Business Legalization News

Proposal to create state-chartered banks for California marijuana industry fails to advance

Virgil Grant arranges containers of various strains of medical marijuana in a display case at a dispensary he runs in Los Angeles. (Frederic J. Brown / AFP/Getty Images)

State lawmakers on Thursday shelved a proposal to allow the state to license private banks to handle the billions of dollars expected to be generated by the state’s legal marijuana industry amid questions about the plan’s feasibility.

Voters approved Proposition 64 in 2016 to legalize growing, possessing and selling marijuana for recreational use, but newly licensed pot shops and farms say they cannot put their money in federally chartered banks because cannabis remains illegal under federal law.

Sen. Bob Hertzberg (D-Los Angeles) proposed that the state could license special privately financed banks that would issue checks to the businesses to pay rent and state and local taxes and fees, and to compensate vendors for goods and services provided to their businesses.

But a legislative analysis said the proposal faced “significant obstacles,” including the fact that it does not guarantee state banks protection from federal law enforcement.

“One unfortunate side effect of this bill could be the concentration of cannabis business assets into one or several easily identifiable institutions, making them an easier target of federal law enforcement action,” the analysis said.

To Read The Rest Of This Article By Patrick McGreevy on LA Times

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Published: August 16, 2018

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