Here at Booth, an interesting and special story is never a scarcity, especially after summer internships. But when I talked to Jesse Taylor, the founder of Verdant Financial Services and a good friend from the trenches of Commercializing Innovation, I was still very shocked by how special his summer internship was in an industry I had only heard about from news and movies—cannabis. This story is also a little bit special as it is about an entrepreneur who hustled into NVC when his proposal was originally denied—the only one of its kind. I have no doubt that his persistence and perseverance will be helpful moving the business forward in this new industry. Here’s Jesse’s story…
When I came to Booth I was sure I was going to get involved with Venture Capital and Entrepreneurship. Over those early few months I struggled to find ways to employ the skills I’d honed over 8 years in the Finance industry in a new and interesting way, but found the FinTech industry to be saturated and uninspiring. The idea came to me while discussing my frustration with a classmate and he, jokingly, suggested that the cannabis industry had a bank problem. We both laughed it off because of the clear problem with legality, but the thought really kept nagging at me and so I started investigating it.
My investigations led to the discovery of a real addressable bank problem, the foundation of our current business concept, and a summer internship as a financial consultant for a Cannabis Research and Develop firm. The research and development firm created products, licensed the know-how on making them to Cannabis product manufacturers, and helped market the products to Dispensaries and consumers. This led to a second and third internship with two separate cannabis venture capital firms during the fall and winter of my 2nd year at Booth.
These three intensive internship experiences taught me a ton about the budding cannabis market, what the income statement and balance sheets of the entire supply chain look like on average, and what the typical entrepreneurs and staff look like that are engaged in this industry. The main problem these businesses face is that banks that are subject to federal regulation are unwilling to risk their core business by having direct engagement with the cannabis industry. This prevents them from receiving the deposit and electronic transfer services, loan options, and financial advice that a bank would typically provide.
Armed with that knowledge, advice from legal and business experts, lots of research, and help from fellow Boothies, I applied to NVC with my business that solves these problems: Verdant Financial Services. Verdant is a FINRA registered independent broker/dealer that issues debt securities to marijuana related businesses (MRB’s) looking to move their cash out of their vaults and into the banking system and loans that money back out to MRB’s looking to finance their business growth and expansion efforts. As Waverly Deutsch puts it, we found a loop hole in the legal system that allows us to ‘legally money launder’ cannabis money and provide much needed loan options to industry participants. Mark Tebbe also helpfully describes the business as a ‘Weed Bank’. Disclaimer: Note that we do not in fact launder money, nor are we a bank!
Despite being well received by them and other NVC judges in individual conversations, our application was originally denied. We were told we didn’t have enough legal support for the business, so I spent the next 72 hours on a telethon trying to find attorneys willing to evaluate the business plan and support it from a legal standpoint. Eventually I found a few legal advisers willing to do so, appealed the decision with this material update and we were let in.
I’m hoping the NVC process leads to the refinement of the business process and gets us in front of investors looking to participate in the growth of the marijuana industry. If we are able to successfully raise sufficient funding, we’ll launch immediately after graduation in California and follow with a subsequent launch in Colorado.
Fun fact: You’d be surprised by how many prominent people come out in support of marijuana once they learn you’re in the business!