Treasurer Convenes Cannabis Banking Working Group
December 22, 2016
The Cannabis Banking Working Group met for the first time this week, convened by California Treasurer John Chiang. The group includes representatives from local government, law enforcement, regulators, banks, taxing authorities, and the cannabis industry. The focus is on addressing the conflict between state and federal laws that limit the industry’s ability to participate in traditional banking and commerce services.
At this week’s meeting (agenda and recording available here), members heard feedback from panels representing the cannabis industry, banking institutions, and public agencies with responsibilities for tax collection on the question “what impact has the lack of banking access had on your group, organization, or industry?” Many issues were raised, including public safety and challenges for both those trying to make tax payments and those receiving the payments. Electronic payments are easier, cheaper, and more accurate than cash transactions. However, representatives from the banking industry cited federal laws as non-negotiable obstacles to incorporating the cannabis industry into the banking system.
CSAC Executive Director Matt Cate sits on the working group and participated in the inaugural meeting. “The cannabis business runs primarily on cash and that can present a number of challenges for county regulators and taxing agencies,” said CSAC Executive Director Matt Cate. “Along with the obvious public safety issues associated with handling large amounts of cash, there are also challenges associated with processing and tracking these payments. With the passage of Proposition 64, the problems already identified will likely get worse. CSAC is committed to seeking a statewide solution for these problems while maintaining the local control counties need to make the best decision for their constituents.”
The focus is on financial issues, and how the lack of access to banking and commerce tools creates challenges for this newly legal industry and the institutions that provide financial services and collect taxes. “The legalization of marijuana for recreational use poses a number of issues California must resolve,” said California Treasurer John Chiang. “Chief among them is how to deal with the standoff between federal and state law which has resulted in the denial of access to basic banking services for cannabis-related businesses. Allowing an industry to only operate in cash and enabling them to ‘don’t ask, don’t tell’ will only invite violent crime, money laundering, and revenue loss into our communities. We have a lot of work to do, and I’m gratified that the Executive Directors from both CSAC and the League of California Cities are fully engaged on this issue. With them participating on our task force, local government is well represented as we work toward solutions to these issues.”
The working group will meet at least four more times to gather information and discuss solutions to this thorny issue. More information, including fact sheets, agendas, and a list serve sign-up, is available here.