A second state Senate committee on Wednesday approved a bill that would make it easier for California cannabis businesses to write checks — instead of using hoards of cash, as is common practice now — to pay taxes, rent and fees to vendors.
The bill, introduced by state Sen. Robert Hertzberg, D-Van Nuys, would allow the creation of a special class of state-chartered banks and credit unions, regulated by the Department of Business Oversight, that could process deposits, withdrawals and other financial transactions by licensed cannabis merchants. The Governance and Finance Committee approved the legislation Wednesday.
The federal government considers marijuana a Schedule 1 drug, so federally insured financial institutions cannot process cannabis-related transactions without running the risk of criminal charges, including money laundering.
Proponents of the proposed legislation say it would help cannabis shops, which largely operate on a cash-only basis, by reducing the large amounts of cash they have to store and transport at any given time. The practice often poses security risks, such as when cannabis businesses try to pay taxes. State Treasurer John Chiang has recommended the state hire armored cars to collect taxes in cash from cannabis merchants and transport it to a secure counting facility.
California this year legalized recreational marijuana use, and sales of cannabis are expected to rise. The Department of Finance estimates the state will collect $600 million in cannabis taxes in 2018.
The proposed legislation, SB930, was approved by the state Senate Banking and Financial Institutions Committee on April 18. The measure now heads to the Senate Appropriations Committee, which would have to pass it before it could proceed to the full Senate for a vote.