMs, which provide cash for the remainder of a rounded-up purchase price. For example, a cashless ATM would process an $82 cannabis purchase and spit out $3 — or possibly $8. These point-of-banking terminals likely come with fees, but that isn’t their largest problem, said Kevin Hart, CEO of Bonita Springs, Florida-based Green Check.
Sloppy or purposefully-misleading registries for cashless ATMs have led to closures, Hart said. It’s one of the many points of diligence important to legitimizing high-risk industries like cannabis banking.
Hart cofounded Green Check Verified Inc. in 2017 as a technology company able to identify cannabis industry regulatory requirements, which are different in each state and territory. Green Check then investigates cannabis businesses to ensure they’re meeting those requirements. Green Check is essentially an external risk agency for banks like CannaFirst.
“There are certain things that are required for being a cannabis business. But, there are ways to make that work effectively,” he said Tuesday. “We’re that intermediary technology provider that stitches it all together and creates those data connections of compliance.”
Perry likened Green Check’s verification teams to FBI agents, looking to understand every aspect of individual cannabis businesses as well as the local regulatory requirements.
“I’m gonna say this a million times: federally illegal, federally regulated. We’re taking a really big risk, and everything is based on the risk matrix that is decided within each financial institution, and everyone has a different one because they have a different risk appetite,” she said. “So while it’s not required for financial institutions to utilize a company like Kevin’s, it is strongly suggested that you do that because when we have to answer, we need to make sure that we have partners out there who know what they’re doing. They have a steady course. They’re always at the top of everything. And so when I see financial institutions that aren’t, I it makes me nervous.”
It was Hart who introduced Perry and other officials from CannaFirst, a division of Pascagoula, Mississippi-based Merchants & Marine Bank, to Gov. Albert Bryan at a cannabis business event in Washington, D.C., in September. Perry and her team had visited the territory to assess the local industry’s needs, meeting with Joanne Moorehead, executive director of the Virgin Islands Office of Cannabis Regulation, and others. She said the firsthand listening tour and general assessment were vital to tailoring her institution’s services to the Virgin Islands.
“I don’t know if you wanna call it serendipity,” Perry said. “It’s been forward ever since.”
Working closely with the Office of Cannabis Regulation was vital, she said. Moving cash would be a problem but so will moving cannabis between islands. The waterway between St. Croix and St. Thomas is a federal highway and in most cases, it’s not legal to transport cannabis on federal roads.
It’s also CannaFirst’s job to assure local businesses that their money is safe — whether a physical stack of cash or the electronic results of their deposits. It sounds easy enough, but as Perry repeats often, cannabis is still federally illegal, which means treading financial routes carefully and always being ready for audits.
With Green Check making sure local businesses were meeting local and banking rules, CannaFirst will be able to help set up banking products, he said. Without proper banking, local cannabis businesses would have a very difficult time renting space, getting insurance, buying or cultivating product, and putting together a payroll.
With regulations and banking options in place, Hart and Perry thought the territory’s goal of legal cannabis sales before the end of 2026 was entirely possible.
“I think they’ll hit their mark,” Hart said.
