A cashier counts a marijuana business owner’s cash tax payment at the California Department of Tax and Fee Administration in Oakland. A state-chartered bank for California cannabis businesses, under consideration in the Legislature, would allow licensed merchants to write checks to pay taxes rather than use large amounts of cash.
The state Senate passed a bill this week to create a state charter for banks to serve California cannabis businesses, which would allow licensed merchants to write checks to pay taxes, fees and vendors — rather than use large amounts of cash, as they currently do.SB930, by state Sen. Robert Hertzberg, D-Van Nuys, now heads to the Assembly.
Because marijuana is classified by the federal government as a Schedule 1 drug, federally insured financial institutions cannot process cannabis-related transactions without the risk of facing money laundering charges.
The bill would establish banks and credit unions, regulated by the Department of Business Oversight, that could process deposits, withdrawals and other transactions by cannabis businesses. Proponents say it would improve security at cannabis shops, which largely operate on a cash-only basis and pay taxes with money that they carry in armored vehicles.
“It’s not only impractical from an accounting perspective, but it also presents a tremendous public safety problem,” Hertzberg said in a statement. “This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue. ”
Adult recreational use of marijuana became legal in California this year, and the state expects to collect $600 million in cannabis taxes in 2018, the Department of Finance estimates.
Story by Catherine Ho