Sean Campbell – Opening a Bank Account for your Cannabis Business

Sean Campbell

Sean Campbell, CEO of Blue Line Protection Group (BLPG) describes how to meet all the regulatory hurdles and satisfy the legal requirements to open a bank account for your cannabis business.

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Matthew: Hi, I'm Matthew Kind. Each week I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at That's What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at That's Now here's your program. Something as simple as having a business checking account is a difficult thing for most cannabis related businesses. Sean Campbell from Blue Line Protection Group is going to brief us today on how cannabis related businesses can have a banking relationship. Welcome Sean.

Sean: Thank you very much Matt.

Matt: Sean can you tell us a little bit about Blue Line Protection Group and the clients you serve?

Sean: Blue Line Protection Group was set up to help people in the cannabis industry initially to protect their premises and protect their businesses and to help them with the transportation of their product and the transportation of their currency to wherever they wanted it to be distributed to. However we've progressed that substantially, recently with being able to help these cannabis businesses and presenting them to certain banks who are willing to bank them provided they do the appropriate compliance basically as dictated by the feds and some of the memos that they put out in response to states legalizing cannabis.

Matt: I want to dig in a little bit to those memos, but first tell us a little bit about your background and how you got started in the industry.

Sean: My background is a bit different as far as the industry itself. I came from the hedge fund industry where I've been for the last 10 years. We've invested in many microcap and smaller companies, under $300 million generally. And so I have quite a bit of experience evaluating companies and evaluating opportunities and in this case evaluating the industry. And what made this particular business exciting was that every contract they engaged was profitable, so that they were doing real business, real revenues. At least initially in the industry a lot of the publicly traded companies were largely story lines where they were planning on doing things and planning on being successful. Whereas this is the real company doing real business and having real connections with the various players in the industry.

Matt: Now the banks are or some of the banks are a bit skittish about working with clients in the cannabis industry. However, there's some recent developments and memos from the federal government that you touched on just a couple of minutes ago. Can you tell us about those memos, the banks' skittishness and how to bridge that gap so banks are comfortable working with cannabis companies?

Sean: Well initially you cannot blame the banks too much because obviously cannabis is federally restricted as a product that can be bought and sold. And because the banks, whether they're state chartered or nationally chartered, are still regulated by the feds because of the insurance aspect. All banks have to have insurance. They're subject to federal regulation. However, the feds recognize there was a bit of conflict now with the states legalizing the production and sale of cannabis and the banks' inability to help with that. I mean any normal business would be able to find banking to carry on their business. The two problems with that are one, that money cannot be used by the cannabis producer or seller. And secondly, of course, you've created a crime magnet. All this cash moving around creates quite the potential for crime, and that's something that the feds didn't want to be responsible for in my view. In response they issued several memos, the most famous of which is the Cole Memo, where they enunciated eight points at the banks would have to hit. And if they were able to meet these requirements then the feds would basically say that were allowed to bank cannabis accounts.

Matt: Interesting. Can you highlight one or two of those eight points that are the most important?

Sean: The problem of course for the banks is that they’re not used to doing, I would say, any of the eight points.

Matt: Okay. Sean: The points they require is that the age of the purchaser is validated. The banks have what they call KYC, Know Your Customer, but that’s generally they know the business that they’re banking. Generally that doesn't require for them to know the customer of that business and who that customer is and what their age is and that it’s been validated. The memo requires that they make sure that the product’s not grown on federal land. They make sure that no one is driving high. Obviously responsibilities the banks don’t usually undertake. The memo requires that they validate that the product being sold is exactly the same as the product that’s being taxed so there’s no criminal enterprise, so there’s nothing going missing, so there’s no skimming out the back with the money or product. And it’s features like these that the bank never undertakes in any other business. And so the feds is now mandating that they have to be responsible for making sure that these actions are undertaken and that there is no criminal enterprise and that none of these requirements are being breached. So that’s why the banks appreciated that they made this effort to give them this memo, but immediately stated for the public that we can’t hit any of these requirements.

Matt: Okay got it. And so what are banks doing to help cannabis businesses right now? How do they work with them then?

Sean: I would say that the banks generally are not working with the cannabis businesses to help them and that’s probably 99 percent of the banks out there. So what you’re left with is smaller banks if you are looking at the opportunity and going well how can we effectively meet these requirements. And that’s generally where Blue Line comes in. I mean there’s three things that we very quickly do, we think, and that’s help people get their license, help people keep their license so they don’t break the rules. And the third thing is that we help them get their money into the banks by helping the businesses meet the Cole Memo and the other (6.57 unclear) requirements that are out there. And so we provide the guards. We did normally anyway and these guards validate the age. We provide the product, so we weigh the product when we pick it up, and we weigh the product when we drop it off. And we make sure that where we’re picking this product up from is the actual grower. And we make sure when they give us their money to distribute that it matches the product they sold. And finally we actually take their money to the tax office so we know what they paid in taxes and that it relates exactly to the monies they've earned from the sale of the product. So with these features in place we’re able to add what we call Hard Compliance, and we’re in the best position to do that because we’re vertically integrated all the way through. We provide all of these services naturally. And going forward we’re taken that one step further where we’re now providing kiosks, so when the purchaser comes in they select from the touchscreen the product they want which can only be the product that’s been delivered there. The home base, the office, the grower can manage exactly what the dispenser has available and that it’s been tracked seed to sale all the way through so that we integrate with several of the seed to sale companies and their software. Once they’ve chosen that product, the customer puts the money into the kiosk directly so that there’s no opportunity for the bud tender or anybody else to skim the money, goes straight into a safe which is part of the kiosk. We then remove that kiosk and take it to the bank that’s agreed that it’s customer is meeting the compliance requirements. And therefore we’ll be able to service the industry in that respect. These are all safeguards to make sure that we are able to say, not really us, the bank is able to say to the feds when they inquire, are you hitting this compliance that they can respond we could do no more. We have done everything that we possibly could to hit your requirement. Matt: Interesting. And then you also have some sort of documentation that says hey we picked up the cannabis, picked up the cash. We matched all those things so you have a record. Sean: We do a compliance package. We were doing it every month, and a couple of the banks have said that every quarter will suffice. So we’re doing a package. It’s about 132 pages long. It compiles all the people that have purchased the product in that time. It compiles all the products that came at that time, seed to sale tracking of what we sold, the tracking of the taxes and that all reconcile together. We have forensic detectives doing this. When we were doing it monthly, they were spending 8 to 16 hours per dispensary to prepare this package and then present it to the bank because it’s really the bank’s digression. But with the package and with the thoroughness of our compliance requirements, we have found several banks now who are willing to accept cannabis cash openly and willing to work with the feds to show them the compliance that they’re undertaking to make sure that these Memos and so forth are hit.

