Photo via iStock/ Ben Harding
California canna-businesses may be finally be getting a chance to open bank accounts in the near future, thanks to a new bill that just cleared the state Senate. This week, state senators voted to approve SB 930, a bill that would establish limited state charter banks and credit unions specifically for the use of licensed cannabis companies. The bill passed the state Senate with a bipartisan 29-6 vote, and will move from there to the state Assembly, where it awaits assignment to a committee.
Like in every other U.S. state with legal weed, California marijuana firms are forced to pay taxes, employees, and bills in cash due to federal laws that prohibit banks from servicing any business involved with an illegal substance. Businesses ranging from state-legal cannabis testing labs to cannabis advocacy groups have had their bank accounts shut down due to these regulations, and even individual employees of cannabis firms have been denied loans due to their association with the industry.
The California Department of Finance expects to collect $600 million in cannabis tax revenue this year, and if the industry's banking problems are not resolved, they must collect this full amount in cash. Foreseeing the problem, state Treasurer John Chiang convened a working group to discuss how the state could possibly resolve the problem. Earlier this year, Chiang told MERRY JANE that “the public bank is one of the pathways that we want to further explore, to see what can be offered to address the holes that need to be filled in regard to making sure that cannabis businesses get to operate above board and out of the shadows.”
SB 930, co-sponsored by state Senator Bob Hertzberg and Board of Equalization Member Fiona Ma, would make good on Chiang's promise to create state-level banking for the industry. These banks would be much more limited in scope than a traditional bank, but would allow canna-businesses to make deposits and pay their rent, as well as their state and local taxes, by check. The bank would also allow account holders to use checks to pay in-state vendors for goods and services, or to purchase state and local bonds or other debt instruments.
“California can’t wait to take action,” Ma said in a statement. “With secure banking for cannabis through SB 930, the industry will benefit, the state will get a revenue boost and pot cash will get off our streets.” Other proponents of the bill agreed that the creation of public banks would increase security for the state's cannabis industry, who are currently forced to transport and store large quantities of cash, making them popular targets for robbery.
“The status quo for our growing legal cannabis industry is unsustainable,” Senator Hertzberg said. “It’s not only impractical from an accounting perspective, but it also presents a tremendous public safety problem. This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue.”
Advocates of cannabis reform have been pushing the federal government to stop prohibiting banks from servicing the cannabis industry, especially considering that cannabis is legal in some form in the majority of U.S. states. This March, state treasurers from California, Illinois, Oregon, and Pennsylvania requested a meeting with Attorney General Jeff Sessions in order to convince the hardline prohibitionist to relax federal canna-banking policies. Legislators have also tried to push bills and amendments to protect banks willing to service marijuana firms through Congress, but none of these attempts has yet succeeded.
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