Hertzberg Legislation to Establish Banking for the Cannabis Industry Passes First Committee
The bill moves on to face a vote in the Senate Governance and Finance Committee next week.
SACRAMENTO – Sen. Bob Hertzberg, D-Van Nuys, today announced that his legislation to help financial institutions safely conduct transactions with licensed cannabis businesses has cleared its first hearing in the Senate Banking and Financial Institutions Committee. SB 930 would allow banks to issue checks to accountholders to be used for the following purposes:
- Pay state and local taxes and fees,
- Pay vendors from California for goods and services provided to the cannabis business,
- Pay rent, and
- Purchase state and local bonds and other debt instruments.
The Department of Finance estimates that the state will collect $600 million in cannabis taxes in the upcoming year. Unlike most businesses cannabis businesses arrive to government offices with duffel bags of cash to fulfill their tax obligations. Additionally, these businesses face security risks because of the volume of cash in their possession.
This month, the Trump Administration signaled that they would loosen the federal government’s policy on marijuana, allowing states to decide how to regulate their legalized cannabis industries. This, coupled with SB 930, is an essential step toward the professionalization of cannabis-related businesses and their integration into the California economy in a safe and transparent manner.
The bill creates a limited purpose state charter bank license that would be administered and regulated by the Department of Business Oversight. Privately-funded banks that receive this charter would be able to provide limited banking services to licensed cannabis and cannabis-related businesses.
“Everyone agrees that there has to be a better way for cannabis companies to do business,” said Sen. Hertzberg. “They simply cannot and should not have to continue to run their businesses like black market operations. We’ve been seeing tremendous interest and getting input from stakeholders across the state, and I’m confident we’re going to get this done.”
Since it was introduced in January, Sen. Hertzberg has met with dozens of stakeholders to refine the details of the proposal, which passed the Senate Banking and Financial Institutions Committee with no recorded opposition. In addition to the bill’s co-sponsor, Board of Equalization member Fiona Ma, the bill is supported by the California Cannabis Industry Association, the Cannabis Distribution Association, the Cities of Los Angeles and Santa Monica, SEIU Local 1000, and a number of other organizations.
“Without some sort of paper trail, there’s no way for us to audit these companies efficiently or effectively,” said co-sponsor Fiona Ma. “This bill is necessary, it is pertinent, and it is something that we need to move forward on, especially if the federal government is not willing to.”
SB 930 also creates an advisory board composed of the State Treasurer, Controller and the Chief of the Bureau of Cannabis Control as members, and the Director of the Department of Finance as an ex officio, nonvoting member.
Media Contact: Katie Hanzlik
Senator Robert M. Hertzberg
Capitol Building, Room 4038