Matt: So when a bank starts to welcome cannabis customers is there like a tidal wave of new customers that are lining up to get into that bank?

Sean: There are. In Nevada where they haven’t even started the business yet, one of the banks has at least 80 customers all ready to go the day that they start business. Likewise in Colorado. It’s been over a year without banking, and the bank that has agreed to now undertake this it will start with a beta which they’re doing this month. And they’ll start taking all accounts on January 1st.

Matt: If I’m a bank president, I might say well, yes I’m welcoming some cannabis customers, but do I want a quarter of my business to be cannabis customers. Are they putting a ceiling on how many, what percentage of their customers will be cannabis related or is that a non-issue?

Sean: That’s going to be different for every bank. It’s different in Nevada as opposed to Colorado. In Colorado they’ve agreed to access additional equity so that they can take a larger deposit. That’s something the banks have to work with, and they believe they’re capable of that. If they are not capable of it, that would be different. But then we would look for another bank.

Matt: Okay. Recently the IRS issued a notice in regards to CPAs working with cannabis businesses. Did you read that? Can you comment on it at all?

Sean: Not really. I know very little of it. They’re generally just… they seem to be mostly concerned about making sure they get paid.

Matt: Right. They want to make sure.

Sean: So it would be any industry, but the IRS just want to make sure they get paid which again is rather hypocritical. It’s the same for the states. I mean they take cash. We deliver cash to the state to pay the taxes, and somehow that cash manages to get into the banking system.

Matt: Yes so that’s interesting. It’s okay.. well I will reserve my comment there, but it’s not a positive one. So you drive in armored vehicles with like AKs or how does this work when you’re pulling up to deliver huge amounts of cash somewhere?

Sean: Ninety-five percent of our employees are ex-police or ex-military. They are better trained, we believe, than anyone else on the street currently. We feel that makes them hard targets and therefore not the first option for criminality. We haven’t had any instances of anyone going after our guys yet, obviously happy about that. Honestly there’s too many easy targets for them currently in every state where we've been. The number of easy targets is so common and so large in number that they don’t need to go after the hard targets which is our guys, and yes they roll fully armed with the equipment you can imagine they would need to carry.

Matt: Okay and so they’re not only transporting large sums of cash but at times large amounts of cannabis and some other special cargo. Okay.

Sean: Special cargo is probably the right word. But you know the edibles and so forth, some of the concentrates are so valuable and do not take up very much space. So the value can be significant.

Matt: So from a compliance point of view if you’re educating a dispensary or infused products company about Blue Line’s compliance services, how should they start to think about compliance, security and cash management in a way they probably haven’t before?

Sean: We won’t take any legacy monies from any of the business that we start to help get or introduce them to banking. Because what’s most important is you’re able to track the sales from the product, the creation of the product to the sale of the product to the taxes, all the way through. So that we have to have a tracking on them. So I think as a first instance they should start to make sure that they have those tracking facilities in place and how they’re going to get there, and how they’re going to make sure that they can track everything all the way through. If they have those systems in place and I have auditors doing their accounts and they’re accounts are up to speed, it’s going to make our job easier. It’s going to be very much less expensive for them to use our service, and the bank is going to be very much happier that they can be confident that the business that they’re banking has been legit from day one and didn't just suddenly become more legit.

Matt: And for the listeners that are perhaps Illinois or Oregon or Alaska or Washington DC, different places where legalization efforts are going on or there’s medical marijuana is legal, will Blue Line be able to help them there or are you only in the larger states where cannabis is legal?

Sean: We’re in four states currently. We are in Illinois. We are in Nevada. We are in Colorado. We are in Washington. We went to California. We ran away partly because they weren't really interested in compliance at that point in time and they will be in the future. We will be going into Oregon. We would advise these people applying for licenses to choose the best companies with the best reputation. We find that helps with their license. We've helped hundreds of people with their applications at this point. In Nevada we were mentioned, I think, 44 times in the hearings as a name. And hopefully that helped some of the ones that got their licenses, and we’d love to help people in these new states on their application.

Matt: Great. In closing how can listeners learn more about Blue Line Protection group?

Sean: It’s easy to look us up on the internet. You will see lots of nice videos and nice things that we’re doing even on YouTube. Just look at That will give you a link to most of the press we've had and most of the videos and so forth. We’re also publicly listed so that you can check our filings to see what sort of company we are and our board members and so forth.

Matt: What’s your ticker symbol? I’m sorry to interrupt. Sean: BLPG, Blue Line Protection Group, BLPG. Matt: Great. Sean: That 1-800 number which is 1-800-844-5576. Matt: Great. Well thanks so much to Sean Campbell of Blue Line Protection group for being on Canna Insider today. Thanks Sean.

Sean: Thank you very much Matt, thank you.

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