California cannabis businesses are hopeful a bill making its way through the state Legislature could provide them with some banking solutions.
Because it’s still illegal to use marijuana under federal law, most banks won’t work with cannabis businesses -- and that means the industry operates largely in cash.
A bill from state Sen. Bob Hertzberg (D-Van Nuys), Senate Bill 930, would create a closed system of banks and credit unions that would deal exclusively with marijuana businesses based within California.
Cannabis businesses would also be required to get private insurance, since they would not be backed by the Federal Deposit Insurance Corporation (FDIC).
Hertzberg said the network would have to be essentially walled off from the traditional banking system.
"What I’m trying to do is get as much cash into vaults as possible," he said. "Get the government paid as much as possible and take as much public safety risk out of the system as possible.”
Under the measure -- which has now cleared two Senate committees -- the cannabis banks and credit unions could only perform specific functions, such as taking deposits and issuing special-purpose checks. They would not be able to offer loans.
Amy O'Gorman Jenkins, senior policy director of the California Cannabis Industry Association, said the industry has billions of dollars in sales, yet is essentially shut out of the current banking system. And that can create some huge headaches. For instance, she said one association member recently submitted a million-dollar tax payment to the state -- all of it in cash.
"It took multiple cars," she said. "It took two days to count."
Jenkins said, aside from being inefficient, handling that much cash also poses a serious threat of theft and violence.
The bill now moves to the Senate Appropriations Committee.