The United States cannabis industry is dealing with a huge banking problem, with major banks and financial institutions refusing to do transactions with cannabis-related businesses. They fear that allowing cannabis companies access to banking services would put them at risk of prosecution by the federal government.
And because of this, cannabis businesses are mostly forced to deal in cash. Federal banking restrictions are making it almost impossible for them to maintain accounts with federally chartered banks and financial institutions. That means they cannot process credit card payments by customers, too.
California, however, is trying to do something proactively to solve this issue. Lawmakers have come up with a measure — Senate Bill 51 — to create state-chartered banks to help the cannabis industry get around banking restrictions.
Under this proposed legislation, credit unions and private banks can apply for a limited-purpose state charter, enabling them to provide depository services to licensed cannabis businesses.
It would also set up special checks by cannabis businesses as a way to pay local and state taxes, fees, and rent.
The bill was approved with a 35 to 1 vote and will now proceed to the Assembly for further approval. If it succeeds, California Gov. Gavin Newsom will have to sign it into law.
When SB 51 was introduced in April by California Senate Majority Leader Robert Hertzberg. He said that as policymakers, they have a duty to further the will of the voters and at the same time protect public safety.
He admitted that the measure is not the ultimate solution to the problem, but is just a small step in the right direction. It will get some of the cannabis cash off the streets and into bank accounts, he added.
Many predict that if this measure is passed and becomes law in California, it could add pressure on the U.S. Congress to push for the legalization of banking for the cannabis industry.
In March, the House Financial Services Committee approved the Secure and Fair Enforcement Banking Act, a measure that would protect banks that work with cannabis businesses. And more recently, the National Association of State Treasurers had issued a resolution to back congressional legislation allowing banks to provide financial services to legal pot businesses.
California has fully legalized cannabis, ending the prohibition of recreational pot in November 2016. However, the state’s legal pot industry is still struggling to compete with the illicit market and is facing challenges pertaining to high taxes and banking access.