Try as we have, your Whispers staff has been unable to come up with the names of the banks — all signs point to two of them — that are gearing up to provide services to Arkansas’ medical marijuana industry despite the regulatory hurdles.
But we did pick up this tidbit from Rep. Doug House, R-North Little Rock, who has been managing the rollout of legislation in support of the voter-approved amendment legalizing medical marijuana in the state:
If at least one Arkansas bank doesn’t step up to the plate by Dec. 1, legislators will look for another option to protect the state from the dangers of an all-cash industry.
Already, House said, lawyers with the state Department of Finance & Administration are researching variations on what’s known as the “Ohio plan.”
In Ohio, the state government is creating a “closed loop system” to act as the bank for marijuana-related businesses and medically qualified patients.
As described in Ohio news reports, patients, cultivators, dispensaries and related industries will be able to deposit money into accounts held by the state, and the state will move money between the accounts when patients pay their dispensaries or when dispensaries pay their vendors. For payments outside the closed industry, the state will write checks at the direction of account holders.
“The idea is we don’t want cash on the streets associated with these operations,” House said.
Banking the marijuana industry can be very lucrative for banks that have the nerve and capital to face crushing federal regulations since marijuana is still illegal under federal law.
Bill Holmes, CEO of the Arkansas Bankers Association, said he expects a couple of Arkansas banks to make the investment, which will put them in an exclusive club.
The U.S. Treasury Department’s Financial Crimes Enforcement Network reported that about 300 banks and a few dozen credit unions nationwide were working with marijuana-related businesses as of March 31, but Holmes thinks that figure is misleading.
“I think there are 25-30 banks that are legitimately banking the MRBs,” he said. The rest have probably just filed suspicious activity reports about money that they think may be marijuana-related or doing business with companies on the fringes of the industry, he said.
Big Names
Back in July, Holmes told Arkansas Business that the banks’ situation was frustrating because “some of their very best, largest customers … want in the [marijuana] business.”
We think we’re starting to figure out what he meant.
For instance, at least one grandson of the late billionaire financier Jack Stephens seems to be involved in a wannabe cultivation business.
While we weren’t able to get personal confirmation, we know this:
2200 Commercial Street Warehouse LLC, which paid $1.9 million (mortgage-free) for a 104,000-SF warehouse near the Clinton National Airport in August 2016, shares a mailing address with a business associated with Jackson T. Stephens III. He is a son of Jackson T. “Steve” Stephens Jr. and a nephew, then, of Warren Stephens, CEO of Stephens Inc.
The warehouse property also is linked with three corporations associated with Henry P. Willmuth. Down River Pharmaceuticals LLC and WPH LLC were both incorporated in March and list Willmuth as incorporator/organizer. Naturalis Health LLC lists Willmuth as registered agent and Patrick H. Murphy as incorporator/organizer.
Willmuth, who recently paid $342,250 for the building that long housed Joubert’s Tavern at 7303 Kanis Road in Little Rock, is a son of Batesville businessman Rocky Willmuth. He did not return calls to his cellphone.
Murphy is believed to be a lawyer who has worked for firms in Little Rock, but he could not be reached for comment.
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