President Donald Trump’s suggestion that he will leave states’ cannabis regulations alone should give hope to the millions of Californians who voted for Proposition 64 in 2016. Ideally, Trump would also push for wholesale changes in federal banking law that would allow the cannabis industry access to credit just like other legal businesses in the state.
But California can’t wait to take action. If elected state treasurer, my top priority will be banking for cannabis.
It’s a $10 billion industry operating mostly in cash. A majority of businesses are not paying taxes – not because they don’t want to, but because they aren’t able to open a bank account and local jurisdictions are failing to issue licenses.
So state Sen. Bob Hertzberg, D-Los Angeles, and I are proposing Senate Bill 930, which is to be heard Tuesday before the Senate Appropriations Committee.
The bill would allow state-chartered banks and financial institutions to apply for a special cannabis banking license to accept clients after a rigorous process that follows regulations from the U.S. Treasury Department.
We spent six months on a cannabis banking report after hearing from all sides. One message came through loud and clear: We need to get the cash out of people’s homes, businesses and backyards.
There are two types of banks – those with federal charters, and banks with California charters. Because cannabis is still considered a Schedule 1 narcotic, we cannot touch federal banking wires. We want state-chartered banks that are protected, regulated and certified under California law, and not required to be under the FDIC.
State income taxes, sales taxes, unemployment, workers’ compensation and property taxes could all be paid through a closed-loop system that takes in revenue from the cannabis industry, but is apart from the federal banking system. Our proposed network of depositories would allow customers to pay their taxes, rent and pay for other vendors’ products and services safely and securely.
Cannabis businesses could be part of a cashless system similar to Apple Pay, and their money would be insured by a state-licensed institution.
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.