John Chiang is Working Overtime to Solve Marijuana’s Banking Challenges
Eight states have legalized recreational marijuana and another 29 now allow sales of medical weed. But because it's is still illegal under federal law, it’s a challenge to find a bank willing to store a legitimate marijuana business's cash. That has resulted in a hazy, cash-heavy industry where different businesses are playing by different rules. It's a confusing and sometimes dangerous situation.
“It’s the early stages of the Wild West,” said California Treasurer John Chiang. He's been at the forefront of efforts to reform marijuana banking. Without changes, Chiang asks, "How do you handle the taxation of cannabis dollars and the banking of billions of dollars of transactions that are going to take place here in California?”
Good question. The City of L.A. even had to invest in new currency-counting machines because office workers were overwhelmed by the amount of cash they had to calculate for tax purposes.
Still, many marijuana businesses are finding banks willing to work with them anyway. According to the Financial Crimes Enforcement Network (FinCEN), the number of banks and credit unions serving the marijuana industry grew to 368 in March. The fees can be astronomical though and not every business is willing to pay them.
Chiang has a formed a working group dedicated to meeting this challenge head on. With less than six months to go before sales of recreational pot are officially legalized, he and a set of experts hope to solve one of the most difficult problems arising from what is expected to be a $7.5 billion industry.
Read more about its activities here.