By John Schroyer
The top executive of a groundbreaking Nevada bank that began working with the marijuana industry last year has left his post to accept a job with a financial services startup targeting cannabis companies.
John Sullivan, who served as president and CEO of First Security Bank of Nevada for nearly four years and convinced the institution’s board to work with medical marijuana companies, now holds the same titles at Integrated Compliance Solutions (ICS). The Las Vegas-based company is in the early stages of rolling out a program dubbed Seed to Bank that will ultimately be available to marijuana companies in every state with legal marijuana markets.
With the move, Sullivan becomes the first CEO of a mainstream bank to jump ship specifically for the marijuana industry, following the lead of other high-profile business executives, politicians and investors who are moving into the sector.
Sullivan began in the financial industry straight out of college in 1973 and has held nearly every position imaginable at various banks. With his 65th birthday just a week away, Sullivan decided recently to move full-time into the marijuana industry because of the immense potential.
“This is exciting to me, to see an industry be created. I wouldn’t have the slightest hesitancy about wanting to work to age 73,” Sullivan said. “It’s sort of brand new. It’s like the dot com explosion 20 years ago.”
Nevada-based investment banker Leslie Bocskor, who doubles as the chairman of the Nevada Cannabis Industry Association, said Sullivan’s move to the cannabis sector is a welcome one.
“It’s huge news,” Bocskor said. “This is the tip of the iceberg, the first bird flying south for the winter, so to speak.”
Bocskor said he gives Sullivan a lot of credit as a traditional banker who has made an effort to reach out and build relationships with cannabis-related companies.
“I think it was June of last year that he got on NPR and publicly stated that First Security Bank of Nevada would be accepting deposits from legal cannabis businesses. That at the time was a watershed moment,” Bocskor said. “John Sullivan making this move is going to cause a further sort of shakeout in the industry that will inspire more people to do the same thing.”
Sullivan said the opportunity came up in part because ICS runs in some of the same professional circles as Sullivan.
At the same time, over the course of several months Sullivan found himself fielding calls from banking executives across the country, asking for tips on how to work with the marijuana industry. The attention stemmed in part from First Security’s openness in the media about offering banking services to MMJ companies in Nevada.
Sullivan, in fact, became one of the first banking executives to talk openly about working with the cannabis industry.
“As more institutions reached out to me, I thought, ‘Well, this is something that is needed for the industry, and this is something I could do to make a difference.’ So I had two choices to make, and now was as good a time as any,” Sullivan said.
Not only will Sullivan be working full-time with ICS, but he’ll continue as a general consultant for banks across the country that are interested in compliance systems so that they can serve cannabis companies and also not run afoul of federal regulators.
ICS is now working to perfect involves kiosks that customers would use to make purchases at medical dispensaries or rec shops, “just like a reverse ATM,” Sullivan said.
One of the longest-standing problems, he explained, is that bankers are still extremely wary of cannabis company deposits, due to marijuana’s status as a Schedule I narcotic under federal law and anti-money laundering statutes. The system he’s working on would help allay bankers’ concerns, because it would provide detailed records of where precisely the money being deposited came from.
That in turn will give banks confidence that they’re operating within guidelines issued by the federal Treasury and Justice Departments.
ICS is currently installing kiosks in about eight marijuana shops in the Denver area, and Sullivan estimated that another 50 kiosks are currently being manufactured.
Other companies are selling or developing similar products and services as part of a rush to offer financial services to the industry in the absence of traditional banking.
John Schroyer can be reached at email@example.com