California trying to get bank accounts for marijuana businesses

April 18, 2017

As California tries to bring its approximately $6 billion pot industry out of the shadows, state officials are attempting to coax banks and other financial institutions into accepting marijuana businesses as clients. [Sac Bee]

Currently, most banks shy away from marijuana businesses out of fear of running afoul the federal government, which views the cannabis industry as illicit but has signalled limited tolerance for pot banking. Uncertainty over Attorney General Jeff Sessions’ approach to the pot legalization movement adds to the concerns. As a result, marijuana businesses run into numerous obstacles when trying to deposit funds, handle credit card transactions and acquire loans.

Likewise, state tax collector are finding themselves in peculiar situations. California’s Board of Equalization, for instance, has resorted at times to arranging for marijuana businesses to deliver huge quantities of cash — hundreds of thousands of dollars — to pay state taxes.

Now, led by Treasurer John Chiang, California officials are hosting a series of meetings of the Cannabis Banking Working Group. The 16-member panel includes state and local law enforcement, banking industry representatives and financial regulators.

Chiang said he hopes to publish a menu of options so that the banking industry can decide which types of services they can offer marijuana businesses. But, the panel’s end product remains uncertain, Chiang said.

The cannabis banking group convened in Sacramento in December, in Los Angeles in February and in Oakland in March. At the March meeting, Russell Rosendal, the CEO of Settled-based Salal Credit Union, testified about marijuana banking in Washington.

Salal is a $500 million institution catering to health care workers in Washington. The credit union has accepted accounts from 275 state-permitted marijuana businesses.

Rosendal said marijuana accounts “promote public safety by reducing cash circulating on our community streets.”

Non-marijuana businesses often get approved at Salal within 15 minutes, while credit union employees take up to 10 days to review potential pot accounts and submit required federal suspicious business activity reports, Salal said.

In 2014, the United States Treasury Department issued guidance stating financial institutions may accept deposits from state-licensed marijuana businesses. But, the guidance mandates that financial institutions file suspicious activity reports on all marijuana related accounts.

Following the release of the federal guidance, many people backed out of marijuana banking relationships, said Andrew Freedman, the former regulatory czar for Colorado’s marijuana industry. Colorado and Washington were the first two states to legalize recreational use of marijuana.

John Vardaman, a former assistant deputy chief of the Justice Department who investigated money laundering, said there is no federal law explicitly prohibiting financial institutions from serving cannabis businesses. However, states need to work to promote disclosure rules and other policies in order to ease the fears of financial institutions.

In May, California’s cannabis banking group will meet in Santa Rosa to start drafting possible policy recommendations for creating or encouraging banking services for marijuana businesses.

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The state of California is missing a prime opportunity here; California needs to charter their (our) own “Bank of California”, similar to what North Dakota did back in the very early 1900s. All state banking business by every single agency would be run through this bank, saving huge amounts of banking fees, and we would be able to set our own rules for how this bank operates, including accepting deposits by cannibis vendors, both cash deposits and the bank could also operate a credit card processing service that would allow cannibis merchants to take credit/debit cards. Win, win, win; the savings to the state, along with the profit generated would be enough to fund a single payer health insurance program as well.

I have a big closet,

The bank of Rambunctious is now open (: )

I work in the investment industry and we are also prohibited from working with anyone who makes their money in the marijuana trade due to the conflicts in federal and state laws.

Too funny. How ironic that the state, who has all but destroyed the California economy, would be coaxing and advising financial institutions how to invest. God help us.

Making it hard to conduct business keeps the price of the product high. Could this be the reason various government entities are not interested in fixing this problem?

Legalized gambling for education and Indian stuff, pot for pleasure and who’s going start the medical prostitution business? I guess if you have a pile of prescribed get laid cards on file, then you can have the appropriate medical staff too. Then there is the no tell tellers at the bank, mums the word. Could this be why the Arabs don’t like us, since they have to die before they get these perks?

uhh what??

This seems like an ideal business opportunity being lost here. Open up a bank that specializes in pot sellers and reap the rewards of being the only bank doing so by charging a handsome fee for the service.

That may have already happened. I got a glossy flier in the mail from the new Bank of the Sierra in Atascadero a while back. They touted their ability for large cash transactions. Hmmmmm…..

Just have the businesses drop off their money in brown paper bags to the governor’s mansion, it will all be going to pay for his non-bullet train to nowhere anyway.