California Considering State-Run Cannabis Bank
California cannabis businesses have struggled with a lack of banking options, but the state is looking into a state-run cannabis banking option.
Banks and the Cannabis Industry
Cannabis businesses are generally unable to work with traditional banks due to the nature of the business and its current status as a federally illegal substance. This, of course, creates a conundrum for the industry, as working as a cash-only business is risky for all involved (think duffel bags full of cash that need to be transported to the taxing authorities, for example — and everyone knows you're a cash-only business).
While there have been several potential ideas for solving the lack of banking options for cannabis businesses, the California State Treasurer, John Chiang, said that the state is considering creating a public bank specifically to cater to these cash-heavy cannabis businesses.
The first step is conducting a feasibility study, Chiang says, alongside the state attorney general's office, which will help all involved gauge the financial (as well as legal) risks of a state-run cannabis banking facility.
Support For New Banking Regulations
The potential move for a state-run cannabis banking system comes on the tail of growing support in the legislature for new banking regs, and has a multitude of benefits for many pieces of the industry itself. One potential benefit is that cannabusiness owners will be more likely to become licensed and compliant because, for one, paying taxes will be far easier than lugging around piles of cash to taxing authorities.
This means that the state will benefit from the increased revenue, and businesses benefit because they can remain legal and regulation-compliant. In turn, a cannabusiness will be far less likely to run into legal trouble that can result in loss of license of even further ramifications in the justice system.
Let CCA Be Your Guide
As the potential for a new, state-run banking system ramps up, it's important to keep your cannabusiness fully compliant with the current regulations — CCA can help. Contact us today.