California Legislature Mulls Cannabis Bank Charters
One of the first bills introduced in the current California legislative biennium proposes to enact a Cannabis Limited Charter Banking and Credit Union Law. Authored by Senator Robert M. Hertzberg, SB 51 is an attempt to address the fact that cannabis businesses are unable to open and use checking accounts, make or receive electronic payments, or accept credit or debit cards because cannabis remains illegal under federal law.
The law, if enacted, would provide for the licensing and regulation of cannabis limited charter banks and credit unions under the oversight of the Commissioner of Business Oversight. These institutions would be authorized to issue special purpose checks that would be valid for only for specified purposes such as paying fees, taxes and rent. They would be prohibited from engaging in banking activity with any other financial institution that lacks a limited purpose charter.
The bill has not yet been assigned to any committee but has attracted several co-authors in the Assembly and Senate. It currently is a non-urgency measure. If it remains so and is enacted, it would not take effect until January 1, 2020. Thus, it may be some time before we see the "First Bank of Doobie" in the Golden State.