US marijuana banking bill makes its way to Assembly Appropriations Committee, if approved, it would allow cannabis businesses to legally open bank accounts at state-licensed financial institutions.
All eyes are on the US marijuana banking bill as it goes to the Assembly Appropriations Committee, with people in the industry pinning their high hopes on its passage.
Senate Bill 930, sponsored by California state Sen. Bob Hertzberg (D-Van Nuys), passed the Assembly Business & Professions Committee on June 26, LA Weekly reported on Thursday. SB 930 is also co-sponsored by California‘s Board of Equalization member Fiona Ma.
The bill previously made big strides when it passed the Assembly Banking and Finance Committee on June 18 and the Assembly Business and Professions Committee on June 26.
The absence of marijuana banking
The cannabis industry has long suffered from bottlenecks when it comes to business transactions. Currently, federal regulations prevent cannabis-based businesses from doing business with banks and other financial institutions, a practice that Hertzberg described as not practical given the legalization of marijuana retailers in many US states.
Co-founder and CEO of Kush Bottles, a provider of packaging and ancillary items to the legal cannabis industry, wrote at Forbes that the “Defeat Of Marijuana Banking Bill Will Hurt Job Growth And Economy.”
“With cannabis now legal in some form in two-thirds of the states, it’s becoming increasingly ridiculous that entrepreneurs aren’t afforded the freedom to access traditional financing,” Bottles wrote. “But with cannabis still considered a schedule 1 drug (the same as heroin) on the federal level, it’s just too risky for big national banks to offer loans or lines of credit to cannabis companies.”
With the “majority of transactions still take place in cash,” Bottle said:
“This creates serious problems that hold back the growth of an industry that has the potential to create more than a quarter of a million jobs by 2020.”
Hertzberg: status quo unsustainable
According to Hertzberg’s office, under SB 930 cannabis businesses with bank accounts would be able to use checking accounts to pay state and local taxes and fees, pay state vendors for goods and services, and pay rent.
Hertzberg continued saying the “status quo for our growing legal cannabis industry is unsustainable.”
“It’s not only impractical from an accounting perspective but it also presents a tremendous public safety problem. This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue.”
Meanwhile, co-sponsor Ma, who is running for state treasurer, said:
“California can’t wait to take action.”
“With secure banking for cannabis through SB 930, the industry will benefit, the state will get a revenue boost and pot cash will get off our streets,” she added.
The Assembly Appropriations Committee hears all bills that will have a fiscal impact and is typically the last stop before a bill lands on the governor’s desk for approval or rejection.
In Canada, banks are already opening up to marijuana businesses. Late last month Bank of Montreal extended a credit line worth $200 million to Aurora Cannabis, one of Canada’s largest cannabis producers.[share-btn]