California Senate Passes Revolutionary Bill to Bypass Federal Reserve, Create Cannabis Banking Industry

 Sacramento, CA — In states with legal marijuana, dispensaries and  retailers are forced to operate in legal gray areas because the federal  government still wants to lock people in cages for possessing this  plant. One particularly troublesome aspect of this prohibition is that  legal marijuana business cannot accept credit cards and are blocked from  using traditional banks. 

Thanks to a new bill in California, however,  all that could be about to change. In January, Sen. Bob Hertzberg, (D-Van Nuys), along with a bipartisan coalition of nine cosponsors, introduced Senate Bill 930 (SB930) which would create a self-contained banking industry solely for the cannabis industry inside the state of California. Last week, the California Senate passed the bill. If the bill makes  it through final approval, the implications are revolutionary and would  aid in further nullifying the federal prohibition of cannabis. Passage of SB930 would bypass the federal banking system entirely and  pave the way for competition in the industry outside of federal  control. 

The current system makes it against the law for banks to accept  money from what the federal government considers “illegal activity”  even though the state has legalized it. The federal government can and  likely would prosecute banks who service the cannabis industry under  the Bank Secrecy Act, the USA Patriot Act, and the Racketeer Influenced  and Corrupt Organizations (RICO) Act. As the Tenth Amendment Center reports, under  the proposed law, the state would license “cannabis limited charter  banks and credit unions.” 

Cannabis businesses would be able to deposit  funds in these institutions and write checks on their accounts for  limited purposes, including paying state or local fees and taxes, rent  on property associated with a cannabis business, paying vendors, or  buying state or local bonds or warrants. 

These checks could only be  deposited or cashed at the issuing cannabis limited charter bank or  credit union, or another cannabis limited charter bank or credit union  that agrees to accept the check, keeping them outside of the federal  checking system known as the automatic clearing house (ACH). These cannabis banks would not be allowed to interact with regular  banks or credit unions. Instead, they would form their own banking  networks and would also be allowed to provide accounts to people and  other entities outside of the cannabis industry. 

“The status quo for our growing legal cannabis industry is  unsustainable,” Hertzberg said in a press release. 

“It’s not only  impractical from an accounting perspective, but it also presents a  tremendous public safety problem. 

This bill takes a limited approach to  provide all parties with a safe and reliable way to move forward on this  urgent issue.” Showing the overwhelming support for such measures, the bill passed  the senate and received only 6 nays. SB930 will now move to the Assembly  for further consideration. As the Free Thought Project previously reported, cryptocurrencies are  also stepping up to free the cannabis industry from federal banking  control. 

As TFTP reported  last month, since blockchain technology is still developing, the point  of sale options for retail locations have been slim, but a new platform  called Alt Thirty-Six is hoping to change that. Alt Thirty-Six has since announced a partnership with the cannabis  software company WebJoint, which they say will allow for more widespread  cryptocurrency adoption in cannabis retail locations thourghout the  United States, not just California. 

“Our goal at Alt Thirty-Six—to bring secure digital payment  solutions to the cannabis industry—perfectly aligns with WebJoint’s  innovative, cannabis-specific software technology. We’re thrilled to  have the opportunity to partner with [WebJoint], providing more cannabis  businesses with access to our platform and changing the way the  industry as a whole handles payments,” Alt Thirty-Six CEO Ken Ramirez said in a statement. 

The service will not be using Bitcoin since the legacy blockchain of  the pioneer crypto has been riddled with scaling problems that have  resulted in high fees and slow transactions. Instead, these services  will utilize Dash, a top cryptocurrency that works much better for point  of sale payment systems due to its high speed and low cost. What the bill in California and the Dash projects illustrate is the  ability of ingenuity and innovation to create new systems to foster  change. Instead of merely trying to tear down the old systems, thinkers  and innovators build new ones which show the obsolescence of the old.