California Treasurer John Chiang has announced a plan to create a state bank that would work with marijuana businesses.
Recreational sales of marijuana are expected to begin in January for California. But because of federal law, dispensaries and growers will still not have access to the banking system making it difficult to store cash and almost impossible to secure credit. It also makes businesses vulnerable to criminals targeting shops as they can be fairly certain that cash and marijuana is stored under the same roof.
Keeping the marijuana market unbanked does not make much sense for officials regulating the industry either. An all-cash business reduces transparency and increases the likelihood of fraud.
California Treasurer John Chaing has proposed a way of at least temporarily resolving the issue. He announced a plan to create a public state bank that would do business with marijuana companies.
Chiang does not feel the plan is perfect but sees a state bank as a way to pressure Wall Street and traditional banks into lobbying the federal government to allow banks to work with marijuana businesses. Sebastopol attorney Omar Figueroa agreed.
“Banks don’t want a public bank, they don’t want the competition, especially if California starts investing its money in its own public bank instead of a Wall Street institution,” Figueroa said.
The marijuana industry is expected to be worth $7 billion and will generate 1 billion annually in tax revenue. There could be quite a bit of money up for grabs for traditional banks if federal law changed.