The California Treasurer John Chiang and state Attorney General Xavier Becerra will perform a study looking into potential costs and regulatory hurdles of opening a publicly owned bank that will serve the California cannabis industry.
“California and other states will need to lead when it comes to bringing the cannabis industry out of the shadows so that it can be properly regulated to prevent sales to minors, to protect the public’s health and safety, and ensure cannabis businesses behave as legitimate, tax-paying members of our economy,” Chiang said, according to the Los Angeles Times.
The study will consider whether brick-and-mortar banks are needed, or just an online service. One major question is whether or not the bank could be insured.
On the city level, citywide cannabis bank ideas have emerged in Los Angeles, Oakland and San Francisco. Currently the only public bank in the United States that is able to cater to cannabis businesses is the state-owned Bank of North Dakota, founded in 1919. The Bank of North Dakota is inspected by state inspectors, not federal bank examiners, like the majority of public financial institutions.
Hezekiah Allen, executive director of the California Growers Association, was thrilled because of the constant danger cannabis business owners currently face. “As cannabis business owners, we’re interested in anything that would change the status quo,” he said. “If there were a public bank and our members could do business with it, our members would open accounts in droves. We have members getting mugged in the street. A public bank is a laudable outcome, and we’re supportive of it, but it’s not going to be what keeps our business owners safe tomorrow.”
Treasurer John Chiang is also running for Governor of California, and a cannabis bank could be a selling point for his campaign.