Cannabis entrepreneurs face a host of obstacles when securing a business account.
The act of maintaining a business account, making deposits to and from it are at times not available. Reports of outright rejection and funds being frozen are common complaints in the industry. These issues were addressed at last month’s Cannabis Banking Working Group meeting hosted by California State Treasurer John Chiang.
Addressing State & Federal Laws
The U.S. Federal government still considers marijuana a Schedule I drug under the Controlled Substances Act. As a result, banks and other financial institutions generally refuse to provide services to cannabis related business.
The Cannabis Banking Working Group is set to address the conflict between state and federal laws that are limiting the industry’s ability to participate in traditional banking and commerce services.
The group includes representatives from local government, law enforcement, regulators, banks, taxing authorities, and the cannabis industry.
After hearing from the representatives, California State Treasurer, John Chiang said, “As we learned today from listening for more than three hours to experts with California’s public agencies, financial services and cannabis industry, there is a dangerous, disruptive disconnect between state law and federal law.”
Expressing concern over missed economic opportunities, Fiona Ma, California State Board of Equalization Chairwoman and a member of the Cannabis Banking Working Group, said, “The cannabis industry is the largest shadow economy in California. Allowing them banking access would facilitate compliance and bring millions of dollars into our economy.”
We are seeing this affect more than just cannabis businesses seeking to use traditional financial services, this also affects governments seeking to collect taxes, along with banks that might wish to provide services.
In December’s meeting, (agenda and recording available here), members heard feedback from panels representing the cannabis industry, banking institutions, and public agencies with responsibilities for tax collection.
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