SACRAMENTO (CBS13) – The multi-billion dollar cannabis industry has continued to grow following pot legalization in California, yet cannabis businesses say they’ve been shut out of the private banking industry, creating a danger for both them and their customers.
Cannabis businesses I spoke with say they welcome the idea of a public bank. They say their banking and bill paying often involves backpacks and duffle bags full of cash.
“We’ve opened several bank accounts in the past and they’ve all been closed down within a few weeks,” said Matthew Zyberg with HUGS Alternative Care cannabis dispensary in Sacramento.
Zyberg says that like others throughout the state, his business has been shut out of the banking industry.
“They said your deposits smell like weed, so we can’t bank with you anymore,” he said.
That’s because the federal government classifies cannabis as an illegal drug and most banks and savings and loans are insured by the federal government. They’re afraid to take part in any cannabis financial dealings.
In a move to change that, California State Treasurer John Chiang announced a study to explore the idea of a public bank that would serve the cannabis industry.
“You have an industry that can’t bank, doesn’t have full access to tax administration, were expecting a billion dollar plus in revenues….” he said.
Unlike other businesses that can access banks physically or online, cannabis businesses are forced to take some unusual measures.
“Once a month, one of our managers is going down to the tax office with a bag full of $75,000 to $100,000 in cash and gives it to the state to pay our state excise tax,” said Zyberg.
Those big-money drops are creating a safety concern for everyone.
“When you have loads of cash there are people who want to engage in criminal activity,” said Chiang.
He says he expects this latest study exploring a public bank for the cannabis industry to be completed at the end of the year.