The banking needs of the cannabis industry have been a pressing concern of CA state and city leaders as they deal with a rapidly growing state industry shut out of national banks and forced to operate businesses only in cash. Leaders are seriously inquiring how state or city Public Banks could potentially meet these needs. On Tuesday, Nov 7 at 10:00 am PST, CA State Treasurer John Chiang will hold a press conference in Sacramento to release a report on the steps California can take to address the lack of banking services that makes an entire industry resort to duffel bags full of dollars as standard business operations.
Federal law making marijuana illegal creates a legal grey zone for states who have legalized it. Because of the need to process payments and interact with the rest of the financial system, banks must have an account with one of the nation's 12 regional Federal Reserve banks, which default to follow national law. Will the Federal Reserve Bank of San Francisco take a different approach from the Federal Reserve Bank of Kansas City, for instance? It's not a settled question, but it's a battle worth fighting.
From Chiang's press release: The Treasurer’s report will be released less than two months before California begins a new era with the legalization of commercial sales of recreational cannabis on January 1, 2018.
The new industry’s inability to access basic banking services, such as checking accounts, credit cards and money transfers, is a threat to the safety of employees and customers of cannabis businesses and the general public. Criminals target dispensaries and farms, knowing they handle large quantities of cash.
The all-cash business model also creates difficulties for state and local agencies collecting taxes and fees. Most are not equipped to securely sort and count duffel bags full of currency.
Share this blog post with your friends!