California is one step closer to providing the state’s burgeoning cannabis industry with legal banking services.
Last month, the California State Senate passed a bill that would allow private banks and credit unions to apply for state charters to explicitly handle cannabis financial transactions. Under this legislation, which the State Assembly and California’s governor Gavin Newsom must approve before it becomes law, these limited-purpose charters would allow such institutions to offer depository services to licensed cannabis businesses.
Cannabis is still illegal on the federal level as a Schedule 1 drug, which means that traditional (federally regulated) banks are not allowed to touch cannabis money, even in the two-thirds of the country where it is legal at the state level. If a traditional bank decides to do business with a state-licensed cannabis company, it risks criminal prosecution for money laundering and “aiding and abetting” a federal crime. This means that our industry is forced to do most of its business in cash. This is a pretty dangerous endeavor if you think about the piles of bills accumulated at dispensaries, not to mention the administrative headache of trying to process payrolls, get vendors paid and audit for taxes — all with cash.