California is working to grant its cannabis industry access to bank services by calling a working group that aims to discuss solutions addressing the clash of state with federal laws on the matter.
Despite being legal in certain states such as Massachusetts, Colorado and California, federal law decriminalizing the use of cannabis forces legal marijuana businesses in the states to function largely in cash, Daily Breeze reports.
California's first legal recreational marijuana shops are set to open in 2018 under voter-approved Proposition 64, which legalized the use of the plant for adults 21 and over. California has a year to work out a banking services solution for the industry as a result.
"We need quick action and practical solutions," said State Treasurer John Chiang, who founded the Cannabis Banking Working Group, in a statement. "California is willing to assume a leadership role nationally to effectively achieve this goal."
Federal law views cannabis as a Schedule I narcotic like heroin, which means mainstream banks and credit card companies won't work with dispensaries and growers out of concern they'll be punished as money launderers.
The "Cole memo," authored by U.S. Deputy Attorney General James Cole in 2013, which guides banks on how to serve marijuana businesses without breaking any federal laws, has done little to encourage the financial services industry to work with marijuana providers.
California's cannabis industry is expected to generate $7 billion in profits and $1 billion in state taxes per year after recreational pot shops open on Jan. 1, 2018.
"A lot of businesses will be hauling around a lot of cash with no place to deposit their money, putting them at risk of robbery," Chiang said, adding that money laundering will likely become pervasive in the industry as well.
One idea that has not been realized for the industry is that of founding a state bank to specifically serve marijuana providers. Federal regulators have shut down such banks in other legalized states before.
Attempts to remove cannabis from the Schedule I drug list have failed multiple times, including under President Barack Obama's administration. As did attempts to pass legislation removing federal penalties for banks serving marijuana providers in legalized states.
Such efforts are also unlikely to see success under the upcoming administration of President-elect Donald Trump. Republicans tend to see the activity less favorably than Democrats.
Chiang's first Dec. 19 meeting of the working group saw no federal representatives attend, despite the State Treasurer inviting members of the Trump administration to the Sacramento meeting.
The 16-member working group and about 100 meeting attendees of banking and cannabis industry representatives met at the state Capitol building to define their common challenges.
"Defining the problem is our first objective," Chiang said. "As we continue to hold meetings around the state and compile information, I think we will continue to gain ever more clarity on precisely what should be done and how."
The working group will meet four more times to discuss solutions to the banking problem. Chiang and other members of the working group expressed optimism they will be able to do so in the year ahead, particularly now that some 45 states in the union allow some form of legal marijuana use.
"The cannabis industry is the largest shadow economy in California," group member and Board of Equalization Chairwoman Fiona Ma said in a statement. "Allowing them banking access would facilitate compliance and bring millions of dollars into our economy."
Meanwhile, the proportion of teens using marijuana has increased as perception of its harmfulness has fallen, noted a University of California study, Pulse Headlines reports. The proportion of teens smoking marijuana in December 2016 has increased 2 and 4 percent among eighth- and tenth-graders, respectively, in Washington state, a state that has legalized marijuana use.
The use of cannabis has only increased by 1 percent among young teens in states where marijuana is not legal for recreational purposes.