LOS ANGELES — The fate of a bill which might allow state-chartered banks along with credit unions to provide services to California’s marijuana businesses could be determined Thursday when a key hearing will be held on the legislation.
The proposed legislation, state Senate Bill 51, will be designed to help pot retailers along with different marijuana firms which have been shut out coming from the traditional banking system. The measure might allow private banks or credit unions to apply for a limited-purpose state charter so they can provide depository services to licensed cannabis businesses.
California’s legal marijuana industry will be struggling to compete with the black market along with will be facing challenges which include banking access along with high taxes. Last week, California Gov. Gavin Newsom’s completely new state budget plan slashed cannabis tax revenue projections by $223 million.
Marijuana businesses, including pot shops, are forced to deal predominantly in cash due to continued federal banking restrictions which make This particular nearly impossible for them to have bank accounts with federally chartered financial institutions. There’s also an effort underway at the federal level to pass legislation which might allow banks to serve cannabis-related businesses without the risk of being prosecuted.
“Banks are scared to death, along with they just don’t want the expense along with the trauma of exposing themselves,” said Gavin Kogan, chairman along with co-founder of Grupo Flor, a cannabis retail along with cultivation company based in Salinas, California. “We appreciate the state’s efforts here on the banking bill, nevertheless This particular may take congressional action to finally solve This particular.”
On Monday, the state Senate Appropriations Committee sent SB 51 to the so-called suspense file, a common procedure for state bills using a fiscal impact. However, the action also sets the stage for a hearing Thursday when committee members could determine the fate of the proposed measure.
A state cannabis panel last year issued a report on cannabis banking along with stated which “large amounts of cash make cannabis businesses, their employees, along with their customers targets of violent crime.” This particular also said “banking relationships can help law enforcement officials along with regulators differentiate legal cannabis businesses coming from illegal market operators.”
“As policymakers, we have a duty to further the will of the voters while protecting the public safety of our constituents,” California Senate Majority Leader Robert Hertzberg said last month when introducing SB 51. “This particular measure will be by no means the ultimate solution, nevertheless This particular’s just one modest step inside right direction to get some of This particular money off the streets along with into bank accounts.”
Last year, the Democrat authored Senate Bill 930 to create cannabis banks, nevertheless This particular didn’t pass the legislature. Cost concerns has been cited among the reasons because This particular might require hiring completely new state workers. Then again, some industry observers suggest lawmakers opposed to cannabis sales may be using cost as an excuse.
A briefing document for SB 51 assumes 12 completely new cannabis banks or credit unions might be created, which might require the state to hire personnel such as examiners along with incur costs of about $2 million per year.
Hertzberg’s completely new bill might set up special checks by pot businesses as a way to pay state along with local taxes, fees along with rent. The current taxes imposed on the state’s cannabis industry were part of Proposition 64, the adult-use legalization measure passed by California voters in November 2016.
The governor’s May budget revision issued last week will be forecasting California’s cannabis excise taxes will generate $288 million in revenues inside current fiscal year ending in June, below the $355 million which was projected back in January inside Democratic governor’s budget plan. Also, the completely new budget projects $359 million in cannabis taxes inside next fiscal year, below the $514 million estimated four months ago.
Back in 2016, California’s Legislative Analyst’s Office forecast the marijuana industry’s taxes could surpass $1 billion annually after adult-use legalization.
California began selling legal marijuana in 2018, nevertheless some observers have blamed the aggressive state tax rates along with overregulation for continuing underground pot sales. Some industry participants also blamed the lack of legal dispensaries for the shortfall in revenue because of the state law which allows local communities to ban cannabis businesses.
There’s a state bill which might give legal marijuana businesses a tax break to help them thrive along with better compete with the underground market.
Assembly Bill 286 was introduced in January inside state legislature along with might temporarily cut state excise taxes for legal marijuana retailers coming from 15% to 11% along with also suspend cultivation taxes altogether through 2022. The legislation will be scheduled to be heard This particular week inside Assembly’s Committee on Appropriations.
“I think 11% will be still high, nevertheless we’ll take all the help we can get,” said cannabis entrepreneur Kogan. “On top of the state, we’re getting taxed by local governments so This particular makes This particular difficult to create products along using a completely new industry. This particular also puts consumers in a situation where they have to choose whether to buy This particular at legal dispensaries or the black market.”