The marijuana initiatives that voters will decide on in November include questions on the legalization of medical marijuana in Missouri and Utah and, in Michigan and North Dakota, the legalization of recreational marijuana.
Yet financial institutions continue to resist the still-federally illegal industry, despite polls showing that 61 percent (Pew Research Center) to 64 percent (Gallup) of the country supports legalization.
Cannabis Banking Bill Fails In California
In California, SB-930, a bill that would have created a state-chartered banking system to give cannabis merchants access to traditional financial services died Aug. 16 in the state Assembly Appropriations Committee.
Legal recreational marijuana sales began Jan. 1 in the state.
With the Golden State typically being a trendsetter in political and social policies, many cannabis industry insiders were surprised when the bill failed to advance.
“This is a serious public safety issue that deserves swift resolution. We’ve got barrels of cash buried all over the state, businesses being ransacked and it’s clear that the federal government won’t act,” state Sen. Bob Hertzberg, the Van Nuys Democrat who introduced the legislation, said in a statement.
“It’s a shock to me that the state government may not act this year either — especially after this bill passed through nearly every step with bipartisan support and little to no opposition.”
Cannabis Execs React
Kevin Ramirez, co-founder and CEO at cannabis payment technology company Alt Thirty Six, told Benzinga the fate of SB-930 represents a huge blow to the legal cannabis industry’s banking efforts.
“California has the world’s fifth-largest economy and a cannabis market expected to exceed $24 billion by 2025,” he said. “Given this recent development, new methods for cannabis banking and payments will inevitably gain traction as merchants desperately seek alternative ways to move and store funds aside from cash.”
“It’s surprising to see California of all states kill this much-needed bill. One of the biggest risks in the industry is the safety of the workforce with regard to all cash transactions.”
Kevin Murphy, CEO of Acreage Holdings, said businesses need access to commercial banking services just like plants need sun and water to thrive.
“Without banking, dispensaries cannot access loans to expand their business and add new staff,” Murphy told Benzinga.
” If cannabis businesses don’t have legitimate banking sources, those businesses are forced to store money onsite in large amounts— this leaves them open as a target for theft and possibly worse. This is not a way to keep our communities safe and certainly not a way to run a business effectively.”
Solutions In Sight?
Acreage Holdings’ Murphy suggests that the lack of bank access can be fixed by the Treasury Department, which could assure banks they will not be prosecuted for taking money from legal businesses, he said.
And the real fix would come from Capitol Hill, in Murphy’s view.
Congress could solve this by “passing a law that sets out sensible banking rules,” he said.
AltThirtySix’s Ramirez points to other solutions such as blockchain.
“There are many uses for blockchain, with one of them being digital payments. With blockchain, you can process payments outside of the traditional financial networks, allowing merchants to experience a faster, more efficient payment and receive their funds in real time.”