California is starting to assess whether a public bank would better serve the state’s marijuana industry.
On Tuesday, California Treasurer John Chiang announced that he and the state attorney general’s office will be moving forward with a feasibility study.
Most private banks won’t work with cannabis businesses because marijuana use is illegal under federal law. Chiang — who is running for governor — says California will conduct a two-part feasibility study on whether a state-backed bank would provide a viable alternative.
Chiang’s office would look at operational issues, like whether the bank should be online or have physical locations. He says the attorney general will consider legal questions.
“We need answers to legal issues surrounding the regulation of a state bank for cannabis, such as whether establishing such a bank would provide greater protection for the institution and its customers,” Chiang says.
The completed study is expected to answer questions about costs, benefits, risks, and legal and regulatory issues.
Chiang says the anti-marijuana stance of U.S. Attorney General Jeff Sessions creates some additional challenges to finding a banking solution for the industry. Chiang says California is collaborating with other states to encourage a federal fix.
California’s cannabis industry is expected to bring in billions of dollars in sales.
Most of the business is currently conducted in cash, which can attract crime.