California to Seriously Consider a Tax-Payer Backed Bank for Cannabis Businesses

California to Seriously Consider a Tax-Payer Backed Bank for Cannabis Businesses

 

 

With the implementation of legal cannabis sales in California, along with 9 other states now, one of the biggest problems for the growing industry is a lack of access to traditional banking services. Something that any other business may take for granted – the ability to open a checking or savings account for business expenses, access to loans and credit cards for unforeseen expenses and most importantly, the ability to take electronic payments from debit and credit cards.

Due to the lack of banking services the cannabis industry has remained largely cash-only in most states whether the sales are for medicinal or recreational purposes. This has caused concern for many reasons including increased chances of being targeted for robbery, the opportunity for businesses to not be entirely truthful about their finances and the lack of chance for growth without access to loans.

The reason for banks to stay away from cannabis businesses is because of their relationship to the federal government – which is why California’s state Treasurer – also a candidate for Governor – has proposed a private, state-ran-and-funded bank to work with cannabis industry businesses.

“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.”

For now, it’s still in the investigation phase – with a combination of the treasurer’s office and the state attorney general’s office working together to determine whether it is financial feasible to open a state-run bank for these purposes.

Those working in the industry have been asking for an answer to reducing the amount of cash flowing in a legal cannabis market for years. If California opens a state-run and taxpayer funded bank and find success, maybe other states will move in this direction as well, creating a safer and more secure financial future for the growing industry until the federal-state conflict can be resolved.