Plans to create a banking industry for the marijuana market run into trouble
One of the obstacles the marijuana industry still has not been able to overcome is the limitation on banking capabilities. Because marijuana is still illegal on a federal level, banks are hesitant to interact with any company in the space over fears of a federal backlash. While one credit union in Alaska has announced that it will open its doors, and accounts, to marijuana companies, most jurisdictions are still being left behind. California thought that it was close to a solution, but it now appears that those plans are dying a quick and painful death.
A state task force that had been created to explore the possibility of banking for marijuana commerce released its findings yesterday, concluding that any banking solution for the cannabis industry would be too expensive and could face legal risks that makes the idea untenable. The task force published a report spanning 151 pages, but the crux of it said that at least six years would be needed to create a cannabis bank and that it would require many state laws to be rewritten. It also asserted that any attempt would have to be approved by the federal government, which would more than likely not be possible.
The biggest sticking point is the federal government. According to California State Treasurer John Chiang, who chaired the task force, “[T]he inconvenient reality [is] that a definitive solution will remain elusive until the federal government takes action. They must either remove cannabis from its official list of banned narcotics or approve safe harbor legislation that protects banks serving cannabis businesses from prosecution.”
Fortunately, that federal limitation looks to be on its way out. Once that happens, the marijuana industry will be able to take advantage of financial banking services, which will help the industry grow even more.