California and Nevada Credit Union League
Working Group Says Cannabis Bank ‘Too Risky’ for California
During a public hearing on Dec. 27, the results of an independent study by the Cannabis Banking Working Group (CBWG) were presented. The report found that the establishment of a public cannabis bank would pose too great of a legal and financial risk to the State of California.
Following the legalization of recreational marijuana in California, State Treasurer John Chiang created the CBWG. The California Credit Union League is a member of the CBWG, actively working to solve the federal-state conflict.
Yesterday’s presentation noted that other solutions examined and determined to be unfeasible—because they would still run afoul of current federal law—included a public credit union, the state purchase of a private bank, and various so-called “fintech” solutions that would attempt to solve the problem by relying on such transactional tools as cryptocurrency.
Chiang said the federal government “must either remove cannabis from its official list of banned narcotics or approve safe harbor legislation that protects banks serving cannabis businesses from prosecution,” he stated.
A copy of the 151-page feasibility report is available here. It was prepared by San Diego-based Level 4 Ventures and details virtually insurmountable “legal, schedule, mission and financial” risks that the State of California would face if it were to move forward to create a public cannabis bank. Instead, Level 4 recommended the state establish a state project office to work towards improving access to banking by the cannabis industry through greater facilitation, communication, and coordination. Click here to view the news released by Chiang’s office.
The League will continue to closely monitor this topic and inform its members when necessary, as it has implications for several credit unions across the state.
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