The California Senate passed a bill that would allow state-chartered banks to offer banking services to the state’s legal cannabis industry. If the bill passes the Assembly, it would be a major step in the progress of the cannabis industry, which is being held back by federal regulations against the plant.
Sen. Bob Hertzberg, along with a bipartisan coalition of 9 cosponsors, introduced Senate Bill 930, which passed on a vote of 29-6.
The $10 billion California cannabis industry currently has to do all its transactions in cash, because federal law forbids federally regulated and insured banks or credit unions from knowingly accepting money related to cannabis.
SB 930 would allow for the creation of limited-charter licenses for banks and credit unions, referred to as Green Banks, overseen by the Department of Business Oversight. These Green Banks would be allowed to issue checks on behalf of cannabis businesses which can then used to pay state or local fees and taxes, rent on business property, vendors, or to buy state or local bonds or warrants.
The checks would have to be deposited or cashed at one of the cannabis limited charted banks, but that would allow the proposed institutions to stay outside of the federal checking system.
Hertzberg said in a news release, “The status quo for our growing legal cannabis industry is unsustainable. It’s not only impractical from an accounting perspective, but it also presents a tremendous public safety problem. This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue.”
The Cannabis limited charter banks and credit unions would be allowed to provide accounts to people unrelated to the cannabis industry as well as create banking networks, but they cannot do business with any federally regulated banks.
SB 930 will not be voted on by State Assembly until 2019 at the earliest.