California State Treasurer John Chiang Looks to Create a State Cannabis Bank
SACRAMENTO, Calif. — California State Treasurer John Chiang announced yesterday that the state will evaluate the possibility of creating a state banking system for cannabis businesses. The Los Angeles Times reported on Tuesday that Chiang had a conference call with State Attorney General Xavier Becerra to talk about the logistics of creating a public bank.
Chiang, who is running for Governor, said that because cannabis businesses are prohibited from using regular banks or credit unions because of federal law, businesses are forced to operate with cash. Chiang says that businesses having so much cash on hand poses great safety risks to them and their employees, as well as the inability for the state to account for taxes. Recreational marijuana became legal in California on Jan.1.
According to Chiang, United States Attorney General Jeff Sessions made it necessary for the state to pursue options when he rescinded the Cole Memo and revoked the federal policy to protect legal cannabis states from prosecution. Brokerages and banks who open accounts for cannabis businesses would face losing their license under the current federal law.
Officials in cities such as Los Angeles, Oakland and San Francisco are also considering starting city banks in order to solve the problem cannabis cash. The Bank of North Dakota is the only financial institution that is openly doing businesses with the cannabis industry.
Factors that the study will consider include regulations, access to online banking, insurance, banking system capital and costs. Chiang said in the conference that “We want California to get the most bang for its buck. So, today I am issuing a Request for Information, or RFI, to get the expert help we need to establish the scope of our feasibility study.” He added that California should be the leader regarding regulating the growing cannabis industry to ensure public health and safety. If implemented, the banks would be owned by the State of California.