Legislation that would allow for the creation of a special class of state-chartered banks and credit unions that could service California’s legal marijuana industry has been passed by a key Senate committee.
Filed by Senator Robert Hertzberg (D), Senate Bill 930 was passed recently by the Senate Banking and Financial Institutions Committee in a 6 to 1 vote, sending it to the Senate Appropriations Committee. Passage in the Appropriations Committee would send it to the full Senate. If passed by the Senate, and then the House of Representatives, it would go to Governor Jerry Brown for final consideration.
The proposed law would allow for the creation of special state-chartered banks and credit unions that could legally process transactions by licensed marijuana businesses. These “marijuana banks” would be regulated by the Department of Business Oversight.
According to its official bill analysis, Senate Bill 930:
“establishes the creation of cannabis limited charter banks (CLCBs) and cannabis limited charter credit unions (CLCCUs) to provide limited banking services to the cannabis industry. Under the administration of the Department of Business Oversight (DBO), CLCBs and CLCCUs can accept and maintain cash deposits as well as issue special purpose checks that can only be used for the following:
- To pay fees or taxes to the state or local jurisdiction,
- To pay rent on property that is associated with the account holder’s cannabis business,
- To pay vendors located in California for expenses related to goods and services associated with the account holder’s cannabis business, or
- To purchase bonds or interest-bearing notes or warrants backed by the full faith and
credit of the state, or bonds or warrants of any local jurisdiction.”
Proponents of the measure say it would allow marijuana businesses to move away from the cash-only scenario most are forced into, which many argue is a security risk and puts the lives of those who work at such outlets in danger. Opponents of the measure – and there doesn’t seem to be many (at least many that are being particularly vocal – argue that allowing banks to provide services to businesses that are illegal under federal law is putting them at risk.
The full text of Senate Bill 930 can be found by clicking here.