On Tuesday, the California Cannabis Industry Association (CCIA) announced that marijuana companies in the state would have the first regular access to banking services following an agreement with the North Bay Credit Union (NBCU).
Since marijuana was legalized following the passage of Proposition 64 in 2016, the vast majority of marijuana companies in California have faced difficulties in getting banking and payment services due to the federal government’s continued ban on marijuana. Many banks fear reprisals by the federal government or actions taken against them for knowingly servicing clients and taking money from those who are breaking federal law.
This has hurt many marijuana companies in California and other states, who have had to resort to being a mostly cash-based business. This has left many vulnerable to thefts and violence against them.
Tuesday’s agreement between the CCIA and the NBCU seeks to alleviate this, with the CCIA opening up banking services to all current members in the state. Those business can now open checking accounts, conduct wire transfers, payment services, and other services afforded to by banks for companies.
“Since California legalized cannabis, operators have faced significant struggles with banking and payment services, given the federal government’s continued ban on cannabis products,” said the CCIA in a statement. “The agreement is intended to alleviate the banking obstacles that cannabis operators face, so they can focus on their core business. Our goal is to alleviate the challenges that small businesses in the cannabis space face when it comes to banking. We look forward to working with the North Bay Credit Union to ensure our members receive the banking services they need to conduct business safely and efficiently.”
Banking services for marijuana businesses in California
Many, including some who don’t support marijuana legalization, welcomed the news on Wednesday.
“Many people are still against total marijuana legalization,” explained Doug McMillan, a former police officer who has helped organize against legalization efforts in other Western states. “But, as long as California has it, as well as other states, we need to tax them correctly, and like any industry, make sure that it doesn’t invite criminal elements. By not allowing cannabis companies to bank, they keep a lot of cash on hand, and that can lead to unsafe scenarios, as many places like dispensaries don’t have nearly as much security as banks do.
“This way it doesn’t invite as much crime, keeps these businesses safe, and ensures that records are more closely kept due to bank receipts to make sure they are paying their fair share of taxes.”
Others have noted that this kind of banking will also help in the long run.
“Some credit unions have been offering services for awhile, but this is the first real big push to that,” stated banker Louisa Willard to the Globe. “And this is a growth industry in the state. Except for the pause now due to COVID, it’s growing by a billion dollars every 1 to 2 years. That’s thousands of new jobs. That’s a lot of store fronts being rented, so that means more loans. There are some behavioral effects, but pot is being treated like alcohol in that regard, as well as cigarettes in most places where you can smoke or whatever it.
“This big banking boost with that credit union just makes it safer on the whole and really protects a growing industry in California.”
With federal marijuana regulations expected to be dropped or decriminalized under the Biden administration, and some in his cabinet possibly pushing for legalization nationwide, the move by banks and credit unions now to allow banking can also be strategic move.
“It’s happened before,” added McMillan. “It’s like the Nike effect. People saw the athletes wear the shoes, with the company coming out before the big tennis shoe explosion in the 80’s and 90’s as a trusted brand leading to being the market leader for decades. Banks are beginning to do that now to get and maintain that customer base and seem reliable to others. So it’s a smart move on the credit unions part too.”