One of the biggest problems for anyone trying to open a cannabis-based business – whether it’s a cultivation facility, a producer of edibles or concentrates, or a dispensary – is lack of access to proper banking. This problem has been consistently brought up by activists, business owners and even lawmakers who see what a problem this is for these businesses. A multibillion dollar industry is currently being dealt mostly in cash, as though it were still illegal, because well, on a federal level it is.
Since banks are backed by the federal government, many are weary of offering services to state-legal cannabusinesses – which only makes things more troublesome for business owners. Allowing these businesses access to banking would not only make things safer for those working in the industry, but it would also make it easier when it comes to other issues such as finding funding, filing taxes, and much more.
Since the federal government is dragging their feet when it comes to fixing this issue, California’s Treasurer – and current Democratic candidate for Governor – John Chiang, has suggested creating a state-run bank that would provide services to the cannabis industry.
“We are contending with the emergence of a multibillion-dollar cannabis industry that needs banking services, and a private banking industry that is stymied by federal law in meeting the needs of the new industry,” said Chiang. “The current administration is out of step with the will of the people, not only those in California, but the 29 states that have legalized either or both medicinal and recreational-use cannabis.”
Right now, the treasurer’s office, as well as the state attorney general’s office, are only looking into what it would take to make a state-run bank possible. Things they will be investigating include the costs, benefits and risks, legality and any regulatory ramifications. The two parties will be expected to make their recommendations by the end of the year as far as the structure of such a banking system, and how it would be funded.
“As cannabis business owners, we’re interested in anything that would change the status quo,” said Hezekiah Allen, executive director of the cannabis trade group California Growers Association. “If there were a public bank and our members could do business with it, our members would open accounts in droves.”
It’s obvious that businesses need proper banking services – the cash-only nature of the business makes the industry a target for crime, theft, and sometimes violence. Since nothing is being done at a federal level, something needs to be done at a state level – just as it has been with legalization so far. Perhaps state-run banking, should it prove successful, will be a solution for California and other states until the federal government finally does something on a larger scale.
