Ever since California opened the doors on the country's largest adult-use cannabis retail market, state officials have been struggling to solve one of the industry's largest problems – the lack of access to banks and other financial institutions. Any bank that opens an account for a canna-business is at risk of being charged with money laundering by the federal government, leaving these businesses with no other option but to operate on a cash-only basis.
Last year, state Treasurer John Chiang floated the idea of creating a state-chartered bank to explicitly serve the cannabis industry. State Senator Bob Hertzberg took up Chiang's call, and proposed SB 930, a bill to create just that. This bank would be much more limited than a traditional bank, but would allow canna-businesses to store their money and write checks to pay their rent and their state and local taxes. The Department of Finance predicted that California would collect $600 million in tax revenue this year, and even though the state has fallen short of the estimate, the current banking situation still requires this full sum to be paid in cash.
Hertzberg's bill raised hopes that the state could get this massive amount of cannabis-related cash off the streets, but these goals have been put on the backburner, at least for the immediate future. This Thursday, the state Assembly Appropriations Committee put the brakes on SB 930, effectively preventing it from advancing until next year's legislative session. Lawmakers decided that the bill faced serious obstacles, most notably the fact that there is no way for the state to guarantee that these banks would be safe from federal prosecution.
Even though the banks proposed by the bill would be owned and operated by the state, they would still need to interface with the federal government in order to be able to move money around. Lawmakers also noted that another “unfortunate side effect of this bill could be the concentration of cannabis business assets into one or several easily identifiable institutions, making them an easier target of federal law enforcement action,” the Los Angeles Times reports.
Hertzberg said that he was “extremely disappointed” that his bill was tabled. “This is a serious public safety issue that deserves swift resolution,” he added. “We’ve got barrels of cash buried all over the state, businesses being ransacked, and it’s clear that the federal government won’t act. It’s a shock to me that the state government may not act this year either.”
The California Cannabis Industry Association agreed that the committee's decision was “disappointing.” Spokesman Josh Drayton told the Associated Press that his group is “committed to partnering with the Legislature to identify solutions to addressing this very critical issue to our state and our industry.” The lack of federal protections for state-legal pot businesses is likely to continue foiling California’s plans to solve its cannabis cash problem, however, and while many members of Congress have proposed measures to address the conflict on the federal level, none have succeeded yet.