Dive Brief:
- A bill that would create state-chartered banks to handle cash from cannabis businesses in California has been pulled by its sponsor, according to The Sacramento Bee.
- California Democratic state Sen. Bob Hertzberg, who introduced the legislation in April, said he plans to make Senate Bill 51 a two-year bill and intends to reintroduce the bill in early 2020.
- "If we're going to do this, we have to do it right," Hertzberg said in a statement. "We owe it to the dozens of cities, counties, and cannabis industry officials who have been supporting this effort to see it through."
Dive Insight:
California, the country's largest marijuana market, is expected to post $3.1 billion in licensed cannabis sales this year, according to an analysis by sales-tracking firms Arcview Market Research and BDS Analytics and cited by the Los Angeles Times.
But as long as pot remains a Schedule 1 drug under federal law, many banks are reluctant to accept those deposits, forcing cannabis businesses to operate as cash only.
Lawmakers in California hoped SB 51 would have allowed private banks or credit unions to apply for a limited-purpose state charter to provide services to the state's licensed cannabis businesses.
"It's hard to imagine an industry that at this point is as large as, like, craft beer, that does not have banking as we have come to know it," Steve Hawkins, executive director of the Marijuana Policy Project, a national cannabis reform organization, told CNBC in May.
When he introduced the bill in April, Hertzberg said it was policy makers' duty to protect constituents, echoing many industry advocates who say the cash-only industry's lack of access to banking is a public safety issue.
"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," he said.
During a July House Financial Services Committee hearing on cannabis and banking, Sen. Jeff Merkley, D-OR, shared a story of the time he shadowed a marijuana dispensary owner as he traveled 50 miles to deliver $70,000 cash in state taxes.
Dispensaries in California have also become victims of theft, as thieves target both the product and the large cash reserves.
Although California's SB 51 has stalled, the nation's financial institutions may soon have a federal solution to the cannabis banking issue.
The Secure and Fair Enforcement (SAFE) Banking Act, which would create protections for financial institutions that provide services to cannabis-related businesses, is garnering bipartisan support in Congress.
In a podcast interview released Friday, American Bankers Association CEO Rob Nichols said he thinks the House of Representatives could pass the bill no later than October.
