Renewed Attempt to Bring Banking Fix to Cannabis Industry Clears First Hurdle
SB 51 follows last year’s SB 930, which received widespread, bipartisan support from across the state’s geographic regions and interest groups
SACRAMENTO – Senate Majority Leader Bob Hertzberg, D-Van Nuys, announced today that SB 51, his latest attempt to provide a banking option for California’s legal cannabis industry, cleared its first legislative hurdle as it passed the Senate Banking and Financial Institutions Committee.
SB 51 is a follow-up bill to SB 930, last year’s attempt to create a path for legal cannabis companies to open bank accounts. Currently, the thousands of cannabis-related companies that do business in California cannot open an account with any existing bank or credit union. They are instead forced to do business in cash, exposing their business and employees to tremendous safety risk.
The bill, cosponsored by California State Treasurer Fiona Ma, would allow private banks or credit unions to apply for a limited purpose state charter so they can provide depository services to licensed cannabis businesses.
“As policymakers, we have a duty to further the will of the voters while protecting the public safety of our constituents,” said Senator Hertzberg. “This measure is by no means the ultimate solution, but it’s just one small step in the right direction to get some of this money off the streets and into bank accounts.”
“It isn’t safe or efficient for our employees to be counting this much cash,” said State Treasurer Fiona Ma, alluding to the fact that state agencies have to undergo great risk and difficulty collecting taxes in cash. “This is a great temporary solution for California until the banks open up their doors to this industry.”
Last year, the two introduced SB 930 with the same goal. The bill received enthusiastic support from the cannabis industry, cities, and other interest groups who considered it a helpful first step in getting even some cash off the streets. It advanced through the Senate with bipartisan support but did not make it out of Assembly Appropriations Committee.
While SB 930 moved through the legislative process, another solution was considered: former State Treasurer John Chiang convened a feasibility study to look into opening a state-run cannabis bank. Efforts were abandoned when it was deemed too risky. Waiting on the federal government to act has also proved futile.
Under SB 51, banks or credit unions could issue checks to accountholders that may only be used for the following purposes:
To pay state and local taxes and fees,
To pay vendors from California for goods and services provided to the cannabis business,
To pay rent, and
To purchase state and local bonds and other debt instruments. This is how accountholders can earn interest on their deposits.
You can find the full video footage of Senator Hertzberg and Treasurer Ma’s presentation at this Dropbox link. SB 51 next heads to the Committee on Governance and Finance.
Media Contact: Katie Hanzlik
Senator Robert M. Hertzberg
Capitol Building, Room 313