A California state government group has issued a report calling for a multi-state consortium to advocate for removal of federal legal and regulatory roadblocks to financial institutions offering banking services to the marijuana industry.
Additionally, the report calls for creation of a state-chartered corporate credit union or banker’s bank to serve the cannabis industry in the state.
“The final step in providing banking services to the cannabis industry is removing federal legal and regulatory roadblocks, the end game of which would allow cannabis to be treated like other cash-intensive regulated industries, such as casinos and pawnshops,” states the report, issued by a group set up by California State Treasurer John Chiang.
To accomplish that, the report advises, “a multistate consortium should be created which includes representatives of cannabis-legal states, local governments, the cannabis and financial services industries, and law enforcement.” The consortium would (among other things) engage in “congressional and executive-branch policy advocacy, which should be coordinated to make sure that cannabis-legal states speak with one voice.”
Issued by Chiang’s Cannabis Banking Working Group, the “Banking Access Strategies for Cannabis-Related Businesses” report follows up on the decriminalizing of adult recreational cannabis, approved by voters in last year’s elections. Chiang stated in the report that the voters’ decision will expand the scale of the industry, noting that “it is estimated that legal cannabis will generate more than $7 billion in annual sales in its first few years of operation, beginning on Jan. 1, 2018.”
Chiang also noted in the report that production, distribution, sale, and possession of cannabis remain illegal under federal law, and that marijuana and many of its byproducts continue to be listed as Schedule I controlled substances, akin to heroin. “The clash between state and federal law threatens to cripple legal California cannabis businesses before they even get up and running,” Chung stated. “One of the main threats to legalization is that banks generally will not open accounts for cannabis businesses out of fear they will be penalized under federal law.”
Other recommendations in the report include:
- Create a publicly owned or supported, state-chartered financial institution in California to serve the cannabis industry. “A feasibility study should be conducted to determine whether creation of a public cannabis financial institution or a bankers’ bank or corporate credit union is advisable,” the report states.
- Expand cannabis industry access to banking services under current law by creating an online portal — designed with financial institution compliance needs in mind – that would aggregate data on cannabis businesses from state and local government units with cannabis regulatory or data-collection responsibilities.
- Establish an armored courier service that will collect state tax and licensing payments made in cash from businesses in California, including cannabis businesses, that do not have deposit accounts.