A bill, aimed at creating limited-service banks and credit unions for cannabis businesses, is seeking California’s Senate approval, CNBC reported.
On Wednesday, the bill was approved on a unanimous vote by the Senate Bank and Financial Institutions Committee.
“The idea is to not have these businesses show up at state offices with suitcases of cash to pay their taxes,” said Katie Hanzlik, a press officer with Hertzberg’s office.
The bill would allow California’s financial regulator, the Department of Business Oversight, to watch over the limited-charter licenses for bank and credit unions.
These banks would be allowed to issue special checks that could be used to pay state or local fees and taxes, rent on property associated with cannabis businesses and vendors of the pot businesses, or to buy state or local bonds or warrants.
The recreational use of marijuana was legalized in California on Jan. 1. However, medical marijuana had long been legal in the state since 1996.
Marijuana, recreational or medicinal, is prohibited on a federal level.
Also, banks in the U.S. have predominantly discontinued their services especially after the federal government’s clampdown in January. This has forced the cannabis industry to mainly deal with cash when processing their transactions.
Bankers can be prosecuted criminally for offering services to cannabis businesses under the Bank Secrecy Act, the USA Patriot Act, and the Racketeer Influenced and Corrupt Organizations, or RICO, Act.
So far, the Department of Business Oversight has not taken a stance on the legislation, “but we are trying to be helpful to the author,” said Thomas Dresslar, deputy commissioner for the department.
He said the department has been working for years to solve the problem of the cannabis industry is stuck largely in cash.
“It’s a public safety and worker safety problem,” Dresslar said. “It’s a real issue and it’s a real problem.”