California seeks pot-money banks

SACRAMENTO, Calif. — Shut out of the traditional banking system by federal laws, the country’s largest legal marijuana market in California stands to benefit if the state approves a measure creating a special class of banks to handle pot money.

The state Senate voted 35-1 on Tuesday to pass a bill that would allow people to start banks and credit unions that could accept cash deposits from marijuana retailers.

Those banks could issue special checks to the retailers that could be used only for certain purposes, including paying taxes and California vendors.

State lawmakers also say such banks would make it easier for licensed pot retailers to pay their taxes, which fell far short of expectations in the first year after legalization.

“This is as close as we can get until the federal government changes its policy,” said Sen. Bob Hertzberg, a Democrat and the author of the bill that now goes to the Assembly.

Marijuana has been legal in California since January 2018, but it remains illegal under federal law. U.S. statutes also prohibit banks from handling money that comes from criminal activity.

Meanwhile, pot businesses can’t get debit or credit cards or use checks, according to a report by legislative staff members.

The result, according to Hertzberg, is “millions of dollars buried in barrels.”

Republican state Sen. Jeff Stone said the state is losing “probably hundreds of millions” of dollars in taxes each year because pot retailers can’t write a check to the state.

“They’ve got to come in with wheelbarrows to carry in all the cash,” he said.