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As the market for cannabis becomes more competitive, interested financial institutions should devise a strategy for reaching — and growing — this client base.
When medicinal cannabis was legalized by the Mississippi legislature in 2022, $777 million Merchants & Marine Bancorp in Pascagoula, Mississippi, saw an opportunity to launch a new digital business.
At the time, interest rates were low. Merchants & Marine was flush with deposits, so growing its core deposit base wasn’t a primary motive. However, bank executives had been discussing cannabis banking for a while by that point and thought it held potential to grow and diversify their own business over the long term, says Chief Operations Officer Jeff Trammell.
To market itself to that client base, Merchants & Marine developed a separate brand, dubbed CannaFirst Financial. Under that banner, it offers deposit services, treasury management, payments services and cash transport. The latter of these is critical for the cannabis industry, which tends to be cash intensive.
Merchants & Marine had historically relied heavily on brick-and-mortar branches, so launching CannaFirst Financial gave it an opportunity to figure out how to run a local, digital bank.
“It helped us work out how the digital banking concept should be done,” Trammell says. “We had a market that needed to be served. We wanted to do a digital bank concept, and we had some really good people who were just excited about the idea of doing something new.”
In Mississippi, CannaFirst has enjoyed an early mover advantage, Trammell says, and the company has gained an edge over out-of-state competitors by offering personalized banking services. Giving a client a temporary increase on a wire transfer or spending a little extra time talking with them about market trends can make a big difference to cannabis businesses, which are still relatively underserved.
To download the report, sponsored by Green Check Verified, click here.
