Hertzberg Cannabis Banking Proposal Passes Second Policy Committee
The bill, which has enjoyed bipartisan support, next heads to the Senate Appropriations Committee
SACRAMENTO – Sen. Bob Hertzberg, D-Van Nuys, announced today that his legislation to create a banking fix for legal cannabis business in California cleared another critical hurdle on its pathway to becoming law. SB 930 passed the Senate Governance and Finance Committee this morning on a bipartisan vote.
Though Proposition 64 legalized adult-use cannabis in California, cannabis related businesses remain unable to deposit their income with federally-insured financial institutions. This is a massive industry that we can only expect will continue to grow; yet cultivation, distribution, and retail businesses alike have been forced to operate on a cash-only basis. This is not only impractical from an accounting perspective, but it also presents a significant public safety issue.
SB 930 would allow the licensure and regulation of cannabis limited charter banks and credit unions that would provide limited banking services to cannabis related businesses, including:
- 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.
“Do you know how long it takes to count a million dollars?” asked Senator Hertzberg during the committee hearing. He added, “What we’re trying to do is to create a controlled system that helps us get as much cash into vaults as possible; gets the government paid as much as possible; and takes out as much risk to public safety as possible.”
Department of Finance estimates that the state will collect $600 million in cannabis taxes in the upcoming year. Unlike most businesses, however, cannabis businesses arrive to government offices with duffel bags of cash to fulfill their tax obligations. Standard oversight and accountability measures, like audits, become very difficult when most transactions are completed in cash.
The bill’s co-sponsor, Board of Equalization member and CPA Fiona Ma, explained that her office received $92.5 million in sales taxes from the cannabis industry last year alone. “We are not going to be able to figure out the taxes this industry is bringing in if we don’t have a paper trail,” said Ma. “We hope that there will be a number of banking institutions across the state that will join this and help us be successful in getting cash off of our streets and out of our backyards.”
The bill now heads to the Senate Appropriations Committee, where it will receive a hearing next month.
Media Contact: Katie Hanzlik
Senator Robert M. Hertzberg
Capitol Building, Room 4038