Last week, state lawmakers in California ceased consideration of a bill to create state cannabis banks due to an analysis that said the state-chartered banks would be too vulnerable to federal raids, reports the LA Times.
The bill would have created private banks incorporated at the state level in an attempt to circumvent federal money laundering statutes requiring banks to file suspicious-activity reports for every transaction involving a cannabis business.
The bill — which was written in the state Senate but died in the Assembly — would have allowed companies to make deposits and write checks, simple services currently unavailable to the cannabis industry.
Cannabis businesses currently have to deal completely in cash, which is a huge risk: not only are cannabis companies at an increased risk of robbery but the cash-only nature of the industry also complicates compliance for tax payments and other regulations. The banks themselves would also have been at risk as they would be unable to receive protection under the Federal Deposit Insurance Corp. and would’ve needed to secure private insurance, an extremely difficult task.
“This is a serious public safety issue that deserves swift resolution. We’ve got barrels of cash buried all over the state, businesses being ransacked, and it’s clear that the federal government won’t act. It’s a shock to me that the state government may not act this year either.” — State Sen. Bob Hertzberg (D-Los Angeles), via the LA Times
Representatives from the California Cannabis Industry Association said they remain committed to working with the state legislature to solve the cannabis industry’s banking woes.