Access to banking services remains one of the major obstacles placed in front of the burgeoning cannabis industry. While more banks and credit unions are doing business with state-regulated companies, there aren’t enough of them, and they are likely to impose hefty fines and requirements upon the businesses. Too many cannabis companies are forced to become cash-only operations. Having so much cash around hurts the business, employees, vendors, and society-at-large by encouraging tax evasion and robberies. To help solve the banking issue, California advocates are urging state legislators to create a state bank free from federal laws against cannabis, as The Press Democrat reported:
State lawmakers in Sacramento are expected to grapple over whether a state-owned bank could help bring the multibillion-dollar cannabis industry into the financial mainstream as the sector is still a largely cash business — even almost a year after legalization for recreational use. State Treasurer John Chiang will release a feasibility study very soon on the proposal along with an analysis from the state Attorney General’s Office on the legal challenges that such a bank could face.
“There is absolutely an eagerness to flesh out these type of solutions,” said Hezekiah Allen, chairman of Emerald Grown, a Humboldt-based cooperative of cannabis growers. Allen has been a leading proponent of a public bank for his sector, where the denial of traditional banking services is a major impediment for growth.
In the United States, the idea has been around for centuries and tried at the federal and state level. Yet until recently, the only public bank operating in modern times has been the Bank of North Dakota — where it is politically sacrosanct. The bank, which celebrates its centennial next year, was formed to help North Dakota wheat farmers who were charged exorbitant interest rates at the time from banks in Minneapolis and Chicago.
A California state bank makes a ton of sense, not just for the cannabis industry, but all state residents. By all accounts the Bank of North Dakota has been a huge success, starting with $2 million in 1919, the bank has added millions to the state’s coffers and now generating a hefty profit of over $100 million a year. With the world’s sixth largest economy, California’s cannabis industry will boom, the only question is whether the booming companies will be owned by California residents or major corporations (likely from other countries). A Golden State bank that can open up accounts to the cannabis industry, and make small business loans to mom-and-pops can help the California cannabis industry survive and thrive while we wait on the federal government to finally end cannabis prohibition.
Learn more about the ins and outs of the California cannabis industry, and what the future may hold, at the International Cannabis Business Conference in San Francisco on February 7-8, 2019. Early-bird tickets are on sale until January 18th. After San Francisco, the ICBC will be hosting events in Barcelona, Berlin, Zurich, and Vancouver throughout the year.