California Senator Bob Hertzberg has pulled a bill that would create a special class of state-chartered banks to serve the cannabis industry.
SB 51 would allow private banks or credit unions to provide depository services to licensed cannabis firms if they secure a limited-purpose state charter. The idea is to end the current situation in which marijuana companies are forced to deal in cash as federal restrictions prevent them from using mainstream banks.
The California Senate approved the bill in May 2019 and it was scheduled for an upcoming vote on the Assembly floor.
Hertzberg is a co-sponsor of the bill along with California Treasurer Fiona Ma, and he has now decided to pull it. The new plan is to reintroduce the legislation in early 2020.
“If we’re going to do this, we have to do it right,” said Hertzberg. “We owe it to the dozens of cities, counties, and cannabis industry officials who have been supporting this effort to see it through.”
Ma said she will continue to champion the bill on behalf of her constituents and business owners across the Golden State, which is the world’s largest marijuana market. She said she will work with Sen. Hertzberg and Gov. Newsom on SB 51 as a matter of top priority in Jan. 2020.
Hertzberg’s office confirmed that there is a clear path for the bill to become law in early 2020 as it contains an urgency clause and it has already cleared a majority of legislative hurdles.
The bill is an alternative to the SAFE Act, which also aims to end the American cannabis industry’s reliance on cash. It is gaining momentum in the U.S. House of Representatives, but it has no chance of passing into law in 2019.
The current situation means that businesses and their customers are at risk of crime, as they are forced to keep large amounts of cash. It also deters states’ efforts to raise the proper amount of tax revenue and to prevent money laundering.
The San Diego Union-Tribune responded to Hertzberg’s “welcome display of caution” by urging California to get cannabis banking right so that others will follow. Its editorial claims that Hertzberg could end up influencing the feds if he gets it right.