A minority shareholder in the First National Bank of Pasco says the Florida-based financial institution has failed to overhaul its board and implement compliance strategies that would allow it to continue to serve cannabis operators.
The charges come from a 31-page lawsuit filed Oct. 31 in the Middle U.S. District of Florida.
First National Bank of Pasco allegedly began processing electronic payments for cannabis operators around 2022, but failed to perform compliance due diligence. Those alleged failures led to enforcement action from The Office of the Comptroller and Currency in the U.S. Treasury. Subsequently, those actions hurt the bank, according to London-based Def Trading, one of the institution’s shareholders.
First National Bank of Pasco reached a settlement with OCC on Sept. 18, 2025, after the agency found that the bank was failing to perform due diligence with cannabis clients, including filing suspicious activity reports (SARs) or even having operating procedures in place to ensure Bank Secrecy Act and Anti-Money Laundering compliance.
An OCC spokesperson told CRB Monitor News the agency does not comment on specific institutions and declined to give any specifics about the First National Bank of Pasco case.
Inexperienced bank leadership
Def Trading alleged the bank did not have leadership “with sufficient relevant knowledge and experience to ensure compliance with the complicated regulations” to provide cannabis-related banking services.
“Despite the fact that it became apparent that the Bank did not have sufficiently trained officers, directors, senior managers or personnel to navigate the compliance regulations associated with providing cannabis related business, the Board of Bancshares and Bank did little or nothing to address the problems,” Def Trading said in the complaint.
The agreement with OCC included a pledge from the bank to appoint a compliance committee within 60 days. Within 90 days, the bank’s board will have had to submit a strategic and capital plan that incorporates new compliance and risk standards.
When contacted, both First National Bank of Pasco and Def Trading’s attorneys declined to comment on the dispute or cannabis banking in general.
The lawsuit also criticized the general experience and makeup of the bank’s board. The complaint alleged the board lacked experience in banking, let alone any experience working with cannabis companies.
“The Board of Directors consists of 5 Octogenarians, a 77-year-old, and a 68-year-old, whose combined experience includes a personal injury lawyer, a trust and estates lawyer, a CPA, a ‘citrus grower,’ a retired office manager, dental assistant and registered nurse, someone in ‘insurance, real estate and agriculture,’ and the former Clerk of the Court for Pasco County. Not a single one of the directors identifies any prior banking experience,” said the complaint.
Def Trading waited 30 days after the OCC agreement was made public to sue because at that point the bank had yet to make any public announcements about possible changes in leadership, given the extensive changes called for by the OCC.
“Reading the OCC Operating Agreement as a whole, the OCC Operating Agreement essentially calls for a complete overhaul of the Bank’s Board of Directors and management. Thus, keeping the Director Defendants and management in their current position will not align with the spirit of the OCC Operating Agreement and can lead to further damages,” said the complaint.
Def Trading seeks more than $3 million in damages, excluding interest, costs and attorney fees.
Cannabis retailer sues over frozen funds
The Def Trading case is the not the only legal action that the First National Bank of Pasco finds itself mired in.
Hashery LLC, a New Jersey-based cannabis retailer known as Wellness for Sale, sued POSaBIT and U.S. Alliance Group on May 27, 2025, over $237,820 that’s owed to Hashery but is being held in a frozen account at First National Bank of Pasco.
POSaBIT works with U.S. Alliance Group, a major payment processing company, to process transactions. According to Hashery’s lawsuit, POSaBIT relies on U.S. Alliance Group to facilitate payments to POSaBIT’s clients.
U.S. Alliance Group announced in January 2022 that it would purchase First National Bank of Pasco. That deal ultimately fell apart, but the U.S. Alliance Board’s chief executive officer, Fadi Cheikha, became a board member of the bank and retained his shares in the financial institution.
Despite the deal falling apart, it did lead to the bank processing ACH payments from cannabis companies.
First National Bank of Pasco sued U.S. Alliance Group on July 23, 2025, as an interpleader to get directly involved in the U.S. Alliance Group’s dispute with Hashery.
