Federal Banks Won’t Allow Money From the Legal Cannabis Industry, California Planned To Create the First Marijuana Bank
In the United States, cannabis boasts a bizarre legal status. The substance, in some states, is both legal and illegal at the same time. In California where weed has been legal since January of this year, it is simultaneously, federally illegal.
This bizarre legal situation is accompanied by a number of consequences. Besides facing arrest for lighting up federal lands, legitimate pot enterprises find themselves unable to house their money in federal banks.
The result is that many of these legitimate marijuana enterprises must operate on a cash economy. This can be incredibly dangerous and denies the state valuable tax revenue.
California thought it had the solution,
The Solution That Wasn’t Meant to Be
California lawmakers have killed a plan that would have created a state-backed bank. This would have dealt largely with the money associated with the booming recreational marijuana market. Unsurprisingly, California’s legal recreational pot industry is the world’s largest.
The bill was proposed by Democratic Senator Bob Hertzberg. He was surprised to see his proposal die Thursday in an Assembly committee without debate.
Hertzberg’s bill would have given the state a greater degree of control. Essentially allowing California to license and regulate charter banks and credit unions, to deal with marijuana businesses. Services provided would have largely been limited to accepting deposits and issuing checks for specified uses such as paying state and local taxes.
Ultimately the solution would have acted as an intermediary stage in cannabis legalization. A transition between now and when weed becomes federally legal. However, with the Trump Administration dragging its feet and talking out of both sides of its mouth, many are suspicious that that date might not come any time soon.
Flaws With the Bill
Hertzberg’s bill, in which California planned to create the first marijuana bank, might have been a legislative disaster. For one, the money laundering laws that prevent federal banks from participation in the weed industry still apply. As a result, such state-backed banks would not necessarily be protected from the federal government.
With a great deal of tension between state and federal bodies of government… Perhaps establishing such infrastructure would be stirring the proverbial pot. The rescinding of the Obama era legislation that protected states that legalized weed, and President Trump’s statements on ending the federal ban, has left Americans guessing what the future may hold.
Tax proceeds from marijuana continue to be an issue in California. With the black market still dominating much of California’s weed distribution. On the other hand, a state-backed bank might be in the best interest of everyone.
By: Stefan Hosko