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💬 Q&A with Kevin Hart, CEO, Green Check Verified (GCV)
GCV is a leading provider of cannabis banking solutions and expert advisory services for financial institutions (FIs), helping them set up cannabis banking programs and pulling more into the industry.
🗣️ On Monday, Safe Harbor (NASDAQ: SHFS), a leader in facilitating financial services to the cannabis industry, entered into an agreement to acquire Abaca, a financial technology platform that has processed more than $3 billion in gross transactions, for $30M. This comes roughly two months after Green Check Verified (GCV), a provider of compliant cannabis solutions and services to financial institutions, acquired PayQwick, which has been successfully servicing underbanked cannabis businesses with payments and lending since 2015. I spoke with CEO, Kevin Hart, last month to learn more about GCV and what sets the Company apart from competitors. On the Safe Harbor & Abaca deal, Kevin told me he welcomes the competiton and that it will make all of the players perform at a higher standard— “what is critical for a successful cannabis banking program has evolved dramatically and both sides, cannabis and financial institutions, demand future proofed solutions that are priced and valued accordingly.”
Background. Kevin Hart is the Founder & CEO of Green Check Verified. He has worked in the C-Suite for a variety of software companies with global clients and partners, and he has led two companies to successful exits with publicly traded companies, as well as another to an IPO. His introduction to the cannabis industry started with the predecessor company, TekServe which was the largest independent Apple dealership in the US. He was approached to take his POS knowledge from working with iPads to increase sales in airports to build something similar for the cannabis industry. While doing this work, he heard of the banking challenges of cannabis-related businesses (CRBs) and the gap of cooperation between those two highly regulated industries, which ended up being the genesis of Green Check Verified (GCV).
Green Check Verified (GCV) Overview. GCV is a leading provider of cannabis banking solutions and expert advisory services for financial institutions (FIs). They are a partner for institutions looking to build successful cannabis banking programs, and a platform that’s helping businesses address some of the industry’s primary challenges including compliance and financing. They help financial institutions to understand how lucrative of an investment setting up a cannabis program can be, in an attempt to pull new FIs into the industry.
Business Model. Green Check’s software, which is free to use for cannabis businesses, connects CRB owners with financial institutions that are actively serving the legal cannabis industry. Through GCV’s technology, CRB owners can unlock the value of data already being generated by their business and leverage compliance efforts to build trusting, lasting relationships for deposit and other financial services.
Who’s lending in the industry. 40% of FIs using GCV are lending to CRBs in some form. The rub is that they have different programs of varying sizes due to individual states' compliance rules and regulations. Luckily, with more FIs entering the space, GCV is seeing interest rates drop significantly from the early days when lending was through third-party money. Interested CRBs looking for a loan can simply push a button on GCV’s platform, fill out an application with their desired fund amount, and an organization like Lendica or Fundcanna may pick it up within a few minutes.
Today. GCV works with 112 different banks and credit unions to process over $400M/month that gets regularly deposited into the U.S. Economy. GCV is taking the demand from cannabis companies and pushing it into the U.S. financial system via their FI clients. They have been educating FIs on why and how they can serve the cannabis industry through free cannabis banking boot camps held twice a month. These webinars have featured prominent figures within the financial landscape such as Nelson Mullins and Rodney Hood of the NCUA.
Growth. GCV recently acquired PayQwick, a fintech company successfully servicing underbanked cannabis businesses with payments and lending. Everyday, GCV is adding 20-30 new CRBs through partner banks to its platform. In 2023, affiliated FIs want to see a 30-40% increase of cannabis sales throughout their cannabis programs. This type of growth is possible, as demonstrated by large FIs like Valley National Bank ($50 billion in assets and 200+ locations), whose largest single deposit customer in 2021 was a cannabis company.
Green Check is able to bank the same dollar five or six times. Because GCV can bank any CRB, a FI can establish relationships with any company that operates in their state. When a consumer purchases $280 worth of product within a dispensary, those items come from several different suppliers or manufacturers. In turn, those suppliers or manufacturers would have purchased their raw materials–the extract or the flower–from a cultivator. As the supply chain of the plant moves in the cycle from growth to consumer, a FI, by using GCV, can bank each and every one of those unique businesses. There may be different rules, regulations, and relationships but the “same money” is being verified for compliance and FI deposits.
Will some larger banks come into the industry prior to banking reforms? Not for sometime. For them, the opportunity isn’t big enough to “move the needle.” This makes the opportunity for the other FIs much more attractive and accessible. Also, most cannabis businesses are community-based and focused, so each side wants that direct relationship.
Funding. GCV has raised just under $9M to date from a series of private investors. The Company is in the process of raising capital now and while the current environment has made the process longer, the interest is strong, according to Hart. Hart believes they have the best industry solution in production and are generating revenue while serving a high-growth industry, GCV's progress speaks for itself.
Competitors. Shield Compliance, DAMA Financial, Hypur, Abaca, NatureTrak, Integrated Compliance Solutions, and Safe Harbor are a few competitors. Some of which are already out of the game or heading for the exits, according to Hart. Hart noted that they “know because their clients are calling us.”
👋 Highly Objective is edited by Dai Truong, who leads Cannabis Investment Banking at Arlington Capital Advisors.. Third-party information presented here and links to third-party content are for informational purposes only and are not intended as a recommendation, offer or solicitation for the purchase or sale of any financial instrument, security or investment. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Linking to third-party sites in no way implies an endorsement or affiliation of any kind between Arlington Capital Advisors, LLC, or its affiliates and any third party. The information in this blog constitutes my own opinions (and any opinions posted by guest bloggers from time to time) and it should not be regarded as a description of services provided by Arlington Capital Advisors, LLC or any affiliate.