The state of California expects an increased growth in its marijuana industry and the need for participation in a banking system for this industry is much needed. Revenue from the cannabis industry in California is projected to the tune of $1 billion per annum and may even be more. With that in mind, John Chiang, the California Treasurer made an appeal to President-elect Trump to intervene and help the state’s $7 billion weed industry participate in the banking system controlled by the federal government. This is an issue that has been pending for years now even with two decades of medical marijuana legalization. The cannabis industry has not been able to join the national banking system because marijuana remains illegal at the federal level. Despite Californians being able to buy marijuana, the federal government considers it as a Schedule 1 drug and therefore, the reason why it has been locked out from participating in the banking sector.
The need for inclusion into the banking system has been further prompted by California voters who passed on Proposition 64 in the 2016 elections. As it stands now, marijuana is legal in California and is allowed for use both for medical and recreational purposes come 2018. The biggest problem now, however, is the manner in which the state will be able to collect the projected annual taxes of $1 billion from legal marijuana cultivation and sales. This is for the reason that marijuana businesses have had challenges to open bank accounts, getting insurance or even accessing loans from legal financing institutions. All these challenges narrow down to the conflict between state and federal regulations. Due to these differences, states where marijuana has been legalized face difficulties in collecting tax revenue, increased risk of dangerous crime and the inability of a lawful industry based on state law to participate in commerce and banking. These are some of the issues that Mr. Chiang addressed in his appeal to Trump.
Mr. Chiang expressed belief that California is able to come up with a system that will work in this coming one year. Its practicability will be proven through its ability to deal with the many other issues that are prevalent due to the conflict arising between the state and the federal governments. Further, he reiterated that the uncertainty concerning the position of Trump’s administration was posing another challenge. The California vote that passed Proposition 64 is believed to be a representation of the national legalization movement’s largest win throughout history. The new marijuana law will endeavor to at least theoretically tame a market that is a mix of legal, medical manufacturing, sales and huge illegitimate cultivations conducted through drug cartels.
Now that cannabis is criminalized at the federal level, Californians can’t tell the stance that will be taken by the Trump administration when it assumes office. Citizens can only wait and see what will become of their new marijuana economy and other cannabis-friendly states. Trump’s choice of Senator Sessions from Alabama as the attorney general is even worrisome. Sessions openly termed weed as an illegal substance leave alone the expressed desire to include the business in the national system of banking. Well, California is not alone and the ever increasing number of states joining in the reforms for marijuana is believed to put some pressure on the federal government to review its stand. In the list, are 28 other states and Washington, D.C. where cannabis is legalized for different reasons: medical or recreational or both. In some other states, marijuana business has formed a patchwork of tax and banking practices. In Oregon, officials established a fortified office installed with security cameras, bulletproof glass watched by armed guards. The building is meant for the collection of huge payments made in cash for the taxes imposed on marijuana. For Washington, D.C., most pot businesses are paying taxes through electronic means, which is a sign of much improved contact with bank accounts. The number of United States credit unions and banks willing to deal with marijuana money under Treasury Department directives given about two years ago is increasing, though they are usually smaller organizations.
Tax collectors in California, however, gave a report concluding that tax revenue from cannabis-related business may be made in cash terms because pot is not permitted at the federal level and businesses cannot access banking services. According to Chiang, the federal policies have not given certainty for financial organizations to provide access to the weed industry. California could intensify the banking issue even more. Chiang resorted to forming a group to research on the banking issues that may be an impediment to the anticipated legal marijuana economy in California. Generally, California is prepared to treat marijuana just like alcohol. Currently, patients can even access medical marijuana for sale online. As the new law takes effect come 2018, adults aged 21 years and above will be able to possess a maximum of an ounce of weed along with other regulations. Hopefully, there will be a well established money system to support these operations.