A proposed new California bill, AB 1525, would give banking institutions and accountants the green light to work with cannabis businesses.
The bill will be addressed when lawmakers return this week, according to Bloomberg, and it proposes to allow financial services, including public accounting services, to help commercial cannabis activity without being at risk of committing a crime.
The bill would let any state or local licensing authority, state or local agency, or joint powers authority share information from a cannabis business, with its permission, with a financial institution or to spur commercial banking.
The bill could be a boon for the industry, which has long been plagued by uncertain financial status, according to Manuel P. Alvarez, California Department of Business Oversight commissioner, Bloomberg reported. Alvarez said the businesses typically deal in cash, and as such, the department has worked to put out guidelines for how those businesses can access banking data and credit unions.
Like any business type dominated by smaller merchants, the cannabis industry faced a crisis when the COVID-19 pandemic hit, with many businesses in danger of closing due to the crunch on revenue from the pandemic.
However, in May, U.S. House Democrats passed the HEROES Act, which proposed making it easier for cannabis companies to access loans and other services usually reserved for traditional banking. And 34 state attorneys general penned a letter to Senate and House leaders detailing the need for stronger legislation for weed businesses, including taxing those businesses, rather than allowing them to continue to rely on crime-prone cash-based models.
As the public consensus moved more in favor of legalized cannabis, last year a bill called the Secure and Fair Enforcement of Banking Act of 2019, or the SAFE Banking Act, would have allowed financial institutions a safe harbor in dealing with cannabis businesses, as opposed to the federal restrictions that have previously restricted business in that sector.
Last year, pot raked in sales of $2.96 billion in California, with expectations of it hitting around $3.7 billion before this year is done, and $7.3 billion by 2024, according to numbers by cannabis market analytics company BDSA.