California State Treasurer John Chiang said Tuesday the state is considering creating a public bank that would cater to cash-heavy marijuana businesses that have been shut out of the financial industry.
Chiang said he will conduct a feasibility study with the state attorney general’s office to gauge the financial and legal risks of a state-run pot bank.
“We are contending with the emergence of a multibillion-dollar cannabis industry that needs banking services and a private banking industry that is stymied by federal law in meeting the needs of this new industry,” Chiang said in a press call.
Also a 2018 Democratic gubernatorial candidate, Chiang said California must protect the legal cannabis industry following U.S. Attorney General Jeff Sessions’ decision to allow prosecutors more freedom to enforce marijuana laws. He said the study will be conducted with the support of the governor’s office and will involve state Attorney General Xavier Becerra.
Chiang’s announcement comes amid growing support in the Legislature for new pot banking regulations. Supporters say allowing licensed pot businesses to make deposits with banks will permit the state to collect tax revenue and allow the industry to stop operating strictly through cash sales.
Last week, a state Democrat proposed a bill to allow licensed growers and retailers to open checking accounts with state-chartered banks and credit unions. Becerra has also asked Congress to pursue legislation that would bar federal banking regulators from canceling or limiting a bank’s deposit insurance for doing business with the marijuana industry.
Chiang said he will focus on structure and funding issues, while Becerra’s office will examine the state’s jurisdictional and legal responsibilities. He hopes to have the report finished by the end of 2018.
The threat of federal interference with banks and legal pot businesses has left a void in the financial industry, Chiang said. He said the “slow, clunking machinery” of the federal government requires California to create its own marijuana rules.
“The recent action taken by Attorney General Sessions threatens us with new national divisiveness, and casts into turmoil a newly established industry that is creating jobs and tax revenues,” Chiang said.