It all started last year when state Treasurer John Chiang floated the idea of creating a state-chartered bank that will explicitly serve the cannabis industry. Earlier in this year, State Senator Bob Hertzberg proposed SB 930 to create such a bank.
Why do cannabis businesses even need a separate bank?
We all know cannabis is Schedule I substance of CSA and is thus, federally illegal. Considering the strict federal regulations revolving around it, big banks do not offer their banking services to cannabis businesses. As a result, Cannabis businesses have to deal mainly in cash, creating accounting problems and public safety problem.
According to Hertzberg “ These (cannabis) businesses handle significant economic activity, yet they are forced to operate under the table and with little government oversight as if they’re a black-market operation. This solution is how we will integrate these businesses into the fabric of the California economy.”
How will SB 930 solve the problem?
Sb 930 would provide for licensure and regulations of state-chartered banks which will provide banking services to the cannabis industry.
SB 930 is much more limited than traditional banking but would authorize charter banks and credit unions to issue special purpose checks for the following:
• To pay fees or taxes to the state or local jurisdiction;
• To pay rent on the property that is associated with the account holder’s cannabis business; and
• To pay a vendor that is located in California for expenses related to goods and services associated with the account holder’s cannabis business.
The series of events SB 930 passed through.
The SB 930 was referred to the Committee on Rules February 8, 2018. SB 930 was passed by the Senate Banking and Financial Institutions Committee, Senate Governance, and Finance Committee, the Senate Appropriations Committee, Members of the Assembly Banking Committee, the Assembly’s Business and Professions Committee. Hopes went down when the Assembly Appropriations Committee heard SB 930 on August 8, 2018, and put the file for consideration at a later time. It was heard by the Assembly Appropriations Committee on 8/16 but failed to gain enough votes to pass out of the committee, killing the bill for this year.
What is the future of the bill?
Lawmakers decided that the bill faced serious obstacles like:
• There was no way for the state to guarantee that these banks are safe from federal prosecution.
• Even though the chartered banks would be owned and operated by the state, they would still need to interface with the federal government in order to be able to move money around.
• It will lead to concentration of cannabis business assets in these easily identifiable institutions, making them an easy target of federal law enforcement action.
The state Assembly Appropriations Committee has put a brake on SB 930, effectively preventing it from advancing until next year’s legislative session.
What is the current solution available?
Merchant service providers like Paybotic provide – cannabis payment processing solutions, cannabis credit card processing, CBD credit card processing, e-checks, gift card and debit card processing. The best marijuana merchant accounts will also provide you with payment strategy consultation, payment and bookkeeping, website design and implementation and information security compliance.