California is pressing forward with efforts to provide legal banking services to marijuana businesses as cannabis companies struggle to get banked.
Reports in The San Francisco Chronicle said California policymakers introduced a bill last Thursday (Jan. 25) that would allow banks and credit unions to provide account services for legal cannabis companies. The legislation was spearheaded by State Sen. Robert Hertzberg (D-Van Nuys), reports said, and would let financial institutions (FIs) provide checking and savings accounts to these businesses and would allow them to issue checks.
The bill, SB930, is one of several concepts that have surfaced in the state in recent months while California supports a growing industry. Marijuana became legal for recreational use on the first of this year, but the drug remains illegal under the U.S. Drug Enforcement Administration’s rule, which has prevented federally regulated financial institutions from providing services to marijuana companies in places like California and other states in which the drug is legal.
Other policymakers have considered the establishment of a state-backed bank to provide financial services for the industry. Reports last November said California Treasurer John Chiang proposed this idea and others along with the Treasurer’s working group established to address key issues pertaining to legal marijuana companies in California.
But Chiang said at the time that even with state intervention, the federal government has to act on the matter.
“A definitive, bulletproof solution will remain elusive without federal deregulation of marijuana,” Chiang had said during a press conference. “This is not an excuse for inaction.”
Hertzberg highlighted the ongoing struggles of legal marijuana operations in today’s conflicting legal climate.
“These businesses handle significant economic activity, yet they are forced to operate under the table and with little government oversight, as if they’re a black market operation,” Hertzberg stated, adding that the legislation would “integrate these businesses into the fabric of the California economy.”
According to California State Board of Equalization member Fiona Ma, the legislation would likely lead to special licenses and uniquely colored checks for the industry.
The marijuana market is the state’s “biggest underground economy,” Ma said, “so we’re trying to bring them into the light, and having some kind of banking is important. Paying your taxes with duffel bags full of cash isn’t safe or efficient for anyone involved.”
Reports noted that the California Department of Taxes and Fees Administration accepts cash payments from marijuana businesses but requires additional security for those transactions.