California could use armored cars to move pot money
State treasurer proposes plan to make banking accessible to marijuana businesses
Even though the recreational sale of marijuana becomes legal on Jan. 1, pot is still a cash-only business.
“We can’t really just go to a bank to get just, like, quarters and nickels and even things like that,” said Shayna Schonauer, of Hugs Alternative Care in Sacramento. “It’s a little harder to because we can’t make cash deposits into banks.”
That’s because the federal government still considers marijuana to be a Schedule 1 prohibited drug. That means no banking nationwide — with only a few exceptions, if you want to take a big risk.
If pot businesses try to make a cash deposit, “What typically happens is the bank will file a suspicious activity report,” said Khurshid Khoja of the California Cannabis Industry Association.
But that could change under a plan launched on Tuesday by California State Treasurer John Chiang. He’s trying to make banking accessible for California’s projected $7 billion marijuana industry, which could yield $1 billion in new tax revenue for the state.
“So what we’re doing is proposing a courier service, where the money would come to the state,” Chiang said. “And the state would be the party that would interact with the banks.”
Under the plan, armored vehicles would pick up cash from marijuana businesses and then transport those tax dollars to a secure counting facility. The cash would then be taken to either a federal reserve facility or a financial institution willing to “accept the cash as deposits to state accounts.”
In addition, California would team up with five other states — Alaska, Maine, Oregon, Pennsylvania and Washington — for a Cannabis Banking Consortium.
It’s all part of a proposal from the Cannabis Banking Working Group to open up credit opportunities.
“They can’t go into a bank and ask for a small-business loan to help fund that,” said Nicole Neubert of the Cannabis Banking Working Group. “Whereas every other business that’s regulated in California would be able to do that.”
“Everyone uses cash and that cash has no place to go,” Schonauer said. “We can’t make cash deposits into banks. And so it just kind of puts our employee safety and the whole company at risk.”
“It’s a very unsafe situation to have to do business in cash,” Khoja explained. “ It’s very difficult for cannabis businesses to pay their employees, to write a check, to pay their taxes — all things that other businesses take for granted.”
Chiang said the Cannabis Banking Consortium could be a bridge for marijuana businesses in need of banking services.
“We have the credit union leagues of California and Nevada,” he said. “It’s a single entity that is participating in our consortium.”
But there are still obstacles ahead for marijuana retailers.
“Not having deposit accounts, not having access to credit producers, not having access to lending,” Neubert said.
Schonauer hopes the new plan will her give better banking access.
“I think it kind of levels the playing field for everyone,” Schonauer said. “And it’s going to make it safer for everyone involved patients, consumers, employees — everyone that’s in this industry.”