Investing in the Future

Oakland is in desperate need of a public bank that is willing to cater to the needs of cannabis business owners. Instead of lining Wall Street shareholder pockets with cash, why not establish a bank that is based on public needs? A public bank in Oakland would be a wholesale bank—meaning that the bank would not actually feature ATMs, bank tellers or provide individual loans. Rather, it would partner up with community banks, enabling them to provide more services to individuals that are involved with the cannabis industry.

Public banks are owned by the people through local governments and are created to serve a public needs. “A public bank can have investment priorities that focus on the creation of jobs in Oakland that spur local economic growth by providing affordable credit to small and medium-sized businesses that have been historically ignored by the larger, more established banks,” read a resolution introduced by Councilmembers Rebecca Kaplan and Dan Kalb. In most cases, banking institutions have historically ignored those who are invested in the cannabis industry.

“The city of Oakland has always tried to be in the forefront of moving the cannabis industry along in the appropriate manner, and this is a step in the right direction.”

On February 9, 2016, Kaplan hosted Oakland’s first Public Banking Forum in Oakland’s City Hall. Kaplan was joined by Dan Kalb, chair of the Oakland City Council’s Finance Committee and Councilmember Abel Guillen, who both co-sponsored the event. The event was organized in part by the Friends of the Public Bank of Oakland, a volunteer activist organization.

Speakers at the forum included Marc Armstrong, Co-Founder and former President of the Public Banking Institute, and Co-Founder and President of Commonomics USA. Also present was Tom Sgouros, author of Checking the Banks: The Nuts and Bolts of Banking for People Who Want to Fix It, and senior policy advisor to the Rhode Island Treasurer. Attendees also heard Nichoe Lichen, member of Santa Fe’s Brass Tacks Team and board member of the Public Banking Institute; and Henry Wykowski, a former prosecutor for the U.S. Attorney’s Office in Northern California, currently Harborside Health Center’s lead attorney.

“The city of Oakland has always tried to be in the forefront of moving the cannabis industry along in the appropriate manner, and this is a step in the right direction,” Henry Wykowski told CULTURE. “The lack of banking not only impedes the industry, but it also interferes with our ability to conduct our business like every other type of business in the United States. The city of Oakland obtains substantial revenue from the tax on cannabis. Since the federal government doesn’t seem to be able to get it back together in this regard, we’re stepping in to fill in the void.”

Of the many reasons cited by the Friends of the Public Bank of Oakland, one example of public banking is the Bank of North Dakota. North Dakota was able to avoid the credit crisis that affected many other states with zero public debt, in addition to having the lowest foreclosure and unemployment rates in the nation.

A total of $20 million to $30 million in capitalization would be required in order to establish a public bank in Oakland. The money would be acquired through Oakland’s own liquid assets and other funds from the General Fund or a small bond levy. Regulator approval for a public bank in California is no easy feat. Before a full banking charter (license to operate) can be granted, the state of California, through the Department of Business Oversight, and the Federal Government, through the FDIC, must assent. “I think that if they’re successful [in creating a public bank],” Wykowki adds, “I think that the people in the industry will reward them by making them the deposit institution of choice for the industry.”

Individual profit-based banks have bullied local businesses in Oakland for long enough. An alternative is needed when local businesses are essentially forking over millions of dollars in city money to Wall Street, year after year.