City Hall building in Los Angeles, California.

Channone Arif

As part of their efforts to prepare for California’s legal cannabis industry, Los Angeles officials have proposed banning “volatile cannabis manufacturing” and creating a municipal bank to work with cannabis-related businesses.

Volatile cannabis manufacturing refers to using flammable gases, such as butane, in the extraction of cannabis oils to create some concentrates. The proposal drew the ire of some operators because products created using these methods make up about 60 percent of the medical cannabis market in Southern California. The state law approved by voters allows for concentrates to be manufactured using the gases, according to an LA Weekly report.  

In a policy paper on the city proposal, attorney Aaron Herzberg of CalCann Holdings said that he was “unaware of any incidents” that have occurred due to using such extraction methods at licensed facilities in other states.

Additionally, LAist reports that City Councilmember Herb Wesson has proposed a plan that would set up a municipal bank to handle cannabis-industry accounts in order to provide banking options for city operators because federal law prevents many mainstream banks from taking on cannabis clients.

“We cannot bury our heads in the sand on the issue of recreational and medical cannabis legalization, instead we must strive to reasonably regulate the emerging industry while creating opportunities for Angelenos,” Wesson said in the report.

State Treasurer and gubernatorial hopeful John Chiang has supported the creation of municipal banks to serve the industry in order to “handle the taxation of cannabis dollars and the banking of billions of dollars of transactions” expected once adults are able to legally purchase cannabis in the state.

John Bartholomew, treasurer and tax-collector for Humboldt County said that the department gets “lots of cash” that is sometimes “actually washed” because it has been “buried out in the backyard.”

Wesson is expected to introduce a formal proposal for the bank to the council’s Budget and Finance Committee. The council must also approve the ban on volatile extraction methods before it is in place.

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