California’s Senate has approved legislation 35-1 to create state-chartered banks to serve the state’s cannabis industry, CNBC reports. Under the law, private banks or credit unions would be able to apply for a limited-purpose state charter to provide financial services to licensed canna-businesses.
The measure would allow cannabis operators to use specials checks to pay for state and local taxes, licensing fees, and rent. However, it’s unclear how many financial institutions would participate in the program due to federal cannabis laws.
In March, the federal House Financial Services Committee approved the Secure and Fair Enforcement (SAFE) Banking Act which would explicitly allow banks to work with state-legal cannabis companies; although, earlier this month Sen. Mike Crapo, the Republican who heads the Senate Banking Committee, could not “make a commitment” as to whether the committee would take up the legislation citing the Schedule I status of cannabis.
“As long as cannabis is illegal under federal law, it seems to me to be difficult for us to resolve this,” he said during a conference for the Independent Community Bankers of America, who support financial services access for canna-businesses.
Robert Selna of the Oakland, California-based law firm Wendel, Rosen, Black & Dean said that, while the bill would “improve commerce incrementally,” it wouldn’t allow cannabis operators to get loans from the institutions.
“It will help cannabis companies pay the rent, but how it corresponds with federal law is still a question.” – Selna, to CNBC
Only West Virginia has passed a law allowing cannabis companies to access banking services. That plan allows one bank to receive a state charter to serve the industry. Currently, officials are still seeking that institution as the state’s request for proposal undergoes a legal review.
The California measure still needs approval from the Assembly and Gov. Gavin Newsom before becoming law.
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