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Interview with John Vardaman (Hypur)

On September 19, John Vardaman of Hypur, will speak at Kahner Global's 3rd Annual Cannabis Private Investment Summit in New York. This event gathers industry leaders and investors for a day of collaboration and networking

John Vardaman spend 10 years working at the U.S. Department of Justice, working on everything from national security to marijuana banking. He helped draft the Cole memo, the DOJ policy that the entire state-legal cannabis industry hinges on. Now, the attorney serves as the EVP and general counsel for Hypur, a technology company that helps financial institutions serve cash-intensive businesses like marijuana companies.

"It's exciting to be part of an industry that's growing in the way that the cannabis industry is," he said in a recent interview. "It continues to enjoy a very unique status in our legal system, which makes it very interesting in terms of the disconnect between state law and federal law. As a lawyer, I'm very interested in it from that perspective."

We got his take on the current administration ("relatively optimistic"), what financial institutions make of marijuana money, and how the industry can gain the trust of banks.

This interview has been edited for length and clarity.


There are a lot of media reports about the lack of access to banks for cannabis companies. At the same time, there are reports that there are plenty of banks out there that will work with the industry. How does a cannabis company – especially a plant-touching one – go about finding those institutions when they're constantly having their bank accounts shut down?

It's admittedly a problem because there's a lot more demand for banking access than there currently is supply. It's still a difficult concept for a lot of financial institutions to get their heads around, but you can actually permissively service an industry that remains illegal under federal law.

It really is about education and explaining how this can be done, and why it's in the interest of the institution to consider it. And also [how] they can perform a community service by enabling these businesses to operate as legitimate businesses. That way, businesses can be monitored, and it can be taxed, and you avoid all the safety and transparency problems associated with banks operating in cash-based industries.

Are the institutions you talk to generally receptive of that message?

If they're talking to us at all, it means that there's probably a certain level of interest. Sometimes, it can just be a curiosity. Sometimes, it can be that this is something they've already decided and they just want to know how best to do it. Every institution is different.

But I can tell you that without exception, every institution that we talk to [feels] better once they have the benefit of our understanding of this market from a compliance side and a legal side. Then you couple that with our technology, which is specifically designed to meet the needs and challenges of this industry. That's not always the end of the story – you're talking to boards of directors, and you have to clear a lot of hurdles. But invariably, when we talk one-on-one with a bank, I think we're able to make them understand why this can be done how it can be done responsibly and profitably.

Going back to your experience at the DOJ, what is your take on this administration and Jeff Sessions? Are you optimistic or pessimistic about what they'll do?

It's no secret that the attorney general is no fan of this industry. Given the fact that so much of the industry is operating on federal policy which can be changed in an instant -- it doesn't require an act of Congress -- I understand why there is concern as to what steps this administration might take.

I think I probably consider myself a little bit more optimistic than a lot of people. This is an industry that has gone so far down the track that to try to undo it is just not feasible, even if they'd want to do it. From a law enforcement perspective, the guidance that I worked on alludes to the fact that federal resources are limited. I just don't think that trying to stamp out the state-legal marijuana industry is a high law enforcement priority. They can expect very little cooperation from states that historically have worked with the federal government on marijuana enforcement. I think those days are over.

It's obvious what the attorney general would like to do. But for a lot of practical reasons, it's unlikely that they're just going to simply rescind the guidance that is currently in effect and try to go back to a policy of full enforcement.