Cannabis banks closer to a reality after clearing state Senate

Local marijuana industry professionals hope for passage of bill

Mariellen Jurkovich, executive director of Humboldt Patient Resource Center, says cannabis banks will further bring the industry into the mainstream. (Times-Standard file)
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The legal cannabis industry in California is a step away from another marker of legitimacy: a bill that would authorize state-chartered banks for cannabis businesses awaits Assembly approval and Gov. Gavin Newsom’s signature.

Until now, the cannabis industry has largely remained bank-less. Even larger businesses operate on a cash-only basis. Senate Bill 51 would allow for cannabis banks and a credit union advisory board to oversee their operations within the state.

These banks would be allowed “special purpose checks” for cannabis-related business transactions. For growers, the sudden appearance of banks would bring to end a long era of a cash-only economy.

“It would be a progressive step in the right direction,” said Sunshine Johnston, a Redcrest farmer and owner of Sunboldt Grown. “Being able to write checks and function like a normal business would be huge.”

Johnston, who has advocated at Board of Supervisors’ meetings for the county’s smaller pot grows, said banking would effectively change the game across the board.

“Big or small,” she said, “this is good for people. It’s already hard to do accounting when you’re still figuring out what your costs are. Having it all be cash makes it that much harder to be accurate.”

If cannabis ever becomes removed from the list of federally controlled substances, the bill ensures that the charter bank law disappears.

Most commercial banks currently avoid cannabis businesses, wary of federal funds disappearing if they support the industry. No matter how established or legitimate, cannabis operations have found banking to be a headache, said Mariellen Jurkovich, executive director of Humboldt Patient Resource Center.

“We’ve been kicked out of five places,” Jurkovich said. “Once they find out who you are, they say they cannot support you because they’re federally funded.”

Fortunately for Jurkovich, the Humboldt Patient Resource Center is one of the few businesses that does currently have a bank. But it’s not an easy process, she said, and many banks charge more money for cannabis businesses than they would for any other commercial setup.

State Sen. Bob Hertzberg, who represents an area in the San Fernando Valley, authored the bill, which now needs to pass the Assembly before reaching Newsom’s desk.

Hertzberg authored a similar bill at the start of 2018, but the legislation failed to pass an Appropriations Committee at the end of the summer.

A banking system is especially important for farmers whose products hold together the entire industry, Johnston said.

“We need operational loans,” she said. “The whole industry is borrowing from farmers. We get the burden of all the taxes, yet we’re the last ones to get paid. And we actually produce something!”

In the absence of banks, the state’s track-and-trace program is the only real way for authorities to keep track of where and how products are sold. But growers at past county meetings have criticized the track-and-trace system for its slower pace and costliness.

“We need credit cards to build up a credit history,” Jurkovich said. “Right now, we can’t get loans. Everyone you’re buying from pays cash. It’s such a vicious cycle.”

Ultimately, she said, a proper banking system would further bring the industry out to light.

“It’s not a safe thing to walk around with a lot of cash,” she said. “We need to become more mainstream.”

Shomik Mukherjee can be reached at 707-441-0504.

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