New proposal would provide banking access for cannabis industry

Four months after a high-profile effort to find a way to provide California’s legal marijuana industry with access to financial services ended in failure, state Sen. Robert Hertzberg, D-Van Nuys, and state Treasurer Fiona Ma are back with a new proposal.

In his final weeks on the job, Ma’s predecessor as treasurer – John Chiang
announced that he no longer believed the Cannabis Banking Working Group that he chaired for two years could come up with a solution to a basic problem: Most banks do not want to provide services to marijuana growers, delivery services and shop owners until federal regulators or Congress and President Donald Trump approved changes in federal policy. Though more than 30 states have legalized the medicinal and recreational use of cannabis, under federal law, it remains a Schedule 1 – meaning very serious – illegal drug.

“[The federal government] must either remove cannabis from its official list of banned narcotics or approve safe harbor legislation that protects banks serving cannabis businesses from prosecution,” Chiang said at a Dec. 27 public meeting of the Cannabis Banking Working Group.

But with the recreational marijuana industry off to a much-slower start than expected since 2016’s Proposition 64 began allowing recreational sales on Jan. 1, 2018, state elected officials are under pressure to help the industry. While other lawmakers have focused on reducing taxes and regulations and making it easier to get permits, Hertzberg and Ma see providing basic financial services as crucial to normalizing legal recreational cannabis and to limiting the corruption and employee safety risk of having a multi-billion-dollar cash-only industry.

That’s why Hertzberg introduced Senate Bill 51, which would let individuals or companies in the private sector seek state charters that would allow them to create credit unions and banks of limited scope specifically for the cannabis industry. The special banks could provide checking services allowing marijuana companies to “open and use checking accounts, make or receive electronic payments, or accept credit or debit cards.”

Oversight of the new banks would be assigned to the newly created Cannabis Limited Charter Bank and Credit Union Advisory Board, whose board would include the state treasurer and controller.

Last year, Hertzberg offered Senate Bill 930, a similar measure that easily passed the state Senate and two Assembly committees before dying in murky circumstances in the Assembly Appropriations Committee. Ma co-sponsored that measure while still serving as a state senator.

In a recent Capitol Weekly story, Hertzberg’s spokeswoman suggested that SB 930 failed because of then-Gov. Jerry Brown’s tacit opposition.

“The bill itself this year is probably going to be extremely similar to last year, but a few outside aspects have changed,” said Katie Hanzlik. “We guessed that there wasn’t quite as much of an appetite in the previous administration, so the good thing on that front is that we have a new administration, and it’s our understanding that Gov. Newsom is really open to this whole field of cannabis and making this industry work in the state.”

While lieutenant governor, Newsom was perhaps the highest-profile supporter of Proposition 64.

The first legislative hearing on SB 51 has not yet been scheduled.

Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

Related Articles

Fossil fuel ‘divestment’ may add to CA pension funding nightmare

If any state in America displays more of a need for a consistent commitment to pension “best practices” than California,

China surging

China's growth dropped from 12 percent in 2010 to “only” 7.5 percent during the second quarter of 2012. Now China

CSU faculty looks unwilling to compromise on pay

A strike by California State University professors, lecturers, librarians, counselors and coaches looks increasingly likely in coming months unless CSU